Can You Get a Home Loan for a Modular Home in Australia?

Last updated: April 2026 | Sources: SIPS Modular Homes AU, Fundd.com.au, Anchor Homes, Hoek Modular Homes, Keystart WA, Home Loan Experts, prefabAUS

Yes — you can get a home loan for a modular home in Australia. But the process works differently from a standard home purchase, and walking into any bank without understanding the specifics will cost you time, money, and possibly your builder's slot in the factory queue.

The good news is that modular home financing has changed dramatically in the past two years. What was once a frustrating, patchy landscape is becoming a legitimate mainstream pathway — largely thanks to Commonwealth Bank's landmark policy changes in 2025 and growing lender confidence in the sector. Here's everything you need to know before you speak to a lender.

Why Modular Home Loans Work Differently

With a traditional build, a bank can use the partially constructed home as security as it goes up. Each progress payment is backed by something physically sitting on your land.

Modular is the opposite. The most expensive phase of construction — factory manufacture — produces nothing the lender can inspect on your land. Until the modules are craned onto your block and permanently affixed, there's nothing securing the bank's money except the land itself. Historically, this made lenders nervous. Many required buyers to self-fund the factory build stage entirely — sometimes 50% or more of the total project cost — before the bank would release a cent.

That's changing fast, but not all lenders have caught up. Knowing which ones have is the most important thing a modular buyer can do before signing anything.

The Key Rule: Permanent Affixture

The single most important factor in whether you can get a standard home loan on a modular home is this: is it permanently fixed to the land?

To be eligible for a mortgage, the modular home must be built on land you own or are purchasing with the home. Lenders require the home to be permanently affixed to a registered land title — installed on a fixed foundation such as a concrete slab or stumps. It cannot be a relocatable or transportable home that can be moved after installation.

Once permanently affixed to land with a registered title, a modular home is treated by lenders like any other residential dwelling. The Big Four banks — NAB, CBA, Westpac, ANZ — generally support prefab builds if they comply with Australian Standards. They require NCC compliance and structural certification before approving loans, and verification of the builder's credentials is also essential.

If your modular home is not on a permanent foundation — if it's on skids, or still classified as relocatable — you're in different (and much harder) territory. If the structure remains on skids, banks may classify it as chattel, requiring a chattel mortgage rather than a standard home loan. Chattel loans carry higher interest rates and shorter terms. Avoid this by ensuring your build goes onto a concrete slab or equivalent permanent footing with full council approval.

The Two Loan Stages: Construction Loan → Home Loan

Most modular builds require two financing phases:

1. Construction Loan (during the build)

Most modular home purchases are financed using a construction loan, rather than a standard home loan. This is because the home is not fully built at the time of purchase. A construction loan releases funds in progress payments as the build progresses. Once the home is completed and fixed to the land, the loan converts into a standard home loan.

A typical progress payment schedule for a modular build might look like:

• 5% at contract signing
• 20% at factory frame stage (modules built in factory)
• 25% at lock-up
• 40% at installation and fixing stage
• 10% at completion

(Exact terms vary by lender and builder — always confirm with your lender before signing a build contract.)

2. Standard Home Loan (after installation)

Once the home is permanently affixed, connected to services, and holds an Occupation Certificate, it converts to a standard variable or fixed rate home loan — the same product as any other mortgage.

CBA's Game-Changing Policy (July 2025)

The biggest shift in Australian modular home financing came on 10 July 2025, when Commonwealth Bank introduced a new prefabricated housing policy — making CBA the first major Australian bank to offer enhanced progress payments during offsite build stages.

Here's what CBA now offers:

With a CBA-Assessed (accredited) manufacturer: Up to 80% of the build contract price can be accessed during off-site construction. Available for fixed-price contracts up to $1.5 million.

With a non-assessed manufacturer: Up to 60% of the build contract price or 120% of land equity, whichever is lower. The remaining funds are released on permanent affixture and connection to services.

In a major show of commitment to the sector, CBA became the first bank to join prefabAUS — Australia's peak body for off-site construction. They are also sponsoring a standard-form contract specifically for prefab builds, similar to those used in traditional home construction, to further de-risk prefab lending and standardise the process for banks and buyers.

CBA's Group Executive Mike Vacy-Lyle put it plainly: "Overseas in countries like Sweden, 80% of homes are factory-built. We expect prefab in Australia to follow a similar growth trajectory."

What does this mean for buyers? If your builder is CBA-assessed, you may no longer need to fund the factory build out of your own pocket. This removes the single biggest barrier that stopped modular from being accessible to ordinary home buyers.

To find out if your builder is CBA-assessed, ask them directly. Builders can apply for assessment by contacting CBA at BBPrefabManufacturers@cba.com.au. (Source: Fundd.com.au, 2026)

What about the other Big Four?

NAB has amended its construction loan structure to allow a third payment stage — particularly notable in Western Australia. Buyers can authorise a payment of up to 95% of the land value during the off-site build phase, protecting the builder's cash flow and reducing the need for the buyer to self-fund factory construction entirely.

ANZ and Westpac are also developing their modular lending policies, but as of early 2026 they remain more conservative. A specialist mortgage broker will know which lenders are currently set up for your specific builder and situation.

Keystart: The Low-Deposit Option for WA Buyers

Western Australian buyers have access to an additional option. Keystart offers a dedicated Modular Home Loan — a loan type within their Low Deposit Home Loan product — specifically designed to help buyers get into a modular home sooner with a lower deposit requirement. If eligible, buyers may also be able to use their First Home Owner Grant toward their deposit.

Keystart maintains a list of accredited modular builders in WA. If you're building in regional WA — where modular is especially popular due to the difficulty of finding local tradespeople — this is worth investigating early.

What Lenders Look At When Assessing Your Application

Regardless of which lender you approach, they'll assess the following:

About you:

• Income, employment stability, and debt-to-income ratio
• Credit history
• Deposit size (typically 10–20% of total project cost)
• Existing assets and liabilities

About the build:

• Fixed-price contract from a licensed builder
• Builder's licensing credentials (QBCC in QLD, VBA in VIC, or state equivalent)
• Council approvals (DA or CDC) and building permits
• Insurance documentation
• Detailed construction drawings and specifications

About the property:

• Land title (registered, freehold)
• Foundation type — permanent slab, stumps, or pier system required
• NCC compliance and structural certification from the manufacturer
• "As if completed" valuation — lenders generally use an "as if completed" valuation, meaning the bank looks at the value of the finished project once the home is completed on the land. In practice, modular homes are not being treated dramatically differently to traditional homes in this area.

One important note on extras: Lenders prefer costs to be clearly included in the contract. Items like a pool, larger solar system or other out-of-scope upgrades may not be included in the bank's lending assessment unless they form part of the contract. If you want inclusions like solar or a deck factored into your loan, make sure they're in the fixed-price contract from day one.

Pre-Approval vs. Formal Approval: Get the Order Right

A common mistake is confusing pre-approval with formal approval, which can cause unnecessary stress early in the process.

Pre-approval is the early stage where the buyer is confirming borrowing capacity and finance position. Formal approval comes later, once the contract, valuation and supporting documents are ready. Buyers do not need to have every detail finalised before they start understanding whether they can borrow.

In other words: get pre-approval sorted early, before you've chosen a floor plan or signed a land contract. It tells you your budget ceiling and gives you confidence to move through the rest of the process without second-guessing yourself.

Government Schemes That Apply to Modular Builds

Modular homes qualify for the same federal and state government support as any new build. Here's a quick summary of what's available in 2026:

(Sources: SIPS Modular Homes AU 2026; Fundd.com.au 2025)

Modular homes qualify for all of the above, provided the home is new, permanently affixed to land, and meets lender requirements. Applications for the FHOG are handled through your state revenue office. The First Home Guarantee and Regional Home Guarantee are applied for through participating lenders.

Common Mistakes to Avoid

Going to a lender who doesn't understand modular. Some banks view modular homes as higher risk, particularly if they haven't worked with home providers in Australia who specialise in modular builds. Don't waste time trying to convince a reluctant lender — use a broker who already knows which banks are set up for this.

Confusing modular with kit homes or transportables. Kit homes are materially harder to finance. Be clear with lenders about whether you are building a modular home (factory-completed, permanently affixed) or a kit home (on-site assembly from a delivered kit). The distinction affects both loan eligibility and grant eligibility.

Signing a build contract before getting finance confirmed. Builder slots fill up quickly, and it's tempting to lock one in before your finance is sorted. Resist this. A fixed-price contract is required for formal loan approval anyway, and signing before knowing your borrowing capacity can leave you exposed.

Not factoring in the full project cost. Lenders will assess the total cost of the project — land, site works, foundation, utility connections, council fees, and the factory build. Make sure your loan application reflects the all-in figure, not just the factory price.

The Bottom Line

Getting a home loan for a modular home in Australia is very achievable in 2026 — more so than at any point in the past. The key steps are:

1. Get pre-approval early, before signing land or build contracts
2. Use a mortgage broker with modular or prefab finance experience
3. Ask your builder whether they are CBA-assessed or accredited with other lenders
4. Ensure your build goes on a permanent foundation with full council approval
5. Include everything in the fixed-price contract — extras outside the contract may not be financeable
6. Check your eligibility for the First Home Guarantee, FHOG, and state stamp duty concessions before settlement

The lending landscape is moving quickly. Buyers who approach it with the right team — a specialist broker, an accredited builder, and a lender who understands off-site construction — will find the process far smoother than the reputation suggests.

Key Resources

• prefabAUS — prefabaus.org.au — Australia's peak body for off-site construction; builder directory and industry standards
• SIPS Modular Homes AU — sipsmodularhomes.com.au — Comprehensive 2026 modular financing guide for Australian buyers
• Fundd.com.au — fundd.com.au — CBA policy explainer, government grant guides, mortgage broker access
• Anchor Homes — anchorhomes.com.au — CBA-accredited builder; detailed financing walkthrough
• Keystart WA — keystart.com.au — Dedicated Modular Home Loan product for Western Australian buyers
• Housing Australia — housingaustralia.gov.au — First Home Guarantee and Regional Home Guarantee applications
• Your state revenue office — For FHOG applications and current stamp duty concession details

This article is for general information only and does not constitute financial advice. Loan eligibility, interest rates, grant amounts, and lender policies vary and are subject to change. Always consult a licensed mortgage broker or financial adviser before making decisions.