Financing a house and land package works differently to buying an established home
You'll need pre-approval that accounts for both the land purchase and the construction contract, and your lender will release funds in stages as the build progresses rather than as a single settlement. Most lenders require a minimum 10% deposit for house and land packages, though the Australian Government 5% Deposit Scheme can reduce that requirement for eligible first home buyers. Your application will be assessed on the total contract value, and the construction timeline directly affects when you'll start making repayments.
Why house and land packages in Morningside and nearby suburbs appeal to first home buyers
Morningside sits close to the CBD with access to the Gateway Motorway and established schools, making it attractive to buyers who want proximity without the price premium of inner-city suburbs. House and land packages in surrounding growth areas offer a way into the market with stamp duty relief on the land component and access to the Queensland First Home Owner Grant of $15,000 for new builds. The full transfer duty concession on new homes in Queensland, which applies with no price cap for contracts signed from 1 May 2025, removes one of the largest upfront costs and can make the total outlay comparable to purchasing an established property once deposit, duty, and settlement costs are combined.
How lenders assess house and land package applications
Lenders evaluate your application based on the combined land and construction contract value. Your borrowing capacity is calculated using your income, existing debts, and living expenses, with the serviceability buffer set at 3.0 percentage points above the loan product rate. If the total contract is $700,000 and you're applying with a 10% deposit, you'll need $70,000 plus settlement costs for the land and enough funds to cover progress payments during construction. Lenders also consider the builder's credentials, the construction timeline, and whether the contract price is fixed or subject to variation. Some lenders will approve based on the contract price, while others may order a valuation that assesses the land value at purchase and the projected 'as if complete' value of the finished home.
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What to expect during the progress payment stage
Once the land settles, construction begins and the lender releases funds in stages aligned with the building contract milestones. Typical stages include slab down, frame up, lock-up, fixing, and practical completion, though the exact schedule depends on the builder and lender. During construction, you'll generally pay interest only on the amount drawn down so far. Consider a buyer who purchases land for $300,000 and has a construction contract of $400,000. At slab stage, the lender might release $100,000, bringing the total loan drawn to $400,000. The buyer pays interest on that $400,000 until the next drawdown, when the loan balance increases again. This continues until practical completion, at which point the loan converts to principal and interest repayments unless you've arranged an interest only period with your lender.
Fixed rate, variable rate, or split loan structures for construction
During the construction phase, most lenders will only offer a variable rate because the loan balance changes with each progress payment. Once construction is complete and the loan is fully drawn, you can lock in a fixed rate if that suits your circumstances. A split loan structure, where part of the loan is fixed and part remains variable, becomes available at that point and can offer a balance between rate certainty and the flexibility of an offset account on the variable portion. If you're planning to use an offset account to reduce interest during the construction period, confirm with your lender that the product supports offset functionality from the first drawdown, as not all construction loans do.
How the Queensland First Home Owner Grant and stamp duty concessions apply
The Queensland FHOG provides $15,000 for new homes valued under $750,000 for contracts signed from 1 July 2026. The grant applies to the total contract value, including both land and construction. The first home new home concession removes transfer duty on the residential land component entirely, with no price cap for contracts signed from 1 May 2025. You'll still pay duty on any non-residential component, but for a standard house and land package, the concession typically reduces duty to nil. These concessions can be used alongside the Australian Government 5% Deposit Scheme, which allows eligible first home buyers to purchase with a 5% deposit without paying Lenders Mortgage Insurance, provided the total contract value is within the Queensland price cap of $1,000,000 for capital cities and regional centres or $700,000 for other areas. Brisbane, Gold Coast, and Sunshine Coast are classified as capital cities and regional centres under the scheme.
What happens if the build is delayed or the contract price increases
Most fixed-price building contracts lock in the construction cost, but variations requested by the buyer or unforeseen site conditions can increase the total. If the contract price rises after your loan is approved, you'll need to apply for a top-up, which requires reassessment of your serviceability. Build delays extend the interest only period and push out the date when principal and interest repayments begin. Some buyers assume this reduces their repayment burden, but a longer construction phase means more interest accrues without reducing the loan balance. If the delay is significant, speak with your broker about whether the approval conditions or product rate are still aligned with your circumstances, as pre-approvals are typically valid for three to six months and rates can move during that window.
Choosing a lender that understands construction lending
Not all lenders offer the same level of support for house and land packages. Some have dedicated construction teams that manage progress inspections and drawdown requests directly with the builder, while others require you to coordinate each stage and submit documentation manually. Turnaround times for progress payments vary, and a lender that takes three weeks to release funds at each stage can delay your build and frustrate your builder. When comparing home loan options, ask about the lender's construction process, whether they use an in-house valuer or a third party for progress inspections, and how quickly they typically release funds once a stage is certified. A construction loan from a lender experienced in managing house and land packages in Queensland will make the process more predictable.
Call one of our team or book an appointment at a time that works for you. We'll help you structure your application, compare lenders that support house and land packages, and make sure your pre-approval covers both the land settlement and the full construction contract.
Frequently Asked Questions
Can I use a 5% deposit to buy a house and land package in Queensland?
Yes, the Australian Government 5% Deposit Scheme is available for house and land packages provided the total contract value is within the Queensland price cap of $1,000,000 for Brisbane, Gold Coast, and Sunshine Coast, or $700,000 for other areas. Both the purchase price and the lender's assessed value must be at or below the cap.
Do I pay principal and interest repayments during construction?
No, during the construction phase you typically pay interest only on the amount drawn down so far. Once construction reaches practical completion and the loan is fully drawn, the loan converts to principal and interest repayments unless you've arranged an ongoing interest only period with your lender.
Can I lock in a fixed rate during the construction phase?
Most lenders only offer variable rates during construction because the loan balance changes with each progress payment. Once construction is complete and the loan is fully drawn, you can lock in a fixed rate or choose a split loan structure if that suits your circumstances.
What stamp duty do I pay on a house and land package in Queensland?
For contracts signed from 1 May 2025, the first home new home concession provides full transfer duty relief on the residential land component with no price cap. You'll still pay duty on any non-residential component, but for a standard house and land package, the concession typically reduces duty to nil.
What happens if my builder delays the construction timeline?
Build delays extend the interest only period and push out the date when principal and interest repayments begin. More interest accrues without reducing the loan balance. If the delay is significant, check with your broker whether your pre-approval conditions or product rate are still current, as pre-approvals are typically valid for three to six months.
