The type of property you're buying changes what lenders will offer you.
A house on a standard suburban block will attract different lending terms than an apartment, a unit on a strata title, or a townhouse. Different property types carry different risk profiles for lenders, and that affects everything from the interest rate you're offered to whether you'll need to pay Lenders Mortgage Insurance, how much deposit you'll need, and which loan features are actually available to you.
Houses vs Units: What Lenders See Differently
Lenders treat houses and units as separate categories because they assess risk differently. A standalone house on a title that includes the land generally attracts lower perceived risk than a unit or apartment on strata title, where the buyer owns the dwelling but shares ownership of common property.
Consider a buyer looking at a three-bedroom house in Ellenbrook compared to a two-bedroom apartment in the same suburb. The house buyer might secure a standard variable rate with full access to offset accounts and redraw facilities. The apartment buyer, depending on the lender, might face a slightly higher rate or restrictions on certain loan features, particularly if the apartment is in a building with more than four storeys or part of a complex where more than 50 per cent of units are owner-occupied. Some lenders also apply stricter servicing buffers or require larger deposits for apartments in buildings with fewer than six units in total or where commercial tenancies occupy ground floors.
The difference comes down to resale risk and valuation volatility. If you're looking at units or apartments, expect lenders to review the strata report closely. They'll want to know about sinking fund balances, any outstanding special levies, and whether the body corporate has flagged major works. A building with low sinking funds and deferred maintenance can limit your borrowing capacity or result in a lower valuation, even if the purchase price is agreed.
Loan Features That Depend on Property Type
Not every loan feature works the same way across different property types. Offset accounts, redraw facilities, and the ability to split your loan between fixed and variable rates are commonly available on houses, but lenders can restrict these on apartments, particularly in higher-density developments or regional areas.
In our experience, buyers purchasing a townhouse in a small complex of four or five often have access to the same loan products as buyers purchasing standalone houses. That changes when the complex is larger or includes commercial space. Lenders treat mixed-use developments with more caution, and that caution translates to fewer product options and sometimes higher rates.
If you're buying an investment property, interest-only periods might also be shorter on units compared to houses. Some lenders cap interest-only terms at three years for apartments where others allow five years for houses. That difference affects cash flow planning, particularly if you're holding the property for capital growth rather than immediate rental yield.
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Strata Title and Lender Appetite
Strata title properties come with additional layers of assessment. Lenders will request a strata report before approving the loan, and what's in that report can make or break your application.
As an example, a buyer looking at a two-bedroom unit in a complex near the Perth CBD found a lender willing to offer a rate 0.15 per cent lower than competitors, but only after the strata report confirmed the building had no outstanding defects, a healthy sinking fund, and no special levies planned within the next 12 months. Another lender declined the same property outright because the body corporate minutes flagged potential water ingress issues that hadn't yet been quoted for repair. The buyer ended up choosing a different property in a complex with a cleaner strata history, which opened up access to more competitive loan products and avoided the risk of future special levies affecting serviceability.
Strata reports aren't just about building condition. Lenders also look at owner-occupier ratios. If more than 50 per cent of units in a building are tenanted, some lenders classify the entire building as higher risk, even if you're planning to live in the property yourself. That can mean a higher interest rate or a requirement for a larger deposit to avoid LMI, even when your income and credit history are strong.
You can read more about how lenders assess home loan applications and what documents are required at different stages of the process.
New Builds, House and Land Packages, and Construction Lending
If you're buying a house and land package or building from scratch, the loan structure changes again. Construction loans release funds in stages as the build progresses, and those progress payments are tied to inspections and builder milestones. You'll typically pay interest only on the amount drawn down during construction, then switch to principal and interest repayments once the build is complete.
Lenders treat new builds differently depending on whether you're buying an established property, a turnkey package, or managing the construction yourself. Turnkey packages, where a builder manages the entire process and you settle on completion, are generally treated the same as purchasing an established home. If you're coordinating the build, expect the lender to require detailed costings, council approvals, and builder contracts before approving the loan.
Some lenders also apply different LVR limits to new builds. While you might borrow up to 95 per cent on an established house using the Australian Government 5% Deposit Scheme, the same lender might cap your borrowing at 90 per cent for a house and land package in a new estate, depending on location and perceived demand.
Western Australian buyers also benefit from stamp duty concessions on new builds, which can reduce upfront costs. Those concessions don't apply to established homes, so the type of property you're buying affects not just the loan but the total cost of purchase. You can explore how construction loans are structured and what to expect during each stage of a build.
Regional and Remote Properties
Location affects lending appetite just as much as property type. A house in a Perth suburb will generally attract more lender interest than a house in a remote regional town, even if both are on freehold title and in similar condition.
Lenders assess regional properties based on population size, economic diversity, and resale demand. A three-bedroom house in a town with a stable population and diversified economy might qualify for the same loan products as a metro property. A similar house in a single-industry town with a declining population might face higher rates, lower LVR limits, or outright decline from some lenders.
If you're buying in a regional area, it's worth confirming lender appetite early. Some lenders have postcode exclusions that aren't advertised but become apparent when you lodge an application. Others will lend but apply a higher servicing buffer or limit loan features like offset accounts. The variation between lenders on regional properties is wider than on metro properties, so comparing options makes a material difference to what you'll pay over the life of the loan.
Rural Properties and Lender Restrictions
Rural properties on larger blocks introduce another set of considerations. If the property is on more than two hectares or generates income from farming or agistment, lenders often classify it as rural rather than residential, and that shifts the loan into a different category.
Rural loans generally attract higher interest rates, shorter loan terms, and lower LVR limits. Some lenders won't offer rural loans at all, while others have specialist rural divisions that assess applications differently. The key issue is whether the property is genuinely residential or whether it's being used for primary production. A house on five hectares used purely as a residence might still qualify for a standard home loan with the right lender, while the same property with a few head of cattle might require a rural product.
If you're considering a rural property, expect the lender to request additional information about water access, bushfire risk, and land use zoning. Properties in bushfire-prone areas can also face restrictions on LVR or require additional insurance before settlement.
Matching Loan Features to How You'll Use the Property
The right loan depends not just on what you're buying but how you plan to use it. An owner-occupied loan on a house where you plan to live for the next ten years justifies different features than an investment loan on a unit you'll hold for five years and sell.
If you're living in the property, an offset account linked to your transaction account can reduce the interest you pay without locking funds into the loan. If you're purchasing an investment property, interest-only repayments during the first few years can improve cash flow, though you'll want to confirm the lender allows interest-only on the property type you're buying.
Split loans, where part of the loan is fixed and part is variable, can also make sense if you want rate certainty on a portion of the debt while keeping flexibility on the rest. Not all lenders offer splits on all property types, and some cap the fixed portion at a lower percentage for units or apartments. If you're considering a split, clarify the terms before committing to a property purchase. You can read more about choosing the right loan features based on your circumstances.
Call one of our team or book an appointment at a time that works for you. We'll walk through your property type, your plans, and which lenders offer the features that actually suit how you'll use the loan.
Frequently Asked Questions
Do lenders charge higher rates for units compared to houses?
Some lenders apply slightly higher rates or stricter servicing buffers for units, particularly in buildings with more than four storeys or where fewer than 50 per cent of units are owner-occupied. The difference depends on the lender and the specific property.
Can I get an offset account on a loan for an apartment?
Offset accounts are available on many apartment loans, but some lenders restrict this feature for higher-density developments or properties in certain locations. Confirming product availability before committing to a purchase is important.
What do lenders look for in a strata report?
Lenders review sinking fund balances, planned or outstanding special levies, building defects, and owner-occupier ratios. A strata report showing deferred maintenance or low funds can reduce borrowing capacity or lead to a lower valuation.
Are rural properties treated differently by lenders?
Yes, properties on more than two hectares or used for primary production are often classified as rural and attract higher rates, lower LVR limits, and shorter loan terms. Some lenders do not offer rural loans at all.
Do new builds qualify for the same loan features as established homes?
New builds can qualify for similar features, but construction loans release funds in stages and may have different LVR limits. Turnkey packages are generally treated the same as established homes once the build is complete.
