Compared with standard residential loans, vacant land loans typically require:

• A. A lower deposit and lower LVR.
• B. A higher risk assessment and often stricter terms or higher LVR.
• C. No additional documentation.
• D. No appraisal or valuation.

Answer: (B)

Vacant land lending is higher risk for lenders because there’s no income stream from the asset and development outcomes can be uncertain. Because of this, underwriting tends to be more conservative, with a focus on a thorough risk assessment and tighter loan conditions. You’ll commonly see stronger credit approvals criteria, higher equity requirements, more careful servicing assessments, and sometimes stricter terms or a more conservative LVR. The emphasis is on mitigating the greater risk associated with vacant land. Lower deposits or LVRs, or no valuation/documentation, would not align with the elevated risk profile, so those options don’t fit as well.