If the property you want to buy is located in a flood zone, you may have difficulty getting a home loan.

However, depending on where your property is and how strong you are financially, we may be able to help you qualify.

Banks care about how often flooding occurs

Flood zoning has many possible time frames.

For example, ‘1 in every 100 year zoning’ means that, on average, the property is expected to flood once every 100 years.

This would be expressed as 1:100 year flood zoning or 1% Annual Expedient Probability (AEP).

If your property is zoned to flood more often than 1:100 years then you are unlikely to be able to get a flood zone home loan.

How much can I borrow?

  • 1% AEP (1:100 year flood zone): 95% of the property value.
  • 2% AEP (1:50 year flood zone): 80% of the property value on a case by case basis.
  • 5% AEP (1:20 year flood zone): In most cases we cannot assist with these properties.
  • 100% loans: Available with some of our lenders if you have a guarantor.

Discounts: Competitive professional package and basic loan discounts are available.

Note: Lenders are hesitant to lend to riskier flood affected properties. We may need to obtain additional records from council or a valuation report to be able to find a lender to approve your loan.

What requirements do our lenders have?

  • You must be allowed to build on the property or there must already be a house on the property.
  • You must be able to insure the property.
  • The maximum flood height must be lower than the floor height of the house.
  • The bank valuer must agree that the property represents an acceptable risk to the bank.

In some cases you may be able to obtain finance for properties that flood up to 1:50 years (2% AEP) if you have a strong application and can meet the above requirements.

What do the lenders think?

There are many issues with a flood zoned property. The fact the property is susceptible to damage through flooding means that there is a real risk involved for the lender. Most banks will not approve a home loan secured by that property.

Your local council will probably not approve new developments on that land so you may be unable to obtain flood insurance.

Can I still borrow?

As a general rule, 1:100 year zoned land is acceptable because this type of land can still be developed and buildings on the land can be insured.

Banks are willing to accept them as security for a mortgage whereas up to 2% AEP land may or may not be accepted.

However, where you have a good credit history and your finances are strong, you will be in a better position to borrow and the banks may consider lending to you.If you have been able to obtain flood insurance, this will also help your application.

If you are looking to apply for a loan, please call us on 1300 889 743 or enquire online today and we can help you get approval.

What is a flood zone?

If your home is in an area that can be affected by floods then your property may have a flood zoning. Flooding in the area may be minor, moderate or major, depending on the climate and the region that you live in.

In many cities and rural areas across Australia, flooding is common. They are especially prone to occur in dry areas and are generally the result of heavy rain.

Flash flooding is a type of flooding that occurs during heavy storms and produces a large amount of storm water which burdens the drainage system and results in a flood.

Flood insurance requirements

Although flooding is a natural event beyond your control, there are still ways to minimise damage to your property.

It is very important to ensure that you have an insurance policy that covers the risk of flooding. This is a factor that banks take into account when considering whether to approve your mortgage.

Insurance providers such as the NRMA offer flood cover for a variety of events including:

  • High rainfall which causes nearby rivers to overflow, creating a flood which damages your home.
  • High river and dam levels which cause flooding to your home.
  • May cover flooding that occurs as a result of rising sea levels caused by severe storms.

Cover differs from storm damage and water damage so it is best to speak to your insurance provider to make sure that you are covered in the event of flooding.

Protecting your home

Properties built on stilts offer greater protection from flooding.

It is also important to remain aware of a potential flood threat by monitoring websites such as the Bureau of Meteorology. This website provides up to date information on the risk of flooding in your area.

Keeping informed about flood warnings and heavy rainfall will ensure that you are better prepared if a flood occurs.

Speak to us today!

We are the experts in getting loans approved:

  • We know which banks will accept your home as security for a loan
  • Our mortgage brokers are credit experts who know the lending policies of over 30 financial institutions
  • We offer nationwide services
  • Free financial services for most loan types

If you are looking to purchase a home in a flood zone and need finance, please call us on
1300 889 743 or enquire online today.

We can help you apply with the right lender that will approve your mortgage, regardless of the potential risks involved. Give us a call today!

  • Matthew

    I’m mulling to get a home loan. Can I borrow more as the home loan from the bank if I insure the property under flood zoning with flood cover?

  • Hi Natalie,

    Although lenders require you to have a flood cover for your flood zoned property, the lenders will not consider this in determining the LVR (Loan to Value Ratio) for the property. They consider the following in determining the loan amount:
    1% Annual Exceedance Probability (AEP) (1 in 100 year event flood zone): 95% of the property value.
    2% AEP (1 in 50 year event flood zone): 80% of the property value on a case by case basis.
    5% AEP (1 in 20 year event flood zone): In most cases we cannot assist with these properties.

  • fargher

    I want to build in a 1% AEP location and I’ve researched the risks and everything but I’m not sure how much deposit I actually need. Any ideas?

  • Hi fargher,

    Most people go over budget so we recommend that you keep saving during the construction process and try to avoid any large expenses until construction is complete. As a general rule, we try to ensure that you get approval for a slightly higher loan amount. This is to ensure that there are plenty of funds available. There’s nothing worse than running out of funds when your house is almost complete.

  • MiMyers

    The house I want to buy is in a 1:100 zone and 95% sounds great but I’ve had to deal with a few non-financial institution defaults recently so will that hamper my chances of getting mortgage approval?

  • Hi MiMyers,

    You should be able to apply with a major bank without having to meet additional requirements as long as your bad credit history is limited to a paid non-financial institution debt of less than $1,000 such as a missed electricity, water or telco bill. If you don’t qualify with a major bank, you may still be able to get a slightly lower interest rate with a non-bank lender.

  • fox

    I want to buy in a 1% AEP zone but it’s in Tasmania. Can I still borrow 95% for this?

  • Hello fox,
    Yes, we can help you borrow up to 95% of the property value to buy a house in Tasmania. If you have a guarantor then you can actually borrow up to 105% of the property value. Do note that properties on rivers with no road access are assessed on a case by case basis. Please call 1300 889 743 to discuss with an expert mortgage broker.

  • Kaz

    I’ve got my sights on a 2% AEP zone property but it has access to groundwater only right now. Can I still borrow 80% or will I need to borrow less to be approved?

  • Yes, some lenders may allow you to borrow up to 80% for that. However, some may not approve unless you have a guarantor or you drop the LVR of the loan. Please call 1300 889 743 to discuss your options with an expert home loan specialist.

  • Nick Graves

    Which lenders should I go through for a flood zones house? Most of our town is in the flood zone.

  • Hi Nick,
    It depends on the zoning. What is the AEP? I.e. how often will it flood? Also what’s the name and state of the town?

  • Nick Graves

    It has only flooded once since 2008. We live in Humboldt Iowa

  • Nick Graves

    We are in a hundred year flood plain

  • Hi Nick,
    We only lend in Australia sorry.

  • Mark

    Hi there

    I’m looking to buy a property in Canterbury (NSW) and I found out that the house I like is in the “Flood planning area”. Although it’s not a flood zoned area (s149 certificate stated this is a possible flood area) However, I heard that is it hard to take out a loan for this kind of property as it is deemed as flood zone? Is it true?
    And I did a bit of research saying that some bank will need a “flood survey” in order to approve a loan. What’s a flood survey?

    Thanks in advance


  • Hi Mark,
    We’ve financed quite a few properties near the canals in Canterbury or further south near the George’s River which are flood affected. What we’ve found is exactly what you’ve said. Some properties are flood zoned (e.g. 1% AEP) and some are just in a flood planning area.
    I’ll email you and cc one of our mortgage brokers who specialises in flood zones. If you send him the link to the property you are looking at then we can check the council zoning map and let you know how the banks will view it. Best of luck with your purchase! In most cases a flood survey isn’t needed, it’s pretty black and white for us from the zoning maps.