Buying vacant land can be one of the smartest moves in Australian property. Whether you want to build your dream home, hold land as a long-term investment, or develop a site for future profit, the opportunity is real. But here is where most buyers get stuck financing it.
Getting a loan for vacant land is not the same as getting a standard home loan. Banks see land differently to houses. There is no structure generating rental income, no established property to value easily, and in many cases, no clear timeline for development. All of this makes lenders more cautious, and it means borrowers need to understand the rules before they apply.
This guide walks you through how vacant land loans work in Australia, what lenders look for, and why non-bank lenders like Credit Connect Group (CCG) can provide a faster, more flexible path to securing the finance you need.
What is a vacant land loan?
A vacant land loan is a type of property finance used to purchase land that does not have any existing structures on it. Unlike a standard home loan, which is secured against both land and a dwelling, a vacant land loan is secured against the land only.
In Australia, you can access a vacant land loan through major banks, non-bank lenders and private lenders. Each will assess the loan differently, but the fundamentals are the same: the lender advances you the capital to purchase the land, and the land acts as security for that loan.
If you plan to build on the land relatively soon, a land loan or a construction loan may be more suitable. In this case, the first drawdown is typically used for the land purchase, with remaining funds released in stages as construction progresses. But if you are buying land without immediate plans to build, a standalone vacant land loan is typically the right option.
How do lenders assess a land loan in Australia?
When you apply for a land loan, lenders evaluate the deal differently compared to a standard mortgage. Since vacant land carries more risk from the lender’s perspective (no building means no rental income and a potentially harder resale), the assessment criteria are more detailed.
Here are the key factors lenders consider:
Loan-to-Value Ratio (LVR)
The LVR is the most important number in any land loan application. It represents the percentage of the land’s value that the lender is willing to finance.
For vacant land, LVRs are typically lower than for established properties. Most banks will lend up to 80–90% of the value for standard residential land, but once you move into rural, large-acreage, or more complex zoning categories, that ratio drops significantly. Private and non-bank lenders generally work within a 50–70% LVR range for vacant land, depending on the type, location and overall risk profile of the asset.
A lower LVR provides a margin of safety for the lender, which is why having a clear understanding of the land’s market value and development potential is so important before you apply.
How much deposit do you need for a land loan?
The deposit you need for a land loan depends on the lender and the type of land you are buying. As a general guide:
- Residential zoned land (banks): Typically 10–20% deposit. Some banks will go as low as 5–10% with Lenders’ Mortgage Insurance (LMI), though LMI on vacant land is often more expensive or harder to obtain than on established property.
- Residential zoned land (non-bank lenders): Usually 30–50% deposit, reflecting the lender’s 50–70% LVR on the land value.
- Rural, large-acreage, or specialised land: Deposits of 40–50% are common across both bank and non-bank lenders due to the higher risk profile and thinner market for these assets.
It is worth noting that stamp duty, legal fees and valuation costs are additional expenses on top of your deposit. Factoring these into your budget early will help avoid surprises at settlement.
Lenders’ Mortgage Insurance (LMI) on land loans
If you are borrowing more than 80% of the land’s value through a bank, you will likely need LMI. This is an insurance premium that protects the lender (not you) in case of default.
LMI on vacant land loans tends to be more expensive than on established properties, and some insurers will not cover land at all. This is one reason many borrowers choose to save a larger deposit or explore non-bank lending options that do not require LMI.
Exit strategy
Every land loan application needs a clear exit strategy. This is how you plan to repay the loan. Common exit strategies include selling the land, refinancing to a long-term mortgage once construction is complete, or using proceeds from another property sale.
Non-bank lenders tend to place particular emphasis on the exit strategy when assessing land loan applications. At CCG, for example, the exit strategy is a core part of how we assess every deal, because it directly relates to how and when the borrower’s capital will be returned.
What types of land can you finance?
Not all vacant land is treated the same by lenders. The type of land you are buying has a direct impact on your loan terms, LVR, and the likelihood of approval. Here are the main categories:
- Registered residential land: This is the most straightforward type to finance. The land is titled, serviced with utilities (water, sewer, power), and zoned for residential use. Banks and non-bank lenders alike are most comfortable with this type.
- Englobo land: This is a larger parcel that has not yet been subdivided or serviced. It is typically purchased for future subdivision and development. Banks are generally reluctant to finance undeveloped land, but non-bank lenders with property development expertise can often assist.
- Land with development approval (DA): Vacant land that already has a Development Application or Planning Permit approval is considered lower risk, because the path to adding value is clearer. This often results in better loan terms.
- Rural and agricultural land: Financing rural land is more complex. Factors like lot size, access to services, environmental overlays and distance from population centres all come into play. Specialist lenders are typically needed.
- Commercial and industrial zoned land: Land zoned for commercial or industrial purposes can be financed, but it typically requires a commercial lending arrangement rather than a standard land loan.
Other factors that influence a lender’s appetite include easements or restrictions on the title, environmental considerations such as contamination or bushfire risk, and the local supply and demand dynamics for land in that area.
Bank vs non-bank: which lender is right for your land purchase?
Choosing between a bank and a non-bank lender for your land purchase comes down to your circumstances, timeline and the type of land you are buying.
When a bank might suit
Banks are a solid option if you are purchasing standard residential land, have a strong credit history, can provide a 10–20% deposit, and are comfortable with a longer approval process. Bank land loans often come with lower interest rates and terms of up to 30 years. However, banks can be rigid in their criteria and slow to process applications, particularly for anything outside the standard residential land profile.
When a non-bank lender makes more sense
Non-bank and private lenders are designed for borrowers who need speed, flexibility, or who are purchasing land that falls outside a bank’s comfort zone. According to PEXA’s Property Insights report, over a quarter of all property settlements in Victoria and Queensland during June 2025 were for vacant lots, highlighting just how active the land market is. For many of these transactions, timing is critical.
A non-bank lender like CCG offers several advantages for land finance:
- Speed: While banks can take four to six weeks just to assess a loan, CCG can provide indicative approvals within 24 hours and settle in as little as one week.
- Flexibility: Each loan is assessed on its own merits rather than through rigid credit scoring models. This means borrowers with unique circumstances or non-standard land types can still access finance.
- Asset-based assessment: Non-bank lenders focus more on the quality and value of the security (the land) and the strength of the exit strategy, rather than just the borrower’s income documentation.
- Tailored terms: Loan structures can be customised to suit the borrower’s specific timeline and objectives, whether that is a short-term hold, a bridging arrangement, or finance for a development pipeline.
What about using a land loan for development?
Many buyers purchase vacant land with the intention of developing it, whether that means building a single home, subdividing into multiple lots, or constructing a multi-unit project. The finance structure you choose should reflect your development timeline and goals.
For straightforward builds, a land and construction loan may be the simplest path. You purchase the land, then draw down additional funds in stages as the build progresses.
For more complex projects, such as subdivision or multi-dwelling development, you may need a combination of land acquisition finance, development finance and potentially bridging finance to manage cash flow between stages. This is where working with a lender that understands the full lifecycle of property development becomes invaluable.
CCG provides a range of secured lending solutions including land acquisition, construction loans, development finance, residual stock loans and second mortgage facilities. Every loan is secured by Australian real estate, giving both borrowers and our investor network confidence in the structure.
What should brokers know about presenting land loan deals?
For mortgage and finance brokers, vacant land deals require a different approach compared to standard residential files. Here are some practical tips for getting land deals across the line:
- Know the lender’s criteria before you submit. Every lender has a different appetite for land. Understand their requirements around location, zoning, lot size, development approvals and access to utilities. Submitting a deal that falls outside a lender’s parameters wastes everyone’s time.
- Address risks upfront. If there are any issues with the land, such as environmental overlays, easements, bushfire risk or limited services, raise them in the initial submission. Providing supporting documentation like valuation reports, geotechnical assessments and feasibility studies shows the lender you have done your homework.
- Present a clear exit strategy. The exit is just as important as the entry. Whether the client plans to build, sell or refinance, articulating a realistic and well-supported exit strategy significantly improves the likelihood of approval.
- Educate your clients. Many borrowers do not understand how land finance differs from a home loan. Help them set realistic expectations around deposits, timelines and the documentation required. A well-prepared borrower makes for a smoother process for everyone.
What documents do you need for a vacant land loan?
While exact requirements vary between lenders, most will ask for the following when you apply for a loan to buy land:
- Proof of identity and current address
- Statement of assets and liabilities
- Income verification (tax returns, financial statements, or accountant’s letter)
- Contract of sale for the land
- Details of the land including zoning, lot size and title information
- A professional property valuation
- Development approvals or building plans (if applicable)
- A clear exit strategy outlining how the loan will be repaid
Having this documentation ready before you approach a lender can significantly speed up the approval process.
How CCG can help with your land finance
At Credit Connect Group, we specialise in fast, flexible, secured property finance that traditional banks often cannot provide. Our loans are secured by Australian real estate and funded by our network of sophisticated private investors, including high-net-worth individuals, family offices and SMSFs.
If you are looking to purchase vacant land, whether for investment, development or a future build, our team can discuss your scenario and tailor a lending solution to suit your needs.
Curious about how we could help finance your land purchase? Get in touch with our team on 1300 795 507 or submit a loan enquiry through our website.
Disclaimer: This article is for general informational purposes only and does not constitute financial, legal, or investment advice. All loan applications are subject to CCG’s standard credit assessment and suitability criteria. Terms, conditions, fees and charges apply. Borrowers should seek independent financial and legal advice before entering into any loan agreement.
