Vacant land loans
Land is security a lender cannot easily sell to a residential buyer, produces no rent and, if you never build, stays that way. That is why land lending is a different product from a home loan: larger deposits, tighter policy on size and zoning, and at many lenders a requirement that you intend to build.
Why the deposit is usually larger
Lenders generally require more equity on vacant land than on an established house, and the maximum loan-to-value ratio is commonly lower. The reason is straightforward: a partly built or never built block is harder to sell than a home, so the lender wants more buffer. Where the land is part of a house-and-land package with a build contract in place, the terms are typically better than for land bought on its own with no plans.
Size, zoning and services
Larger blocks attract tighter policy, and beyond certain sizes many lenders decline or treat the security as rural rather than residential. Zoning matters too: rural-residential is not the same security as a suburban lot. So does servicing, whether the block has power, water and sewer connected or available, because an unserviced block is harder to build on and harder to sell.
The build timeframe question
Many lenders will only lend on land where you intend to build within a defined period, and some require a build contract before or shortly after settlement. Buying land purely to hold is a narrower proposition and the lender list shrinks accordingly. If your plan is to build later rather than soon, that should be stated up front rather than discovered at assessment.
Registration and settlement timing
Land in a new estate settles on registration, and registration dates slip routinely. Your approval has a shelf life shorter than most estate timelines, which means approvals need refreshing rather than being left to lapse. The construction guide covers what happens once you move from land to building.
What lenders assess on vacant land
Four factors, and the first two do most of the work.
Generally more equity required than on an established home, with lower maximum ratios. The exact position varies by lender and by block.
Larger blocks and rural-residential zoning narrow the lender list sharply. Confirmed before you offer, not after.
Many lenders require a build intention within a set period, and some want a contract. Holding land indefinitely is a narrower proposition.
Power, water, sewer and legal access. An unserviced block is harder to build on and harder for a lender to value.
Looking at a block rather than a house?
Charles can tell you which lenders will fund it, what deposit is realistic, and how the build finance would follow.
Vacant land loan questions
How much deposit do I need for vacant land?
Generally more than for an established home, because maximum loan-to-value ratios on land are typically lower. How much more depends on the lender, the block size and the zoning, and on whether a build contract accompanies the purchase. A serviced suburban lot with plans to build is treated very differently from a large unserviced block.
Can I buy land now and build later?
Sometimes, and the lender list narrows. Many lenders require an intention to build within a defined period and some want a contract in place. Where you genuinely intend to hold for several years, that should be stated at the outset so the file goes to a lender whose policy allows it.
Does land size affect the loan?
Considerably. Beyond certain sizes lenders tighten maximum ratios or decline, and some treat larger blocks as rural security with quite different terms. Zoning compounds this, since rural-residential is assessed differently from a standard residential lot.
What happens when I am ready to build?
The land loan is generally replaced or supplemented by a construction facility, which funds the build in stages against a fixed-price contract. Planning both together at the start is far simpler than arranging them separately, because the total borrowing has to work as one.
Do lenders charge more for land loans?
Frequently the pricing differs from standard home lending, reflecting the security. The gap varies and is worth comparing, particularly where the land will be held for a period before building.
Related guides
General information only, not credit or financial advice. Professional lending policies, eligible occupations and loan-to-value thresholds vary by lender and change over time. Eligibility is confirmed against current lender policy in an assessment; nothing on this page is a promise that any lender will approve any application.
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