Buying land as a first home buyer
By Ali Hasani, Founder and Principal Mortgage Broker at Buyvest, MFAA accredited. Last updated July 2026. Lender land policies and council controls vary and change.
This guide covers the three types of land, how a land loan differs from a home loan, what duty and holding costs apply in NSW, what makes a block buildable, and how long the whole thing takes.
The short version: A 20% deposit is a common minimum on a land-only loan, against 95% LVR on many home loans, and LMI is not always available. Buying land with a building contract opens the 5% Deposit Scheme where land alone does not. Vacant land duty is exempt only to $350,000 with a concession under $450,000. From purchase to moving in is commonly 18 to 24 months.
What types of land can you buy?
Land is sold as registered, unregistered, or as part of a house and land package. Registered land has title and services in place and can be built on straight away. Unregistered land is cheaper but the timing depends on the developer.
Registered land is the simplest. Title is recorded, boundaries are surveyed, and water, sewer, power and communications reach the block. Settlement completes and building can begin. Lenders treat it as the least risky of the three, which shows up in the terms.
Unregistered land sits inside a subdivision the developer has not finished. The price is lower for a reason: registration can slip, specifications can change before the plan is recorded, and the whole timeline sits with someone else. A house and land package bundles the block with a builder, which simplifies the finance and narrows the design choices at the same time.
How does a land loan work?
A land loan uses the block itself as security, and lenders treat it as higher risk than a house. A 20% deposit is a common minimum where a home loan can go to 95%, and many lenders write in a deadline to start building.
This is where buying land diverges most sharply from buying a house, and it is the part that catches people. A land loan is secured against a block with nothing on it, which a lender cannot rent out, cannot easily value against close comparables, and cannot sell as quickly if things go wrong. The terms reflect that.
A 20% deposit is a common minimum with mainstream lenders on standard residential land, where the same borrower might access 95% LVR on a house. Rural, oversized or unusually zoned blocks drop lower again. And lenders mortgage insurance is not a reliable fallback: not every insurer covers vacant land, and those that do apply their own restrictions, so a deposit under 20% needs checking rather than assuming.
Two conditions catch buyers out. Many land loans carry a requirement to commence construction within a set window, commonly two to five years from settlement. And lenders generally require all-weather road access, meaning a council-maintained sealed or gravel road. A block reached by an unformed track or an easement across a neighbour's land can be unacceptable security whatever the price.
The one that changes the arithmetic: the Australian Government 5% Deposit Scheme covers vacant land bought with a building contract, not land on its own. Same buyer, same block: 5% with a contract in place, or a common minimum of 20% without one. Where the land and build are separate contracts, both count towards the price cap together.
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What does it cost to buy and hold land?
Beyond the purchase price, vacant land attracts transfer duty above the first home buyer thresholds, council rates from the day you own it, and interest on the loan for the whole holding period, while the block generates neither income nor shelter.
Transfer duty on vacant land works on its own thresholds. Under the First Home Buyers Assistance Scheme, vacant land is exempt up to $350,000, with a concession applying under $450,000 and nothing above that. Most Sydney blocks clear the concession range, so duty is payable in full on the land, which is worth modelling rather than assuming away.
Against that, the NSW First Home Owner Grant of $10,000 applies where land and building contract combined come to $750,000 or less, and it is one of the few routes to the grant.
Holding costs run from settlement. Council rates apply whether or not anything is built. Interest accrues on the land loan for the entire period. Land tax may apply depending on your total landholdings and how the land is held, and exemptions and concessions exist. Tax outcomes turn on personal circumstances, so a conversation with your accountant or financial adviser is worthwhile. Our budgeting guide covers the wider cost picture.
What affects whether a block can be built on?
Soil, slope, services, zoning and access decide what a block costs to build on and whether it can be built on at all. Reactive soil, a steep fall, or services that stop at the boundary all add cost before a single wall goes up.
The block sets the build cost before a builder quotes. Reactive or unstable soil drives foundation design and can add tens of thousands. A slope means earthworks and retaining. Services that stop at the boundary, or do not reach it at all, mean connection costs that vary enormously between estates and infill sites.
Then the constraints. Bushfire prone land imposes construction standards and affects insurance. Flood mapping can rule out residential development entirely. Easements let utilities cross the block and limit where a house can sit. Covenants from earlier transactions can dictate materials, size or design. Zoning, setbacks and height limits define the building envelope. Our location and condition guide covers hazard checking, and the bank valuation on land turns on these same factors.
What can you build on the land?
Zoning and lot size set the limits. A single home is the baseline, and some blocks permit a secondary dwelling or two living spaces on one title. Council controls, setbacks, height limits and covenants narrow it further from there.
One dwelling is the baseline on most residential blocks. Beyond that, a secondary dwelling can add rental income or accommodate family, and some blocks permit two living spaces on a single title. Each option depends on zoning, minimum lot size, frontage and the local council's controls, which differ between council areas and change with planning policy.
Lending treats a build differently from a purchase. Construction finance draws down in stages against completed work rather than settling in one amount, which our construction guide covers in full. Whether a lender counts expected rent from a secondary dwelling toward serviceability varies, so it is a question worth asking before the plans are drawn.
How long does it take from land to moving in?
On registered land, design commonly runs 2 to 6 months, council approval another 2 to 6, and construction 6 to 12. Total from purchase to occupancy is commonly 18 to 24 months, and unregistered land adds the wait for registration.
The sequence is design, approval, then build, and each stage has its own variability. Design and documentation commonly take 2 to 6 months depending on how custom the home is. Council approval takes another 2 to 6 months, faster where the design fits a complying development pathway and slower where it needs a full development application. Construction runs 6 to 12 months for a standard home.
Unregistered land adds registration ahead of all of it, and that timeline belongs to the developer. Builder availability moves with the market. The practical consequence is that a land purchase commits you to somewhere else to live for a year or two, and to loan repayments on a block you cannot occupy while you pay them.
Frequently asked questions
How much deposit do you need for a land loan?
A 20% deposit is a common minimum with mainstream lenders on standard residential land, against 95% LVR available on many home loans. Rural, large or unusually zoned blocks attract lower maximum LVRs again. Lenders mortgage insurance is not always available on vacant land.
Can you use the 5% Deposit Scheme to buy land?
Only with a building contract. The Australian Government 5% Deposit Scheme covers vacant land purchased together with a contract to build, not land bought on its own. Where the two are separate contracts, the land price and build cost count towards the price cap together.
Do you pay stamp duty on vacant land in NSW?
Under the First Home Buyers Assistance Scheme, vacant land is exempt from transfer duty up to $350,000, with a concession applying under $450,000 and no relief above that. Most Sydney blocks sit above the concession range, so duty applies in full on the land.
Do lenders require you to build within a certain time?
Often. Many land loans carry a condition requiring construction to commence within a set window, commonly two to five years from settlement. The terms vary by lender, so the build timeline is worth confirming before signing rather than after.
What is the difference between registered and unregistered land?
Registered land has title recorded, boundaries surveyed and services connected, so building can start after settlement. Unregistered land is part of a subdivision not yet recorded, usually cheaper, with timing tied to the developer completing registration and specifications able to change before then.
Does road access affect whether a lender will accept a block?
Yes. Lenders generally require all-weather road access, meaning a council-maintained sealed or gravel road. Access over an unformed track, an un-gazetted road, or an easement across a neighbouring property can make a block unacceptable as security regardless of its price.
How long does it take from buying land to moving in?
On registered land, design commonly runs 2 to 6 months, council approval another 2 to 6 months, and construction 6 to 12 months. Total from purchase to occupancy is commonly 18 to 24 months. Unregistered land adds the wait for the plan to be registered.
Do you pay land tax on vacant land?
Land tax may apply depending on your total landholdings and how the land is held, and exemptions and concessions exist. The outcome turns on personal circumstances rather than a general rule.
Take the next step
On a land purchase the finance question comes before the block question, because the deposit and the build-start condition shape what is reachable. Our pre-approval guide covers borrowing capacity, our LVR guide covers the thresholds, and our property type guide compares building against buying established. Model the numbers with our property deposit calculator and mortgage repayment calculator.
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Email: hello@buyvest.com.au
Related resources for first home buyers
Construction guide | Property type comparison | Freestanding properties | NSW stamp duty | First Home Owner Grant | Bank valuations | First home buyers journey
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This article is general information only and does not take your personal circumstances into account. Land loan deposit requirements, maximum LVRs, lenders mortgage insurance availability, build-start conditions and access requirements vary between lenders and change over time. Duty thresholds, zoning and council controls described here are specific to New South Wales. Figures were verified in July 2026 against Revenue NSW First Home Buyers Assistance Scheme and First Home Owner Grant thresholds, the Australian Government 5% Deposit Scheme property price caps published on firsthomebuyers.gov.au, and published lender guidance on vacant land lending. Confirm your position with a licensed broker, lender or town planner before relying on it. Ali Hasani is an Authorised Credit Representative (CRN 567392) of Connective Credit Services Pty Ltd (Australian Credit Licence 389328).
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