Everything You Need to Know About House and Land Packages

Purchasing a house and land package as your first home puts you in control of every decision from the block you choose to the floor plan that suits your lifestyle. Your eligibility for the Australian Government 5% Deposit Scheme, the Western Australian FHOG, and the FHOR concession means you can enter the market with less upfront capital and zero stamp duty if your contract is structured correctly.

Why First Home Buyers in Ellenbrook East Choose House and Land Packages

Ellenbrook East sits within the broader Ellenbrook 6069 suburb, a master-planned growth corridor 30 kilometres north-east of Perth CBD. The precinct attracts first home buyers because it delivers modern homes on titled or near-titled land at price points that align with both the Australian Government 5% Deposit Scheme cap of $850,000 and the Western Australian FHOG threshold of $800,000 south of the 26th parallel. Connectivity improved materially when the Ellenbrook train line opened in December 2024, reducing commute times to the city and making the area viable for professionals working in metropolitan Perth.

Consider a buyer who contracts a house and land package valued at $780,000 in Ellenbrook East, with the land settling first and construction commencing shortly after. That buyer can access the full $10,000 FHOG, pay zero transfer duty under the FHOR, and finance the purchase with a 5% deposit through the Australian Government scheme. The alternative of purchasing an established home in the same corridor eliminates FHOG eligibility and triggers stamp duty once the property value exceeds $600,000 under the current FHOR threshold. The structure of the house and land contract determines whether you capture both benefits or forfeit one.

How the Land and Construction Contracts Are Structured

A house and land package involves two separate contracts: one for the purchase of vacant land and one for the construction of a home on that land. The land contract settles first, transferring the title into your name. The construction contract is a separate obligation between you and the builder, with payments drawn progressively as each stage is completed. The sequencing of these two contracts is why banks and government agencies treat house and land packages differently from turnkey purchases.

Your lender will require pre-approval for the full project value before you sign either contract. Most participating lenders under the Australian Government 5% Deposit Scheme will finance both the land and the construction as a single facility, releasing funds to settle the land and then advancing construction payments according to the builder's progress schedule. You do not need two separate loans, but you do need to structure the approval so the lender's valuer assesses both the land at current value and the completed home at "as if complete" value.

FHOG and FHOR Eligibility for House and Land Packages

The Western Australian FHOG of $10,000 applies only to new homes. A house and land package qualifies as a new home because you are building on vacant land. To remain eligible, the combined contract value (land plus construction) must not exceed $800,000 south of the 26th parallel or $1,000,000 north of it. Ellenbrook East sits well south of the 26th parallel, so the $800,000 cap applies. You must also occupy the completed home as your principal place of residence for at least six continuous months commencing within 12 months of completion. This occupancy requirement is enforced by RevenueWA and applies to every first home buyer accessing the grant.

The FHOR concession for Western Australian first home buyers removes transfer duty entirely on homes valued up to $600,000 and applies a concessional rate on homes valued between $600,001 and $800,000. For vacant land purchased separately, no duty is payable on land valued up to $450,000, with a concessional rate applying on land valued between $450,001 and $550,000. When you contract a house and land package where the land value sits below $450,000 and the completed home value sits below $800,000, you pay zero duty on the land settlement and the construction contract is not a dutiable transaction. This structure delivers a stamp duty saving that can exceed $25,000 compared to purchasing an equivalent established home.

As an example, a buyer contracting a house and land package with land valued at $380,000 and a construction contract of $400,000 pays zero transfer duty on the land and receives the $10,000 FHOG. If that same buyer were to purchase an established home valued at $780,000, no FHOG would apply and transfer duty would be calculated under the concessional FHOR rate, costing approximately $3,230. The house and land structure delivers a net benefit of $13,230 in grants and duty savings before financing costs are considered.

Deposit Structure and the 5% Deposit Scheme

The Australian Government 5% Deposit Scheme allows eligible first home buyers to purchase with a 5% deposit, with Housing Australia guaranteeing the difference between your deposit and 20% of the property value. No income cap applies under the scheme from 1 October 2025, and no LMI is payable. The property price cap for Perth and applicable metropolitan postcodes, including Ellenbrook East, is $850,000. Both the purchase price and the lender's assessed value of the completed home must sit at or below that cap.

When you apply for finance under the scheme, your lender will assess your borrowing capacity based on your income, existing debts, and living expenses. Your 5% deposit must be genuine savings, meaning funds you have saved over at least three months, or a genuine gift from a family member. The deposit is applied to settle the land, and the lender releases the balance of the land purchase price at settlement. Construction payments are then drawn progressively, with the lender advancing funds to the builder as each stage is certified by the bank's valuer.

In practical terms, a buyer purchasing a house and land package valued at $780,000 under the scheme would need a $39,000 deposit, plus approximately $8,000 to $12,000 to cover land settlement costs including conveyancing, bank fees, and council rates adjustments. The construction contract does not require a second deposit, but buyers should budget for additional costs during the build including site works, upgrades to the standard inclusions, and connection fees for utilities. These costs are typically funded from savings or added to the loan if borrowing capacity permits.

What Happens Between Land Settlement and Construction Completion

Once the land settles, you own the block and are responsible for council rates, even though construction has not commenced. Most first home buyers continue renting during the construction period, which typically runs between six and 12 months depending on the builder's schedule, weather, and the availability of trades. During this period you are paying rent on your current home, council rates on the land, and interest on the portion of the loan that has been drawn to settle the land.

Lenders offer two main interest management options during construction. The first is capitalising interest, where the interest accrued on the land loan is added to the loan balance and repaid once construction is complete and the loan converts to principal and interest repayments. The second is making interest-only payments during construction, which prevents the loan balance from growing but requires cash flow to service the payments while still paying rent. Most first home buyers choose to capitalise interest because it preserves cash flow during a period when costs are high and income is already committed to rent.

Your construction loan remains interest-only until construction is complete and the bank receives the final valuation and occupancy certificate. At that point the loan converts to principal and interest repayments and you move into the property to satisfy the occupancy requirement for the FHOG and FHOR concession. This conversion is automatic and does not require a new loan application, but you should confirm the final repayment amount with your lender before the first principal and interest payment is debited.

Fixed, Variable and Split Loan Structures for First Home Buyers

Most participating lenders under the 5% Deposit Scheme offer variable rate, fixed rate, and split loan structures. A variable rate loan allows you to make unlimited extra repayments and typically includes an offset account, which reduces the interest charged by offsetting your savings balance against the loan balance. A fixed rate loan locks your interest rate for a set period, usually between one and five years, protecting you from rate rises but restricting extra repayments and usually excluding offset accounts.

A split loan structure divides your loan into two portions: one fixed and one variable. This structure allows you to lock in part of your repayment while retaining flexibility on the variable portion. In our experience, first home buyers purchasing house and land packages often choose a 50/50 split, fixing half the loan to provide certainty during the construction period and keeping the other half variable to retain access to an offset account and the ability to make extra repayments once they move in and redirect their rent into the loan.

The choice between fixed, variable, and split structures depends on your risk tolerance, cash flow, and expectations for interest rate movements. If you expect rates to rise, a fixed rate provides protection. If you expect rates to fall or remain stable, a variable rate allows you to benefit from reductions and maintain flexibility. Your broker can model each scenario using your actual income, deposit, and loan amount to show the total interest cost and repayment impact over the life of the loan.

Avoiding the Pitfalls That Delay Settlement or Completion

The most common issue first home buyers encounter with house and land packages is a delay between land settlement and construction commencement. Builders may experience delays due to weather, supply chain issues, or trade availability, and these delays extend the period during which you are paying interest on the land loan while still renting. To manage this risk, confirm the builder's estimated construction timeline in writing before signing the construction contract and budget for at least two additional months of rent and land loan interest as a contingency.

The second common issue is scope creep during the construction phase. Upgrading finishes, adding landscaping, or changing the floor plan after the contract is signed can add tens of thousands of dollars to the final cost. If these upgrades push the total contract value above the FHOG cap or the 5% Deposit Scheme cap, you may lose eligibility for one or both schemes. Lock in your selections before signing the construction contract and avoid making changes unless they are essential.

The third issue is underestimating settlement and build-phase costs. First home buyers often budget for the deposit and assume the loan will cover everything else, but conveyancing fees, bank valuation fees, building insurance during construction, and connection fees for water, electricity, and gas can add $15,000 to $20,000 to the total outlay. Your broker and conveyancer should provide a detailed cost estimate before you sign any contract so you can confirm your savings are sufficient to cover both the deposit and the associated costs.

Call one of our team or book an appointment at a time that works for you. We'll structure your home loan application to maximise your grant and concession eligibility, coordinate with your conveyancer and builder, and ensure every dollar of your deposit and borrowing capacity is working toward settlement and completion.

Frequently Asked Questions