For many Australians—especially those who remember when a loaf of bread cost 20 cents and a house deposit didn’t require a small fortune—the dream of home ownership has become increasingly out of reach.

Rising property prices, higher cost of living, and ever-tightening lending rules have made it tough for first-home buyers and downsizers to get a foot on the property ladder.


But there’s some good news on the horizon: the Commonwealth Bank (CBA), Australia’s largest bank, has just announced a significant change that could make it easier for Aussies to build their own home with a much smaller deposit.

If you’ve been thinking about building or know someone who is, this could be a game-changer!

Starting on 24 May, CBA will increase the maximum loan-to-value ratio (LVR) for its construction loans.


This means you can now borrow more of the property’s value with a smaller deposit. Here’s how it breaks down:

Under the updated rules, buyers can now borrow up to 95 per cent of the value for properties under $3 million, down from the previous 90 per cent limit.

This means only a 5 per cent deposit is needed instead of 10 per cent.

The borrowing limit has increased from 75 per cent to 80 per cent for properties valued between $3 million and $6 million, making it easier for buyers to secure higher-value homes with a smaller upfront deposit.


This is a significant shift, especially for those looking to build a new home.

According to the Australian Bureau of Statistics, the average construction loan for a new build was $674,649 in the December quarter.

Under the old rules, you’d need a deposit of $67,474.90 (10 per cent). Now, with just a 5 per cent deposit, you’d only need $33,732.40—freeing up over $33,000!

Dr Michael Baumann, CBA’s Executive General Manager for Home Buying, says the move is about helping more Australians achieve their home ownership goals sooner.

‘Our expanded construction loan policy is designed to create more opportunities for Australians interested in building their property to achieve homeownership sooner by allowing them to access construction finance with lower deposits,’ he said.

If you’ve been eyeing a prefabricated (prefab) home—those clever, cost-effective houses built in a factory and delivered to your block—there’s more good news.

CBA has updated its policy to make it easier to finance prefab builds. Previously, buyers had to fund up to 90 per cent of the upfront costs themselves before the home was even delivered.

Now, CBA will allow progress payments of up to 60 per cent of the total contract price before the property is affixed to the land.

This could make prefab homes a much more accessible and affordable option for many Aussies.

CBA has been busy making a range of changes to help more people into the property market, including:

CBA has introduced several updates that could improve borrowing power for some buyers.

If your HECS/HELP debt is repaid within 12 months, it will now be excluded from your loan serviceability assessment, which may help if you're close to clearing your student loan.

First-home buyers who plan to rent out a room can now include up to $150 per week from one renter as part of their serviceability calculation.

Additionally, CBA is expanding its Lenders Mortgage Insurance (LMI) waiver program in a pilot phase to cover more essential workers—including paramedics, firefighters, and nurses—potentially saving eligible buyers thousands of dollars.

With the Reserve Bank of Australia (RBA) expected to cut interest rates in the coming months, borrowing could become even more affordable.

CBA economists are predicting three rate cuts this year, which would bring the cash rate down to 3.35 per cent.

Other big banks, including Westpac, ANZ, and NAB, are also forecasting rate cuts, with NAB even predicting a double cut in May.

If you’re thinking about downsizing, helping your kids or grandkids into their first home, or even building your dream retirement home, these changes could make a real difference.


Lower deposit requirements mean less cash upfront, and more flexible lending rules could open up new options for your family.

While these changes are positive, it’s important to remember that borrowing more with a smaller deposit means you’ll have a larger loan to repay—and potentially higher interest costs over time.

Make sure you take a few key steps before borrowing—start by doing your sums to understand what you can comfortably afford, including potential interest rate rises and ongoing expenses.

Check your eligibility, as not all borrowers or properties qualify for the maximum loan-to-value ratio, and you may still need to pay Lenders Mortgage Insurance if your deposit is under 20 per cent.

It’s also worth seeking advice from a mortgage broker or financial adviser to find the best option for your circumstances.
Are you or someone you know thinking about building a new home? Do you think these changes will help more Aussies enter the property market? Have you had experience with prefab homes or low-deposit loans? Share your thoughts and stories in the comments below—we’d love to hear from you.