Land Loans: How to Finance Vacant Land

Buying land first and building later can be a smart way to get into a new estate or secure a block in an area you love. But land loans come with different rules from standard home loans.

How land loans differ

• Higher deposits: many lenders limit land loans to 80% LVR, some to 90% with LMI
• Size limits: blocks above a certain size may be treated as rural, needing different policy
• Building timeframes: some lenders want you to start building within a set period for better terms
• Rates: sometimes slightly higher than home loans

Land with a build contract

If you're buying land and building straight away (a house-and-land package or separate contracts), lenders usually treat it as a construction loan. This often allows higher LVRs, including the 5% Deposit Scheme for first home buyers.

Land with no build plans

If you're buying land to hold, lenders are more cautious. Expect:

• Lower maximum LVR
• Greater scrutiny on location and zoning
• No rental income to help serviceability

Block size matters

Many lenders cap residential land at somewhere between 10 and 50 hectares, depending on the lender. Larger blocks may need a rural or lifestyle property lender. Zoning (residential, rural residential, primary production) also affects which lenders will help.

NSW stamp duty on land

First home buyers in NSW can get:

• No duty on vacant land up to $350,000
• Concessional duty up to $450,000

You must build and move in within the required timeframe.

First Home Owner Grant

In NSW, the $10,000 grant applies when building a new home, with a combined land and build value of up to $750,000. It's usually paid at the first construction progress payment.

Holding costs

While you hold land you'll pay:

• Council rates
• Possibly land tax if it's not your principal residence (exemptions can apply while building a home)
• Loan interest

Frequently asked questions

Can I buy land with a 5% deposit?

If you're a first home buyer with a building contract, possibly through the 5% Deposit Scheme. For land only, usually not.

Is there a deadline to build?

Some lenders and stamp duty concessions have timeframes. Check before you buy.

Can I build later with a different lender?

Yes. You can refinance the land loan into a construction loan with another lender.

Buying land? Call Finfident on 02 6416 2142, or Call, Text or WhatsApp 0424 545 654. We'll find a lender suited to your block and your building plans.