Postcode Location Guide

Postcode details

Find out if the location of your property is viewed as a high risk by the banks.
Is it a low doc loan? ?

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What are the location categories?

Each lender and LMI provider has a guide that assigns a category for each postcode in Australia. There are typically five categories:

  • Metro Plus: Established properties in well sought after metropolitan locations. Very low risk.
  • Category 1: Metro areas, capital cities in each state & major regional centres with a large population. Generally considered to be low risk.
  • Category 2: Medium sized regional centres. Considered to be low to medium risk.
  • Category 3: Smaller towns with fluctuating property markets. Considered to be medium to high risk.
  • No Category / National Locations: All other postcodes that aren’t included in the above categories. Considered to be a very high risk.
  • High Density: Inner city suburbs or areas with high rise residential buildings. High density units in these areas are considered to be very high risk.

A particular area or postcode may have different classifications for different lenders depending on their interpretation of the property market in that area.

Some lenders will also take historical data into account. For example, Genworth Financial considers Western Sydney to be high risk because they’ve had a lot of losses in that area. On the other hand, QBE LMI has more restrictions on some areas that have an unstable economy.

Why do lenders have postcode categories?

Lenders assess loans differently depending on the location of the property being offered as security. They apply stricter lending policies in high risk locations to limit their risk. In most cases, this means they often reduce the maximum available LVR and the maximum loan amount that you’re able to borrow.

For example, if you apply for a 95% mortgage in a Category 3 location, the lender may decide that this is too high a risk and therefore may request that you reduce your loan to 90% or 80% LVR. If this happens and you’re unable to come up with a larger deposit, your mortgage application will be declined.

Home loans with no postcode restrictions

Some of our lenders don’t have any postcode restrictions and will consider any location in Australia, allowing you to borrow up to 95% LVR. You can read more on our no postcode restrictions page.

Although, there are lenders with no location restrictions, they may limit your loan amount in some states due to comments made by their valuer.

Typically NSW, VIC, QLD and the ACT do not have problems like this due to the valuer. However TAS, SA, NT and WA have extremely remote areas which cause some valuers to list adverse comments in their report to the bank.

  • Michael

    I have applied for a home loan in NAB last month, however they turned me down saying that the postcode was risky one. What are the specific criteria that makes a postcode or a certain address more riskier than the others?

  • Hi Michael,

    Different banks have different policies on what type of security is acceptable and have a risk matrix based on various factors. For a guide, they assess the risk based on the marketability of the property, population size, real estate values, comparable sales, local economy and presumed future of the area where the property lies. When assessing a home loan application, they consider all these factors.

  • Smaug

    I want to borrow 80% for a 420k property that’s zoned as a farm but only has a residential house and 15 acres on it and it’s a category 4 location. I earn 92k a year, have been working for over a decade in my current job and have no dependents plus no major issues. I went to a bank and they told me that won’t go over 70% so am I really stuck with that LTV?

  • Hey Smaug,

    We may be able to find you a lender that can go 80% but that will depend on a few factors such as the condition of the property, whether or not it’s flood zoned, irrigation licence, etc. Please call 1300 889 743 to discuss this with an expert mortgage broker or have one of us contact you instead by simply placing an online enquiry:

  • jett

    The bank I went with earlier reject my application although it was just a small town. They said that it was due to lack of comparable sales. No other option then?

  • Hi jett,

    If you are buying in a small town then the property market will not be very active and as a result the bank valuer will be unable to find comparable sales. The great news is that some lenders can accept properties even with few comparable sales. You may need to reduce the percentage that your are borrowing against the property value (LVR) to enable you to get approval.

  • chaf

    How much can I borrow to buy a hobby farm? It desn’t seem to be in a very high risk location so I should be able to go more than 80%, right?

  • Hi chaf,

    The amount you can borrow generally depends on the size of the property. You may be able to borrow up to 95% of the property value for a hobby farm of up to 50ha. If it’s between 50-60ha then this will drop to 80% LVR. For land size up to 100ha, this will be 70-80% LVR. Please check out the hobby farm loans page to learn more:

  • Louis

    Will I be able to borrow to buy a property in a no category location?

  • Hey Louis,

    Some of our lenders do not have any postcode restrictions so they consider no category locations in Australia and allow you to borrow up to 95% LVR. They may limit your loan amount in some states though. Please call us on 1300 889 743 if you’d like to speak about this with one of our experts.

  • Mel Semmler

    wanting to buy 18acre property on outskirts of 5412. Selling price 280. Currently have mortgage 165K will rent this property out to family. Have 100+ equity. Borrowing amount 300K. 7K credit card. 1 adult child at home but has job. Earning 100K+ jointly. Applying Peoples Choice. what are chances?

  • Hi Mel,
    I’m not sure about People’s Choice Credit Union’s policy so you’d need to discuss with them. However based on what you’ve said it’s likely we can get you to qualify with another lender if that doesn’t work out.

  • Zoe Q Lin

    Is this still relevant? Bought off the plan is Homebush…

  • Hi Zoe,
    Yes this is up to date information. Homebush is a high density location. If you have the specific address of the property you purchased (no need for unit number) then we can confirm the lending rules for that block.

  • Bidaan

    Hi Team, Does the location of a property determines whether we will get the first home owners grant or not?

  • Actually, no Bidaan. Some lenders have certain restrictions about specific location and they’ll restrict whether you’ll get approved for a mortgage or not.. The First Home Owners Grant (FHOG) is independent of the location, however, the grant amount will vary depending on which state you are in. Also, it’ll be based on whether you are buying a new or established home, if you are buying vacant land and building and the purchase price of the property that you are buying.
    Please go through our First Home Owners Grant for more info

  • Simon

    Hi team, am looking at 250acre property West nsw $650000 purchase price,fully established farm, family income $150000 deposit $100000-$120000, I would like to no what I can borrow and at what deposit I would need Any help would be great
    Cheers. Simon

  • Hi Simon
    The problem would be your deposit size. For properties over 60 ha (148 acres) you need to have a substantial deposit. In most cases you can borrow 60% or maybe 70% of the property value. So you’d be quite a bit short unless your family can gift or loan you a deposit or unless you have other property that you can add as additional security for the loan.