How much deposit you need for a house and land package depends on how you buy, what you’re after and your mortgage lender's requirements.

One thing’s for sure: the greater the deposit you can afford, the lower the repayments and interest accumulated across the life of the loan.

The Short Answer: It Depends How You Buy

When it comes to buying a house and land package, there are two options.

1. You have either a turnkey house and land package where it’s bundled together, and there’s a single deposit.
2. The other alternative is buying the house and land separately, with deposits for the two transactions being calculated differently.

Each option has its pros and cons that will suit different buyers. 

Deposit when buying a turnkey house and land package

The deposit when buying a turnkey house and land package is calculated as 10% of the total cost.

The term “turnkey” simply means buying a property that comes equipped with the necessary features, amenities and appliances needed. The cost to buy covers the land and the build. It makes the process simpler, particularly for those new to building or buying. There are still two contracts, and each purchase is financed separately. However, the entire transaction occurs in one process.

Deposit when buying the land separately 

When buying the land and house separately, the minimum deposit for the land is 5% for land up to a 95% Loan-to-Value Ratio (LVR).

Loan-to-Value Ratio (LVR) is a percentage comparing the amount you want to borrow relative to the appraised value of the land. For land purchases, due to being harder to sell than an already built home, lenders often view vacant land as higher risk and may cap your LVR lower (Such as 70% to 80%) depending on the size and location of the block.

Why House and Land Packages Have Two Deposit Calculations

With a house and land package, there are two separate contracts.

Firstly, the land and the build are priced and assessed independently by lenders. Sometimes the lender will value the land differently to the agreed price with the landowner, or they will value the completed building differently to the cost-to-build. It is the lender's valuations that matter when it comes to loans.

The land deposit is paid to the developer when you secure the block and usually placed at 5% to 10% of the land price. Also, the land purchase settles first, before construction begins. This means the two financial commitments happen at different times. Once settlement on the land occurs, the balance owing on the site is payable.

The building deposit is paid to the builder once home designs and inclusions are finalised, typically set around 5% of the construction value. Once construction begins, progress payments are made at specific milestones, rather than an upfront lump sum.

Deposit for the Land Component

Depending on your financial position, lenders' requirements and government rules, buyers can borrow up to 95% of land value. 

Land Value	Deposit %	Deposit $	Balance Owing
$400,000	5	$20,000	$380,000
$400,000	10	$40,000	$360,000
$400,000	15	$60,000	$340,000
$400,000	20	$80,000	$320,000

Deposit for the Construction Component

When determining the deposit for the construction component of a house and land package, your Lender uses the lower of bank valuation or building contract price. For example, the builder contract price may be $400,000 whereas the bank values the finished build at $500,000. In this instance, the lender will require a deposit calculated on $400,000. This means based on a 5% deposit, your upfront payment to the lender would be $20,000.

How the Builder's Deposit Differs From Your Lender's Deposit

The builder deposit is calculated based on their contract price and payable directly to them as an upfront, out-of-pocket amount to secure your building contract. Generally, it is used for initial administrative costs and preliminary works.

The lender's deposit is the total equity percentage (Typically 5% to 20%) required by your bank to approve your overall home and land finance.

Can the First Home Owner Grant Reduce Your Deposit?

Yes, the First Home Owner Grant (FHOG) can reduce your deposit, but it depends on whether your lender allows it to count toward your exchange or settlement deposit, or treats it strictly as a post-settlement rebate. It’s important to note that the FHOG applies to the build, not vacant land and is paid at first drawdown.

Some lenders may accept the upcoming grant funds to lower your required upfront cash contribution or deposit. This is relatively uncommon - more often lenders require you to pay the entire deposit out of pocket first, then pay the grant directly to you only after the property deal officially settles.

Also worth noting is that eligible Queensland first home buyers pay no stamp duty on new homes or vacant land, and if you’re not a first home buyer, when you buy a house and land package, stamp duty is only applicable on the land component.