First home buyers
Building in Melbourne's north: a house-and-land finance guide
Melbourne’s northern growth corridor is one of the busiest places in the country to build. New estates in Mickleham, Craigieburn, Kalkallo and Donnybrook are full of first-home buyers and young families putting up brand-new homes — often because building is where the $10,000 First Home Owner Grant is aimed. We’re based in Mickleham, so this is our backyard. Here’s how house-and-land and construction finance actually works in 2026, and the traps worth knowing about before you sign.
Where people are building
If you’re looking in the corridor, you’ll come across large master-planned estates — places like Botanical in Mickleham, Cloverton in Kalkallo, and Olivine in Donnybrook, alongside plenty of new land releases around Craigieburn and Wollert. Land here is generally more affordable than closer to the city, which is a big part of why so many first-home buyers choose to build.
Wherever you build, the finance follows the same broad shape.
House-and-land vs a construction loan
These two terms get used interchangeably, but they’re different things:
- A house-and-land package is a way of buying. You purchase the block, then sign a separate fixed-price building contract to construct a home on it.
- A construction loan is the finance behind a build — whether that’s a house-and-land package, a knockdown-rebuild, or building on land you already own.
In practice they go hand in hand: most people buying a package fund it with a construction loan.
How the money actually flows
This is the part that trips people up, because it’s nothing like a normal home loan.
- The land settles first. You buy the block, usually with its own deposit and loan (or as part of the overall lend).
- The build is funded in stages. Instead of handing over the whole loan at once, the lender pays your builder in progress payments as each stage is completed — typically five to six stages over roughly 12–18 months.
- You pay interest only on what’s drawn. During the build you’re generally only charged interest on the funds released so far, not the full loan.
- It converts to a normal loan at the end. Once the home is finished, the loan usually flips to standard principal-and-interest repayments.
A typical progress-payment schedule looks something like the table below. The exact split varies between builders and contracts — treat this as an illustrative example, not a fixed rule:
| Stage | What it covers | Example share |
|---|---|---|
| Deposit | Gets the build started | ~5% |
| Base / slab | Foundations and slab laid | ~15% |
| Frame | Timber or steel frame up | ~20% |
| Lock-up | Roof, external walls, windows and doors | ~20% |
| Fixing | Internal fit-out — plaster, cabinetry, fixtures | ~30% |
| Completion | Final finishes and handover | ~10% |
Because you only pay interest on drawn funds, your repayments start small and grow as the build progresses — worth budgeting for, especially if you’re also paying rent in the meantime.
The $10,000 grant is built for new homes
Building is where first-home government support is most generous. As at August 2026:
- The First Home Owner Grant of $10,000 is aimed squarely at new homes, which includes building (State Revenue Office).
- The Victorian first-home stamp duty exemption (up to $600,000) and concession (to $750,000) can also apply (State Revenue Office).
- The First Home Guarantee can let eligible buyers build with a 5% deposit and no LMI (Housing Australia).
These measures can sometimes be combined, but the rules and caps change over time — confirm the current criteria (or ask us to check) before you count on any of them.
Fixed-price contracts, valuations and the traps
Building finance has a few pitfalls that catching early can save you real money:
- Valuation coming in under contract. Lenders value the finished home “as if complete.” If that valuation lands below your contract price, you may need to cover the gap.
- Out-of-contract and variation costs. Landscaping, driveways, fencing, upgrades — items outside the fixed-price contract can add up fast, and they’re not always covered by the loan.
- Cash-flow timing. Each drawdown takes a few days to process, and the first and last can take longer. Builders expect to be paid on time.
- Keep a buffer. A contingency of a few per cent for surprises is sensible on any build.
A genuinely fixed-price contract, read carefully, is your best protection — and it’s worth having someone in your corner who’s seen a few builds go through.
Already own the land, or buying established instead?
Not everyone building starts from scratch. If you already own a block, a construction loan can fund just the build. And if an established home turns out to suit you better, the finance is simpler — our first-home buyer guide to Craigieburn covers that path, and the deposit guide works through the numbers either way.
How a local broker helps with a build
Not every lender is good at construction lending — the drawdown process, valuations and timing vary a lot between them. We’re based in Mickleham, we know the corridor, and we compare construction-friendly lenders rather than pushing one bank. From there we help manage the progress payments so the build keeps moving. See construction loans for the detail, or book a free consultation to map out your build.
This article is general information only and doesn’t consider your personal circumstances. Lending criteria, builder contracts and government scheme rules apply and change over time. Confirm current figures with the linked government sources before acting.