How Do Home and Land Package Loans Work?

A home and land package loan sounds like one simple loan for one simple purchase. In practice, it is usually a land loan and a construction loan working together, with the land settling first and the build funded in stages.

That can be confusing when the developer, the builder and the lender all have different timelines. Buyers are often surprised by how much they pay before the build starts, how interest is charged during construction, or that some lenders will not finance certain types of package at all.

How it works depends on the lender, whether the land is titled, the type of building contract, the deposit and the timing of the build.

This guide explains how Australian lenders may assess a home and land package loan, based on lender policy wording we reviewed in October 2026.

How does a home and land package loan work?

Most home and land package loans follow these steps:

1. You sign a land contract and a building contract (or one contract covering both, for some turnkey packages).
2. The lender values the property “as if complete”, based on the land and the building plans.
3. The land settles, funded by your deposit and the land portion of the loan.
4. The builder’s deposit is paid, often from your own funds or as the first draw.
5. The build is funded through progress payments as each stage is completed.
6. After the final payment, the loan usually switches to standard repayments.

Yes, a home and land package may be financed if the lender is satisfied that:

• the land is titled, or will title within the approval period
• the building contract is a fixed-price contract with a licensed builder
• the “as if complete” valuation supports the total cost
• you can service the full loan once construction is complete
• the build will start and finish within the lender’s timeframes
• the contract structure is one the lender accepts

Related research: Can You Get a Construction Loan to Build a House in Australia?

What is a home and land package?

A home and land package pairs a block of land, often in a new estate, with a house design from a builder. Packages are sold by developers, builders and agents, and can be priced as one figure even though they usually involve two contracts.

A turnkey package goes further: the builder completes everything (landscaping, fencing, driveway, window coverings) so you can move in when you get the keys.

Home and land loan vs buying an established home

• Funding: an established home settles in one payment, while a package is paid in stages.
• Interest: during the build you usually pay interest only on the amount drawn so far.
• Valuation: the lender values the finished home before it exists, so a low valuation can create a shortfall.
• Timing: builds can run late, and some lenders set deadlines for starting and finishing.
• Costs: you may pay rent and loan interest at the same time while the home is built.

How do lender policies differ on home and land package loans?

We reviewed policy summaries for 40 Australian lenders (a mix of banks and non-banks) from a third-party broker policy tool, as at October 2026. This is a research sample of 40 lenders, not the whole market.

• 27 of the 40 lenders in our sample have detailed construction lending wording. One more lists construction as a product without detail. 11 of the 40 say they do not offer construction loans, and one has no data.
• 10 of the 40 mention split contracts. Seven say split contracts are not acceptable or excluded (AMP, Granite, St.George, Suncorp Bank, Westpac, WLTH and Zeus). NAB treats them as off-the-plan security. CBA and Macquarie refer to split contracts in multi-unit or multi-property developments.
• 3 of the 40 mention turnkey packages. Firstmac requires investment construction to be on a full turnkey basis. St.George and Westpac state that their construction progress payment policy does not apply to turnkey house and land packages.
• 16 of the 40 set a timeframe for starting or completing the build, ranging from starting within 3 to 12 months and completing within 12 to 24 months.
• 4 of the 40 set out how much can be paid as the builder’s deposit, generally 5% (CBA lists up to 10% in NSW and the ACT, and Firstmac and CBA list 6.5% in WA in some cases).

VMG’s construction wording allows a higher initial LVR (80% against end value) for a package build than for a build that is not a house and land package (70%). Firstmac accepts vacant land only as part of a land and house construction package.

These are examples of how differently lenders approach the same situation. They are not recommendations. Policies change often, so confirm the current position with a broker before you apply.

Policy summary as at October 2026, from a third-party broker policy tool (export dated 20 October 2026). The lender guides behind it are dated between July 2026 and October 2026 for the lenders named on this page. The sample counts on this page cover all 40 lenders, whose guides are dated between October 2025 and October 2026. For example, CBA's guide is dated 7 July 2026. Lender policies change often and may have changed since.

What is a split contract, and why do some lenders avoid it?

“Split contract” is used in different ways. Many buyers use it to mean a separate land contract and building contract. Lenders often use it more narrowly, and how a lender defines it matters.

• AMP describes a split contract as one where the land contract states that a separate contract with a specific builder must be completed.
• Granite and WLTH describe split contracts as transactions that rely on multiple contractual arrangements to complete a single residential security outcome, introducing completion, valuation, enforceability or marketability risk.
• CBA and Macquarie focus on split contracts within multi-unit or multi-property developments.

Separate land and construction loan splits are common. CBA’s wording, for example, says construction loans can finance the purchase of land and building a home using separate loan splits. The issue is usually the way the contracts depend on each other, not simply that there are two of them. Ask the lender how it will treat your contracts before you sign.

Do you need a deposit for a construction loan on a house and land package?

Yes. You typically need a deposit for the land and enough funds or loan approval to cover the full build, plus costs such as stamp duty on the land, legal fees and any upgrades not in the contract.

Many lenders require your own funds to be used first, before loan money is drawn for construction. CBA, Suncorp Bank, Bank of Us, St.George, Westpac, WLTH and Zeus all have wording to this effect.

Related research: Can You Get a Construction Loan with Only a 5% Deposit?

How is the builder’s deposit paid?

The builder usually asks for a deposit when the building contract is signed or when the land settles. State laws cap how much a builder can take. In the lender wording we reviewed, CBA lists the statutory maximum as 10% in NSW and the ACT, 5% in Queensland, Victoria, the NT and Tasmania, and 6.5% or 10% in WA depending on the contract. Firstmac allows up to 5% of the fixed-price contract (6.5% in WA) to be released to the builder at land settlement.

How do progress payments work?

Progress payments are released as the builder completes each stage, commonly the slab or base, frame, lock-up, fixing and completion. The lender may send a valuer to inspect before each payment. Interest is charged only on the amount drawn, so repayments rise as the build progresses.

Related research: How Do Construction Loan Progress Payments Work?

What is a commencement letter or authority to commence construction?

Before the first progress payment, lenders usually need confirmation that the build can start. Depending on the lender, this may include council-approved plans, a building permit, builder insurance and a letter authorising the builder to commence. CBA’s wording, for example, refers to a commencement letter being issued to the builder. The exact documents differ by lender and state.

Can you pay interest only during construction?

Often, yes. Several lenders allow interest-only repayments during the build, then switch to principal and interest. In the construction wording we reviewed, interest-only periods ranged from 12 months to 5 years, depending on the lender and product.

What happens if the build takes longer than expected?

Lenders set deadlines. ANZ, for example, requires construction to start within 12 months of land settlement and finish within 24 months of starting. Other lenders set shorter periods, such as starting within 3 or 6 months. If a build is at risk of running over, the lender may need an extension request, and some may withdraw undrawn funds.

What if the land is not yet titled?

Many estate lots are sold before they title. Lenders often approve the loan conditionally, but approvals expire, and the land may need to be revalued at settlement. If prices fall, the valuation may come in lower.

Related research: Can You Get a Construction Loan for Unregistered Land?

What if the valuation comes in below the package price?

If the “as if complete” valuation is lower than the combined land and build price, the lender bases the LVR on the lower figure. You may need a larger deposit, a smaller build or upgrades removed, or a different lender.

Can first home buyers use the 5% Deposit Scheme for a package?

Scheme rules as at October 2026; check the current rules with Housing Australia. Often, yes, through participating lenders, subject to the scheme’s rules and the lender’s construction policy. Not every participating lender funds construction under the scheme. Gateway, for example, states it does not provide construction loans under the Deposit Scheme. First Home Owner Grant timing also matters: Suncorp Bank notes the grant is not generally available until construction has started, so it cannot be used for the land or the builder’s deposit.

Can you get low doc land and construction loans?

Low doc land and construction loans are offered by fewer lenders. Some alt doc products exclude construction and vacant land, while a small number of non-bank lenders offer construction with alt doc income. If you are self-employed without up-to-date tax returns, check this early.

10 common mistakes with home and land package loans

1. Signing contracts before checking the lender’s contract rules.
2. Assuming the package price will match the valuation.
3. Not budgeting for the builder’s deposit.
4. Forgetting that your own funds are usually used first.
5. Underestimating rent and interest during the build.
6. Ignoring land title timing and approval expiry.
7. Adding upgrades after approval without extra funds.
8. Choosing a non-fixed-price contract when the lender wants fixed price.
9. Missing build start or finish deadlines.
10. Assuming grants will be available at land settlement.

How to improve your chances before applying

• Get the full land and building contracts before you commit.
• Ask the lender how it treats your contract structure.
• Confirm when the land will title.
• Keep a buffer for upgrades, site costs and delays.
• Check the builder’s licence and insurance.
• Sort out living arrangements for the build period.

Is it worth waiting for the land to title?

Sometimes. Waiting can reduce valuation and approval-expiry risk, but you may lose the lot or face price rises. A broker can explain how long an approval is likely to last with different lenders.

Example scenarios

Scenario 1: First home buyer with titled land

A first home buyer signs for a titled estate lot and a fixed-price build. The land settles, the builder’s 5% deposit is paid, and progress payments follow. This is the most straightforward case.

Scenario 2: Unregistered estate lot

A buyer signs for a lot that will title in 10 months. The lender’s approval may expire before then, so the loan may need to be reassessed closer to settlement.

Scenario 3: Investor buying a turnkey package

An investor wants a fully finished turnkey package. Some lenders require investment construction to be turnkey, while others treat turnkey packages outside their standard construction policy.

Scenario 4: Build price higher than valuation

The package costs $40,000 more than the valuation. The buyer may need to cover the gap with savings or reduce the build specification.

So, how do home and land package loans work?

A home and land package loan usually funds the land first and the build in stages, with interest charged on what has been drawn.

The strongest applications usually have:

• titled land or a short title timeframe
• a fixed-price contract with a licensed builder
• a valuation that supports the total price
• savings for the deposit, builder’s deposit and costs
• a buffer for delays and variations
• a lender whose policy accepts the contract structure

Need help with a home and land package loan?

A Fundd mortgage broker can help you compare options and check whether current lender policies may suit your house and land package. We can review your contracts, deposit and timeline with you before you apply, ideally before you sign.