First Time Buyer Advice: The Pros and Cons

Eligibility Requirements Under Federal and Territory Frameworks

First home buyer eligibility is determined by a combination of federal, state, and territory legislation that varies materially depending on jurisdiction and the assistance program being applied for. Eligible first home buyers can purchase with a 5% deposit under the Australian Government 5% Deposit Scheme, operative from 1 October 2025. The deposit percentage does not determine eligibility in isolation. Applicants must not hold a relevant prior property interest, must be individuals aged 18 or over, and must intend to occupy the property as their principal place of residence for the prescribed occupancy period.

In the Australian Capital Territory, the regulatory landscape changed substantially from 1 July 2026. Eligible buyers are now fully exempt from conveyance duty regardless of the value of the property purchased and regardless of household income under the Home Buyer Concession Scheme. This removes both the property value limit and the income threshold that applied to transactions settling before that date. All other eligibility requirements continue to apply, including the requirement that the buyer own and occupy the property as their principal place of residence continuously for a minimum of one year commencing within 12 months of settlement.

Consider a buyer who is 24 years of age, has never held title to residential property, and has identified a two-bedroom unit in Braddon. The buyer earns $85,000 per annum and has saved a deposit sufficient to meet the 5% threshold under the Australian Government 5% Deposit Scheme. The buyer will be exempt from conveyance duty under the ACT Home Buyer Concession Scheme and will not be required to pay lenders mortgage insurance if the application is submitted through a participating lender under the federal scheme. The buyer must be prepared to satisfy the occupancy requirement and provide declarations to both the lender and the ACT Revenue Office as part of the application process.

The Structure and Function of Low Deposit Options

Low deposit options permit eligible first home buyers to purchase with a 5% deposit, and eligible single parents or legal guardians can purchase with a 2% deposit, with Housing Australia guaranteeing the difference between the deposit and 20% of the property value. No lenders mortgage insurance is payable under these arrangements. Applications are made through a participating lender panel of 31 lenders comprising three major banks and 28 non-major lenders. Applications cannot be made directly to Housing Australia.

The absence of income caps under the Australian Government 5% Deposit Scheme from 1 October 2025 removes a barrier that previously applied under earlier iterations of the program. No income caps apply and no annual place limits apply. This permits a broader cohort of applicants to proceed, provided they meet serviceability requirements imposed by the individual lender. Serviceability is assessed independently by each participating lender and is based on the applicant's income, liabilities, living expenses, and the lender's assessment methodology. A formal home loan application will require verification of income, employment history, and credit standing.

Property price caps continue to apply and vary by location. For the Australian Capital Territory, buyers should verify the applicable cap with the participating lender at the time of application, as these caps are updated periodically and may differ from those published for other jurisdictions.

First Home Owner Grant Structures Across Jurisdictions

First home owner grant amounts, eligibility thresholds, and property type restrictions differ materially between jurisdictions. The Australian Capital Territory does not currently offer a first home owner grant. The grant was replaced by the Home Buyer Concession Scheme effective 1 July 2019. Buyers in the ACT do not receive a cash payment at settlement equivalent to the grants available in other jurisdictions.

In New South Wales, the First Home Owner Grant provides $10,000 for new builds or substantially renovated homes only, with a purchase cap of $600,000 or a land and build cap of $750,000. In Queensland, the First Home Owner Grant provides $15,000 for new homes valued under $750,000 for contracts signed from 1 July 2026. The grant was $30,000 for eligible contracts signed between 20 November 2023 and 30 June 2026. All other eligibility criteria remain unchanged. The grant is not available for buyers of established homes in that jurisdiction.

ACT buyers purchasing established homes or new builds interstate should be aware that eligibility for a first home owner grant in another jurisdiction does not preclude eligibility for the ACT Home Buyer Concession Scheme, provided the buyer meets the residency and occupancy requirements applicable to the ACT transaction. However, buyers must not have received a first home owner grant or equivalent concession in another jurisdiction if that prior benefit creates a relevant property interest under the ACT scheme's eligibility criteria. Legal and tax advice should be obtained where there is any uncertainty.

Conveyance Duty Exemptions and Off-the-Plan Concessions in the ACT

From 1 July 2026, eligible buyers are fully exempt from conveyance duty regardless of the value of the property purchased and regardless of household income under the ACT Home Buyer Concession Scheme. This represents a significant structural change from the prior regime, which imposed both a property value limit and an income threshold. The removal of these limits applies to all eligible first home buyers transacting in the ACT from that date.

A separate concession applies to off-the-plan unit purchases. From 1 July 2026, no duty applies to off-the-plan unit owner occupier purchases with no property value threshold. This exemption applies to unit-titled properties such as apartments and townhouses. The buyer must be an individual and must occupy the property as their principal place of residence continuously for at least one year commencing within 12 months of the date of completion. This replaces the prior position where the exemption applied only to properties valued at $1,020,000 or less for contracts exchanged between 1 July 2025 and 30 June 2026.

Off-the-plan buyers in Canberra suburbs such as Belconnen, Gungahlin, and Woden are subject to these revised provisions. The buyer must ensure that the contract terms, settlement arrangements, and occupancy timeline satisfy the requirements of both the lender and the ACT Revenue Office. Buyers should obtain written confirmation from the developer regarding expected completion dates and any conditions precedent to settlement that may affect the buyer's ability to satisfy the occupancy requirement within the prescribed period.

Combining Federal and Territory Assistance Programs

State and territory grants and stamp duty concessions can generally be used alongside the Australian Government 5% Deposit Scheme. Help to Buy cannot be combined with the 5% Deposit Scheme but can in most jurisdictions be used alongside applicable state grants and duty concessions. Restrictions vary by jurisdiction and program.

The Australian Government's Help to Buy program, operative from 5 December 2025, permits the Australian Government to contribute up to 40% of the purchase price for a new home and up to 30% for an existing home in exchange for a proportional equity stake. A minimum 2% deposit is required, and income limits are $100,000 for individuals and $160,000 for joint applicants or single parents. Property price caps vary by location. The program is available in New South Wales, Victoria, Queensland, South Australia, the Australian Capital Territory, and the Northern Territory. Western Australia joined in early 2026. Tasmania has opted out.

ACT buyers applying for Help to Buy must satisfy the income limits, property price caps, and occupancy requirements applicable to that program in addition to any requirements imposed by the participating lender. Buyers should request a copy of the equity participation agreement and the buyback provisions before proceeding to contract. The terms governing the Australian Government's equity stake, including valuation methodology, buyback price calculation, and circumstances permitting or requiring buyback, are material to the long-term financial position of the buyer and should be reviewed by a solicitor.

Pre-Approval Processes and Application Timeframes

Pre-approval is a conditional indication from a lender that finance may be made available subject to satisfactory property valuation, final income verification, and the absence of material adverse change in the applicant's financial position. Pre-approval does not constitute a binding commitment by the lender to advance funds. The lender retains discretion to decline the application or vary the terms prior to formal approval.

A first home buyer should obtain pre-approval before making an offer on a property. The pre-approval process requires the applicant to provide payslips, tax returns, bank statements, and details of existing liabilities. The lender will conduct a credit assessment and may request additional documentation if the applicant's employment is casual, contract-based, or self-employed. The pre-approval period is typically 90 days, after which the applicant must reapply or request an extension.

Consider a scenario where a buyer has located a property in Dickson and wishes to proceed using the Australian Government 5% Deposit Scheme. The buyer submits a pre-approval application to a participating lender, providing three months of payslips, two years of tax returns, and six months of transaction statements for all accounts. The lender assesses serviceability and issues conditional pre-approval subject to property valuation. The buyer makes an offer, the offer is accepted, and the contract is executed subject to finance. The lender orders a valuation. The valuation is returned at a figure below the contract price. The lender will only advance funds based on the lower valuation figure, requiring the buyer to either renegotiate the contract price, increase the deposit, or withdraw from the transaction. The buyer should be aware of this risk before proceeding to contract and should consider including a finance clause with sufficient time to obtain formal approval and valuation.

Fixed and Variable Interest Rate Structures

Interest rate structures are classified as fixed, variable, or split. A fixed interest rate remains unchanged for a specified term, typically one to five years. A variable interest rate fluctuates in response to changes in the official cash rate and lender pricing decisions. A split rate structure divides the loan balance between a fixed portion and a variable portion, permitting the borrower to hedge against rate movements while retaining access to offset or redraw features on the variable component.

Fixed interest rates provide certainty of repayment amount during the fixed term but restrict the borrower's ability to make additional repayments above the annual threshold without incurring break costs. Variable interest rates permit unlimited additional repayments and access to offset accounts and redraw facilities. An offset account is a transaction account linked to the home loan, with the balance offset against the loan balance for interest calculation purposes. A redraw facility permits the borrower to withdraw additional repayments made above the minimum required repayment, subject to lender terms.

Buyers concerned about fixed rate expiry at the end of the initial fixed term should be aware that the loan will revert to the lender's standard variable rate unless the borrower elects to refix or refinance to another lender. The standard variable rate is typically higher than discounted variable rates available to new borrowers. Borrowers should review their loan structure at least 90 days before the expiry of the fixed term to assess available options.

Occupancy Requirements and Compliance Obligations

Occupancy requirements are a condition of eligibility for both federal assistance programs and territory-based concessions. The Australian Capital Territory Home Buyer Concession Scheme requires the buyer to own and occupy the property as their principal place of residence continuously for a minimum of one year commencing within 12 months of settlement. Failure to satisfy this requirement may result in the withdrawal of the concession and the imposition of duty calculated at standard rates, together with interest and penalties.

The buyer must notify the ACT Revenue Office if circumstances change during the occupancy period, including if the buyer ceases to occupy the property, leases the property, or sells the property before the minimum occupancy period is complete. Exemptions may apply in limited circumstances, including hardship, relocation for employment, or relationship breakdown, but these exemptions are discretionary and must be applied for in writing.

Buyers who fail to comply with occupancy requirements under the Australian Government 5% Deposit Scheme or Help to Buy may be required to repay the benefit received, including any reduction in lenders mortgage insurance premium or any equity contribution made by Housing Australia. Buyers should retain evidence of occupancy, including utility bills, rates notices, and correspondence addressed to the property, for the duration of the prescribed period.

Contact one of our team or book an appointment at a time that works for you to ensure your application is structured correctly and that all regulatory obligations are satisfied before proceeding to settlement.

Frequently Asked Questions