Property Type and Security Lending
Straight answers for when the borrower is fine but the property is the sticking point, from small apartments and restricted postcodes to acreage, non standard builds, vacant land and multi dwelling properties. General information, current for 2026.
Sometimes a loan is held up not by the borrower but by the property: a small apartment, a restricted postcode, a rural lifestyle block, a custom or owner builder construction, vacant land, multiple dwellings on one title, or a co-living or rooming house. Lenders set minimum sizes, postcode lists, land limits and dwelling thresholds differently, so a property one lender declines may be fine with another. These guides explain each, current for 2026. General information, not advice.
Clear answers to common questions about financing non standard properties in Australia: small apartments, restricted postcodes, hobby farms and rural lifestyle blocks, custom and cost plus construction, owner builder loans, vacant land without a build requirement, multiple dwellings on one title, and co-living or rooming houses. These describe the kinds of lender policies that exist, which vary by lender and change over time. General information, not advice.
Sometimes the borrower is fine but the property is the issue
Small apartments, restricted postcodes, acreage, multi dwelling properties and rooming houses can all trigger tighter lending, even for a strong borrower. The property type and security are what the lender is reacting to.
Lenders draw lines in different places
Minimum apartment sizes, restricted postcode lists, rural land size limits and dwelling count thresholds are all set by each lender and differ, so a property one lender declines may be fine with another.
Non standard builds need the right lender
Custom, cost plus and owner builder construction sit outside the simplest fixed price box, and vacant land terms vary. Some lenders accommodate these with extra conditions, others do not.
Deposit and income treatment can shift
Unusual properties may need a larger deposit, and rental income from multi dwelling or co-living properties is often shaded, so the headline yield does not always translate fully into borrowing power.
Where to get help
These are general guides, not advice. A broker can match the specific property to a lender whose policy accepts it, usually at no cost to you, and you should seek separate advice on any regulatory requirements.
- When a strong borrower is declined, the property type or security is often the reason, from small apartments to restricted postcodes and acreage.
- Lenders set minimum apartment sizes, restricted postcode lists, rural land limits and dwelling count thresholds differently, so a property one lender declines may be fine with another.
- Custom, cost plus and owner builder construction need the right lender and extra conditions, and vacant land may or may not require you to build.
- Multiple dwellings on one title are usually residential up to a threshold, above which the loan can become commercial, with the line varying by lender.
- Co-living and rooming houses are specialised, with cautious mainstream lenders, specialist policies, and rental income often shaded.
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Property Type and Security Lending: common questions
Can I get a home loan for a small apartment under 40 square metres?
It can be harder, but it is often possible. Many lenders set a minimum internal living area, commonly around 40 or 50 square metres, below which they may decline or require a larger deposit. Some lenders are more flexible with small apartments than others. The exact minimum and how the area is measured vary by lender, so finding the right one matters.
Why do some postcodes have home loan lending restrictions?
Some lenders apply postcode based restrictions, such as a lower maximum loan to value ratio or a larger deposit requirement, in areas they consider higher risk, often due to perceived oversupply of high density apartments. These restricted postcode lists differ between lenders and change over time, so a postcode that one lender restricts may be fine with another.
Can I get a home loan for a hobby farm or rural lifestyle block?
Often yes. Some lenders will finance rural lifestyle blocks and hobby farms on residential loan terms up to a certain land size, commonly measured in hectares, without treating the property as a commercial farm. Above their size limit, or where the land is used for genuine primary production, a rural or commercial loan may be needed. Limits and treatment vary by lender.
Can I finance a custom or cost plus building contract?
Most construction lending is built around fixed price building contracts, which lenders prefer because the cost is certain. Some lenders will finance custom architectural builds or cost plus contracts, where the final cost is not fixed, but generally with more scrutiny, conditions and sometimes a larger contingency. Whether a lender will do this, and on what terms, varies.
Can I get a loan as an owner builder?
Owner builder loans, where you act as the builder managing your own construction, are offered by fewer lenders and on tighter terms. Lenders generally require a larger deposit, meaning a lower maximum loan to value ratio, evidence of the relevant owner builder permit and your capability, and they manage progress payments carefully. Whether a lender offers this, and the conditions, varies.
Can I buy vacant land without committing to build?
Often yes. Some lenders will finance vacant residential land without requiring you to start construction within a set time, while others attach a condition to build within a period, commonly a year or two. Treatment depends on the land, its zoning and the lender. A larger deposit is sometimes required for land, so it is worth checking the terms.
Can I finance multiple dwellings on one title?
Often yes, up to a point. Some lenders will finance a limited number of dwellings on a single title, such as a duplex or a home with a granny flat, on residential loan terms. Above a certain number of dwellings, commonly more than two or three, the loan may be treated as commercial. The threshold and treatment vary by lender.
Can I get a home loan for a co-living or rooming house?
It is more specialised. Many mainstream lenders are cautious about co-living and rooming house arrangements, where a property is rented by the room to multiple unrelated tenants, because of the higher management and resale considerations. Some specialist lenders have policies for them, and the rental income treatment and loan terms vary. The right lender and structure matter.
General information only. This page provides general information about home loans and is not financial or credit advice, a quote, or a guarantee, and your personal circumstances have not been considered. Lending policies, interest rates, fees and eligibility vary by lender and change over time. Always confirm your own situation with a licensed mortgage broker or lender before acting. Ross McFarlane (Credit Representative 526725) is an authorised Credit Representative of Australian Associated Advisers Pty Ltd t/a Keylend, Australian Credit Licence 392169.