How Property Type Affects Your Loan Approval
The property type you choose determines how much a lender will lend you, what interest rate you pay, and whether the bank requires mortgage insurance. A registered nurse applying for a $600,000 loan against a two-bedroom apartment in Parramatta will receive different terms from a lender than the same nurse applying for the same loan amount against a three-bedroom house in Blacktown, even if both properties cost the same.
Lenders assign different risk weights to different property types. Units above a certain floor level, units in buildings with commercial ground floors, and townhouses with company title all trigger higher risk assessments, which translate directly into higher rates or lower maximum loan amounts. In our experience, nurses and midwives often focus on the price and location without understanding how the property type itself shapes the loan structure. Consider a registered nurse buying a one-bedroom unit in Footscray to live close to the new hospital. If that unit is in a building with more than 50 per cent non-residential use, several lenders will cap the loan-to-value ratio at 70 per cent regardless of the buyer's income or deposit, cutting off access to LMI waivers for nurses and requiring a 30 per cent deposit where 10 per cent would otherwise suffice.
The outcome here is not about the nurse's income or credit history. The property type alone determines the ceiling.
Units in High-Density Buildings Carry Lower Loan Limits
Lenders impose stricter lending limits on apartments in buildings above a certain size or density. A registered nurse working at St George Hospital and purchasing a unit in Kogarah may find that lenders will approve a maximum 80 per cent loan-to-value ratio if the building contains more than six storeys or more than 50 units, regardless of whether the buyer qualifies for a professional LMI waiver. This means a nurse who would otherwise qualify for a 90 per cent loan through a professional home loan package is forced to provide a 20 per cent deposit, or to choose a smaller building.
The limit applies even when the unit itself is well maintained and located in a strong rental precinct. The lender's risk model treats high-density buildings as higher risk due to resale liquidity and body corporate exposure, and that assessment overrides individual borrower strength. We regularly see nurses approve for larger loan amounts against a townhouse or older low-rise unit than they would against a newer apartment in the same suburb, purely because of the building size.
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Townhouses and Properties on Community Title Need Checking
Townhouses often sit on community title or strata title with shared common areas, and lenders treat these differently from freehold houses. A midwife purchasing a two-storey townhouse in Liverpool under community title may find that one lender approves the property under standard residential terms, while another treats it as restricted security and reduces the maximum loan-to-value ratio to 80 per cent. The difference comes down to how each lender interprets the title structure and the maintenance obligations attached to common areas.
In a scenario like this, a midwife with a 10 per cent deposit and access to a professional LMI waiver at 90 per cent loan-to-value ratio would lose that benefit at the second lender, forcing either a larger deposit or a different property choice. The same townhouse, if it were on freehold title with a small private courtyard instead of shared land, would pass both lenders without restriction. The legal structure of the title drives the outcome, not the physical dwelling or the location.
When applying for home loans for nurses, we check title type at the start of the process, not after the contract is signed. Contracts that are subject to finance give you time to confirm the property passes your lender's security policy, but a property that looked like a house on the listing can turn out to be a strata townhouse once you read the contract, and by then you are already committed unless you pull out.
Studio and One-Bedroom Units Face Higher Rates or Reduced Borrowing
Several lenders either exclude one-bedroom units entirely or reduce the maximum loan amount they will lend against them. A registered nurse purchasing a one-bedroom apartment in Clayton near Monash Medical Centre may find that the lender will only approve 70 per cent loan-to-value ratio instead of the 80 or 90 per cent that would apply to a two-bedroom unit in the same building. The lender's rationale is resale risk in the event of default, because one-bedroom units have a narrower buyer pool and can take longer to sell in a downturn.
This affects younger nurses and midwives disproportionately, because one-bedroom units are often the most affordable entry point in hospital-adjacent suburbs. A nurse working at The Alfred and looking in Prahran or St Kilda will find one-bedroom units priced $100,000 to $150,000 below two-bedroom units, but the deposit required to buy the one-bedroom unit can end up being the same or higher because of the reduced loan-to-value ratio cap. In some cases, the nurse would need a smaller deposit to buy the more expensive two-bedroom unit than the cheaper one-bedroom unit, purely because of how lenders price the security risk.
If you are set on a one-bedroom property, confirm your lender will accept it before you make an offer. Not all lenders apply this restriction, but enough do that it shapes your shortlist of lenders and loan products.
Serviced Apartments and Properties with Commercial Use Are Restricted
A unit in a building that operates partly as a serviced apartment complex or contains ground-floor retail or commercial tenancies is treated as non-standard security by most lenders. A midwife buying a two-bedroom unit in South Brisbane in a building that offers short-term serviced apartment lettings in some units will find that her lender either declines the security entirely or approves it at a maximum 70 per cent loan-to-value ratio with a higher interest rate. The restriction applies even if the specific unit being purchased is not used for short-term letting and is held on a standard residential lease.
The lender's concern is twofold: short-term letting increases wear and tear and body corporate costs, and mixed-use buildings can be harder to sell in a downturn because residential buyers are put off by transient occupants or commercial activity. The result is that nurses and midwives looking at investment loans for nurses in high-yield precincts near major hospitals need to check not just the unit, but the whole building use, before committing.
In our experience, this is the restriction that catches the most buyers by surprise, because the property looks and functions like any other apartment and nothing in the real estate listing flags the mixed use. The body corporate records and the strata plan will show it, but most buyers do not review those until after they have made an offer.
New Builds and Off-the-Plan Purchases Are Valued Differently
A nurse or midwife purchasing an off-the-plan apartment or a house-and-land package will find that the lender values the property at completion, not at the contract price. If you sign a contract to purchase a two-bedroom apartment in Chermside for $680,000 with a 10 per cent deposit and settlement in 18 months, the lender will order a valuation at settlement based on market conditions at that time. If the market has softened and the valuer assesses the property at $650,000, the lender will only lend against the lower figure, leaving you to cover the shortfall or renegotiate the contract.
This risk is highest in precincts where multiple apartment buildings are completing at the same time, flooding the market with similar stock and pushing down valuations. Off-the-plan purchases also restrict your ability to access some first home buyer schemes, because certain state grants and concessions apply only to established properties or impose price caps that off-the-plan contracts often exceed once developer margins and completion costs are included.
We recommend that nurses and midwives considering house and land package loans or off-the-plan apartments get pre-approval before signing, then reconfirm that approval closer to settlement once the valuation is ordered. The contract price is not the same as the lending value, and the gap can run to tens of thousands of dollars in a falling market.
Properties in Regional or Postcode-Restricted Areas Limit Lender Choice
Some lenders restrict lending in certain postcodes or regions entirely, either because of postcode-level data showing higher default rates or because the lender has reached its exposure limit in that area. A registered nurse relocating to a regional hospital and purchasing a house in a smaller town may find that only two or three lenders will approve the loan, and those lenders may not offer the same low deposit options or professional packages available in metropolitan areas.
This does not mean the property is unsuitable or overpriced. It means the lender's risk model treats that location as higher risk, either because resale takes longer or because employment diversity is lower. In practice, a nurse working at a regional public hospital has more employment security than many metropolitan borrowers, but the lender's postcode restriction applies regardless.
If you are moving to a regional area for work, speak to a mortgage broker for nurses who works with lenders active in that region. The postcode restrictions are not published, and they change quarterly as lenders adjust their portfolios, so a broker with access to multiple lenders can identify which ones will lend in your target area before you start looking at properties.
How to Choose a Property Type That Supports Your Loan Structure
Start by confirming what property types your target lenders will accept at your required loan-to-value ratio. If you need a 90 per cent loan to make the purchase work, and you qualify for a professional LMI waiver, check that the property type does not reduce that maximum ratio back to 80 per cent. If it does, you either need a larger deposit or a different property.
Second, get the title type and building structure checked before you make an offer. A property listed as a townhouse may be on strata title, freehold title, or community title, and each structure triggers different lending terms. The contract will specify the title type, but by the time you see the contract, you have usually made an offer. Ask the selling agent or conveyancer for the title type and body corporate records before you commit.
Third, avoid properties in buildings with mixed residential and commercial use unless you have confirmed your lender will accept them at your target loan-to-value ratio. The higher deposit requirement or higher rate can price you out of the purchase, even if the property itself suits your needs.
Call one of our team or book an appointment at a time that works for you. We check property type and security policy before you make an offer, not after the contract is signed, so you know what loan structure and deposit you need before you commit.
Frequently Asked Questions
Do lenders treat units differently from houses for loan approval?
Yes, lenders assign different risk weights to units, townhouses and houses. Units in high-density buildings, buildings with commercial use, or one-bedroom units often face lower maximum loan-to-value ratios or higher interest rates. A nurse who qualifies for a 90 per cent loan against a house may only be approved for 70 or 80 per cent against certain unit types.
Can a one-bedroom unit affect how much I can borrow?
Yes, several lenders either exclude one-bedroom units or cap the loan-to-value ratio at 70 to 80 per cent instead of the standard 80 to 90 per cent. This means you may need a larger deposit to buy a one-bedroom unit than you would for a two-bedroom unit in the same building, even though the one-bedroom property costs less.
What happens if I buy off-the-plan and the valuation comes in lower than the contract price?
The lender will only lend against the valuation at settlement, not the contract price. If the market softens and the valuer assesses the property below your contract price, you will need to cover the shortfall with additional deposit or renegotiate the contract. This risk is highest in precincts where multiple buildings are completing at the same time.
Do townhouses on community title get treated differently by lenders?
Yes, some lenders treat townhouses on community title or strata title as restricted security and reduce the maximum loan-to-value ratio to 80 per cent. The same townhouse on freehold title would pass at 90 per cent. The legal structure of the title drives the lending terms, not the physical dwelling.
Will lenders approve a unit in a building with serviced apartments?
Some lenders will decline the property entirely, and others will cap the loan-to-value ratio at 70 per cent and charge a higher interest rate. The restriction applies even if the specific unit you are buying is not used for short-term letting. Check the building use and body corporate records before making an offer.
