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Prefabricated and modular homes have received a significant boost in support, in an effort to grow Australia’s uptake of this style of home-building.
While modular homes have long been popular overseas, they’re now finding more traction here, thanks in part to new initiatives like Commonwealth Bank’s recent partnership with modular builder Oly Homes.
What is a Modular Home?
A modular home, sometimes called a “prefab” or “off-site” home, is built in sections or modules in a factory and then assembled on your desired land. These homes are designed to match or exceed the quality of traditional builds, and they’re often completed much faster due to streamlined, controlled construction processes.
Can You Get a Loan for a Modular Home?
In the past, securing a home loan for a modular build in Australia was challenging. Banks typically offered lower lending ratios, sometimes covering just 5–10% of the build, and regulations weren’t always clear. However, the landscape is quickly changing.
Commonwealth Bank’s recent announcement marks a step forward. Thanks to its partnership with Queensland-based Oly Homes and four other approved modular manufacturers (including Modscape, JMB Constructions, Prebuilt, and Saltair Modular), CBA is now offering loans of up to 80% for modular home builds priced up to $1.5 million. If you buy from a non-approved manufacturer, you may be eligible for up to 60% financing.
What’s new?
- For the first time, major banks are supporting modular home buyers with real, competitive finance options.
- CBA is also funding an expansion for Oly’s manufacturing business by providing the funding for a new factory on the Sunshine Coast which could lift Oly Homes’ average output from 200 homes to approximately 550 per year.
Why Are Banks Supporting Modular Homes Now?
The move comes as Australia faces a significant housing shortfall. The federal government wants to deliver 1.2 million new homes by mid-2029. Modular construction, with its rapid build times (often 10–16 weeks, compared to 55 weeks for traditional builds), presents a viable solution.
What Do You Need to Secure a Modular Home Loan?
Financing modular homes can be tricky because the home itself is not built on-site, but rather it’s assembled on site, meaning lenders can’t use the property as security, making it a risk for them.
The key is to research and start communicating with lenders early in the process. Keep in mind that some lenders have specific criteria for the types of homes they’ll approve for financing.
To secure financing, you’ll need a land title deemed suitable for development, as lenders typically require assurance that the property meets their criteria. In many cases, lenders may also insist that the land is either fully paid off or incorporated into the loan agreement. Additionally, some lenders might request detailed site plans or zoning approvals to further validate the land’s development potential.
Are There Challenges or Risks?
Despite new financing and government support, there are still factors to consider:
- Financing Limits: Loans are only up to 80% for approved modular homes, and less for non-approved. Many lenders have much more stringent lending criteria (in some cases only lending up to 10% of the cost). You’ll still need a solid deposit.
- Regulations and Contracts: Not all local councils or banks view modular and site-built homes the same way. Look for fixed-price contracts and familiar, reputable brands.
Make it a Reality
Modular homes are fast, accessible, and increasingly well-supported by banks and regulators.
With a clear path to simplified financing solutions for modular homes, more Australians can enjoy faster home builds without sacrificing quality.
Ready to explore your options? Speak with our expert Mortgage Brokers today for personalised support for all of your finance needs and take the next confident step on your homeownership journey.
We’re here to help.
