Rural or Hobby Farm Home Loans

Looking to start a new chapter living life on the land? A rural home loan can help you get there.

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If you’re dreaming about clean air and peaceful nights, if you want to raise kids away from the city or enjoy your retirement in tranquility, there’s a chance you’ll need to need to find out about specialised rural home loans.

How do rural home loans work?

A loan for a rural property can be used for both business and personal purposes. Often described as a hobby farm, it’s not generally easy to get approved for. Rural properties are considered high risk, and many lenders are unwilling to lend money for these properties.

If you are looking at a hobby farm or a residential rural property and don’t plan to turn your new property into your primary source of income, a rural home loan might be just right.

Hobby versus commercial farm

When we are talking about rural property, it's important to make the distinction between a hobby farm and a commercial farm. Hobby farms:

  • Are primarily residential properties
  • Are not used for commercial income purposes or as a speculative investment
  • May be used to raise livestock or to grow crops, but this must be for the purposes of recreation or lifestyle, for the enjoyment of the owners only
  • Are valued only on the weight of the land and any buildings on it. No machinery, livestock, crops or otherwise rural income-producing assets will be included in the valuation.

How much deposit do I need for a rural property?

Windmill on an Australian farm.The deposit you'll need for a rural property will depend on the size of the property.

Lenders may require deposits as small as 5%, or as much as 30%, depending on the size and location of the property.

Your application is more likely to succeed if your property is under 10 hectares. Banks are more hesitant about larger properties, and above 200ha banks are likely to be very conservative in their lending. That being said, rural home loans are designed for these purposes exactly, so educate yourself about which lender offers the best loan contract and be prepared for your application.

Rural loan eligibility: land size

Lenders can be hesitant when it comes to the size of the land you're purchasing. This is because larger lots are often used for commercial farming purposes, which requires a commercial home loan.

The size of the land you're buying will often dictate the size of deposit you need. With land below 10 hectares, your loan is likely to be treated like any other residential home loan, and you may be able to borrow up to 95% of the value of the property you're purchasing.

Some lenders may require only a 5% deposit for land up to 50 hectares. However, if you're buying land larger than this, you're likely to need a 20–30% deposit.

Properties above 100 hectares in size are unlikely to find residential home loan financing. Lenders often consider these properties to be commercial farms, even if you don't intend to produce income from farming.

What else do lenders look at when you apply for a rural home loan?

Each lender will have their own set of criteria they use to assess whether they will offer a home loan for the purpose of purchasing a rural property. Aside from land size and how you will use the land, many lenders consider:

  • Location. Some lenders have postcode restrictions in place for rural home loans. This means if the property you are looking at purchasing is outside of the lender's approved postcodes, you may need to reconsider the property or look at another lender.
  • Property Access. The property must be easily accessible for different reasons. A dirt road is appropriate and often common with rural properties, but it must be well maintained so that any vehicle that needs to can access the property.
  • Public Services. The property must have access to public services such as electricity, water and sewage, if you opt to have your property completely self-sustaining it may also be useful to have all the regular services accessible at the property just to make the process of lending easier.
  • Area Zoning. In order to be classified as a hobby farm rather than a commercial farm the land will need to be zoned as rural, rural residential or the equivalent depending on the state it is in. If it is zoned as industrial, commercial or for farm use this may impede your ability to get a rural home loan as it may be a commercial farm.

Specialist rural and agricultural lenders

Here are some companies in Australia that may be able to help you with specialist finance for different types of acreage and rural property purchases:

  • Aglend. Aglend offers finance solutions for farmers and agricultural businesses. This includes rural land loans.
  • Australian Lending Centre. This specialist lender can help with rural loans.
  • Redilend. This bad credit lender also works with rural properties and hobby farms.
  • Building Loans Australia. This brokerage is focused on land purchases.

How to apply for a rural home loan

If you have made the decision to take out a rural home loan to buy a home outside of the city, start by doing your research to find the best conditions, terms and borrowing rates.

It’s advisable to speak with a mortgage broker who understands your needs and can help steer you in the right direction.

First and foremost, plan for the future and research your possibilities. If you are set on a tree change and can feasibly afford to make the move, put the extra time into finding the rural home loan that’s right for you.

Compare Land Home Loans

This table displays information about land loans from various lenders. Some of these loans may not be available to purchase a hobby farm or acreage or larger piece of land. If the green button beside a product is labelled "more info" it means Finder does not currently have a partnership with this lender or a relevant broker. You can contact the lender directly via their own website.

Rates last updated December 6th, 2019
$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
2.84%
2.84%
$0
$0 p.a.
80%
Available for rural residential properties up to 25 acres. Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
3.91%
3.92%
$0
$0 p.a.
95%
Fund the construction of your new family home with a very competitive variable interest rate. Available with a 5% deposit.
5.13%
5.18%
$350
$0 p.a.
90%
Purchase land to build on or hold as an investment and pay no monthly fees.
3.24%
3.24%
$0
$0 p.a.
80%
Available for rural residential properties up to 25 acres. Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
2.79%
3.26%
$0
$10 monthly ($120 p.a.)
80%
Buy rural residential property up to 100 acres in size. A competitive fixed rate mortgage available with a 10% deposit. Earn Velocity Frequent Flyer Points at settlement, monthly and every three years, plus extra bonus points for a limited time.
5.85%
5.47%
$350
$0 p.a.
90%
Interest only loan for borrowers building a home on vacant land.
3.18%
3.32%
$0
$10 monthly ($120 p.a.)
80%
Buy rural residential property up to 100 acres in size. This flexible, competitive variable rate mortgage comes with a redraw facility. Eligible borrowers can earn Velocity Frequent Flyer Points, plus extra bonus points for a limited time.
6.19%
6.24%
$350
$0 p.a.
80%
Investment loan to fund the purchase of vacant land.

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Important Information*
Logo for St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)
St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)

Online only cashback offer: Refinancers borrowing $250,000 or more can get a $4,000 cashback for their first application (Other terms, conditions and exclusions apply). Buyers and refinancers can get this competitive variable interest rate. Application fee waived for loans above $150,000.

Logo for UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000
UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

Take advantage of a low-fee mortgage with a special interest rate of just 2.84% p.a. and a 2.84% p.a. comparison rate.

Logo for ME Flexible Home Loan Fixed with Members Package - 2 Year Fixed Rate LVR <= 80% (Owner Occupier, P&I)
ME Flexible Home Loan Fixed with Members Package - 2 Year Fixed Rate LVR <= 80% (Owner Occupier, P&I)

Lock in a competitive rate for owner occupiers for two years. Comes with a 100% offset account.

Logo for Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR<=90% Incl. LMI (Owner Occupier, P&I)
Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR<=90% Incl. LMI (Owner Occupier, P&I)

Get one free online redraw per month and pay no ongoing fees. Application fees are waived for loans above $150,000.

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16 Responses

  1. Default Gravatar
    GregSeptember 27, 2019

    I’m interested in getting a loan of about 55k for a property on a crown perpetual lease. I’m mainly interested in this place as a family weekender.
    What are the loan types available and what sort of deposit will I be looking at?
    Thanks.

    • Avatarfinder Customer Care
      NikkiSeptember 28, 2019Staff

      Hi Greg,

      Thanks for getting in touch! The information above shows the type of loan you can get to lease a property and you can choose from the lenders listed above. Your deposit depends on the loan you apply for, for example, some allow a 10% deposit and some will need a 20% deposit.

      To explore more options, I’d recommend that you get in touch with a mortgage broker. They’re home loan experts who can help you find the right loan for your situation and can explain any processes, fees or charges that may apply.

      Hope this helps!

      Best,
      Nikki

  2. Default Gravatar
    KathleenJanuary 8, 2017

    We are wanting to buy a house on acreage out of a major town, approximately 30 minutes away, the property is 45 acres and is mainly Forrest, it has a self sustained house built on it, septic, solar and water tanks. It will only be residential and not farmed for money, is this classified as rural.

    • Avatarfinder Customer Care
      MayJanuary 9, 2017Staff

      Hi Kathleen,

      Thank you for your question and for contacting finder.com.au we are a financial comparison website and general information service we are not mortgage specialists so can only offer general advice.

      Basically, lenders have postcode restrictions in place for rural home loans, so if the property you are looking at purchasing is outside of the lender’s approved postcodes, you may need to reconsider the property or look at another lender. It’s best to check with the lender (you want to apply for the rural home loan with) if the property you’ve chosen is under their approved postcodes.

      Alternatively, you may also speak with a mortgage broker who will take all your circumstances into account and offer you a range of lending options.

      Cheers,
      May

  3. Default Gravatar
    MaryJanuary 22, 2016

    Can you tell me if it is possible to reverse mortgage a property which is more than 150 acres? Mine is twice that and I have not been able to find anyone who will?

    • Avatarfinder Customer Care
      BelindaFebruary 2, 2016Staff

      Hi Mary,

      Thanks for reaching out.

      Your ability to qualify for a reverse mortgage for a rural property will depend on a range of factors including the property value, property location and your proximity to retirement age. As a result, applications for a reverse mortgage for a large rural property are treated on a case-by-case basis and are subject to the lender’s individual circumstances.

      You can compare reverse mortgages and learn more about how they work on this page but you should speak to a licensed mortgage broker to discuss your options as they can draw upon their panel of lenders to find one that’s more likely to review your reverse mortgage application. A broker may have relationships with specialist lenders who may have more lenient lending criteria.

      All the best,
      Belinda

  4. Default Gravatar
    SantiagoMarch 23, 2015

    Hi, my name is Santiago, originally from Argentina and hold an Australian passport. I want to invest in a rural property in Spain and start a boutique hotel. Both my partner and myself are employed here in Australia and we own several properties in Argentina/USA – my question is can I borrow money from an Australian bank to invest in a rural property overseas?

    • Avatarfinder Customer Care
      ShirleyMarch 23, 2015Staff

      Hi Santiago,

      Thanks for your question.

      Generally you can, but the land will need to meet a criteria as set out by the lender.

      If you find that none of these loans are suitable for your situation, there is always the option of speaking to a home loan broker. They’ll be able to help you further should need further help in narrowing down a suitable home loan option.

      Cheers,
      Shirley

  5. Default Gravatar
    DEBFebruary 19, 2015

    We have a 2200 acre property (non hobby farmers) this rural loan is through one of the major lenders and our house in town (which we own)is mortgaged to this Loan. We are wanting to build/ or move a house on our property but our bank will only lend us so much. Who is the best bank to talk to about obtaining a loan for our house.

    • Avatarfinder Customer Care
      ShirleyFebruary 19, 2015Staff

      Hi Deb,

      Thanks for your question.

      Please note that finder.com.au is an online comparison service and is not in a position to recommend specific products, providers and services. If you’d like, you may want to use our borrowing power calculator to see where you stand in terms of how much you can borrower.

      If you would like to discuss your eligibility or options, please get in touch with a lender featured on this page. If you find that none of these loans are suitable for your situation, there is always the option of speaking to a home loan broker. They’ll be able to help you further should need further help in narrowing down a suitable home loan option. 

      Cheers,
      Shirley

  6. Default Gravatar
    danielSeptember 28, 2014

    hi. i have found a rural property of 1500ac (607ha approx). i was wondering what sort of loan i would need to apply for and just how much deposit i would need ? this will be my first time in the realestate market so its all new to us. i would not be using the property for a primary source of income. i am employed full time. however i would pursue some sort of income/profit from the farm in the way of livestock and or lease in the future. any info would be appreciated. regards, daniel

    • Avatarfinder Customer Care
      ShirleySeptember 29, 2014Staff

      Hi Daniel,

      Thanks for your question.

      A rural home loan could be suitable for your situation. Your deposit depends on the loan your apply for, for example, some allow a 10% deposit and some will need a 20% deposit.

      Since this is your first home loan, I’d recommend that you get in touch with a mortgage broker. They’re home loan experts who can help you find the right loan for your situation and can explain any processes, fees or charges that may apply.

      All the best,
      Shirley

  7. Default Gravatar
    DanAugust 7, 2014

    I am wanting to refinance my 150 acre rural zoned lifestyle block. What is my best option? Currently with CBA but they are not willing to give me a normal mortgage on this property. I am getting charged business rates and the loan is interest only.

    • Avatarfinder Customer Care
      ShirleyAugust 8, 2014Staff

      Hi Dan,

      Thanks for your question. Unfortunately we are not able to recommend the best loan or option for you.

      Please compare rural home loans on this page – remember to read the terms and conditions to determine if a product is right for you.

      Cheers,
      Shirley

  8. Default Gravatar
    AngelaJune 9, 2014

    Hi
    We currently have a small property that we run a small business from (horses). Have been operating for 15 years and make a profit (again small!). We have a loan of $175k and property value of $600k.
    We want to purchase a block of land (380 acres) for $400k to run livestock and grow hay etc.
    What is the best way to go about this
    1) deposit, is it required?
    2) can we use equity on smaller place?
    3) can we just increase loan on smaller place to take advantage of lower interest rates?
    4) how can we make it most tax effective? Will still be a business.
    Cheers

    • Avatarfinder Customer Care
      ShirleyJune 10, 2014Staff

      Hi Angela,

      Thanks for your question.

      It is likely that you’ll need a deposit for this loan, especially if you don’t want to pay Lenders Mortgage Insurance. Depending on the nature of the loan you opt for, you may be able to use your existing equity.

      Unfortunately we cannot comment on tax implications or strategy – please speak to a mortgage broker about this.

      Cheers,
      Shirley

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