Unlock the secrets to buying your first townhouse

Eligibility Requirements for First Home Buyer Schemes in the ACT

Eligibility for first home buyer assistance in the Australian Capital Territory requires that all buyers and their domestic partners have not owned property in the last five years. From 1 July 2026, the Home Buyer Concession Scheme exempts eligible buyers from conveyance duty regardless of property value or household income. The off-the-plan unit duty exemption applies to unit-titled properties, including townhouses purchased off-the-plan, with no property value threshold where the buyer occupies the property as their principal place of residence continuously for at least one year commencing within 12 months of completion.

Consider a buyer who has rented in the ACT for seven years and is purchasing an off-the-plan townhouse in Belconnen. The buyer has no prior property ownership history and neither does their domestic partner. The property is unit-titled and will be occupied as the principal place of residence. Under the HBC, the buyer pays no conveyance duty. Under the off-the-plan unit duty exemption, no duty applies provided the occupancy condition is met. The buyer accesses both concessions simultaneously, eliminating duty liability entirely.

Deposit Options Under the Australian Government 5% Deposit Scheme

The Australian Government 5% Deposit Scheme permits eligible first home buyers to purchase with a 5% deposit without paying Lenders Mortgage Insurance. Housing Australia guarantees the difference between the deposit and 20% of the property value. No income caps apply and no annual place limits apply. Applications are made through a participating lender panel. Fixed rate, variable rate and split loan structures may be available depending on the participating lender.

For the Australian Capital Territory, the property price cap is $1,000,000 for all areas. Both the purchase price and the lender's assessed value of the home must be at or below this cap. The scheme cannot be combined with Help to Buy but can be used alongside the HBC and the off-the-plan unit duty exemption. Buyers should confirm available loan features directly with their chosen participating lender.

Loan Structure Considerations for Townhouse Purchases

Loan structure refers to the allocation of the total loan amount between fixed interest rate and variable interest rate components. A fixed interest rate locks the rate for a specified term, typically between one and five years. A variable interest rate fluctuates in accordance with market conditions and lender discretion. A split loan structure divides the loan amount between fixed and variable components.

Variable rate loans typically permit access to an offset account and unlimited additional repayments. Fixed rate loans typically restrict additional repayments and do not permit offset accounts. Break costs may apply if a fixed rate loan is discharged or refinanced prior to the end of the fixed term. Buyers who anticipate making additional repayments or who require an offset account should consider a variable rate loan or a split loan structure with a substantial variable component.

Documentation Required for First Home Loan Application

A first home loan application requires identity verification, income verification, and liability verification. Identity verification typically requires a driver licence or passport and a Medicare card. Income verification for employees typically requires recent payslips covering at least 30 days and a recent notice of assessment from the Australian Taxation Office. Income verification for self-employed applicants typically requires two years of financial statements and two years of tax returns.

Liability verification requires recent statements for all credit cards, personal loans, car loans, and buy now pay later accounts. Lenders assess borrowing capacity by reference to net income after deduction of tax, existing liabilities, and declared living expenses. Buyers who hold unused credit facilities should consider closing those facilities prior to application to increase assessed borrowing capacity.

Pre-Approval and Its Role in the Purchase Process

Pre-approval is a conditional commitment from a lender to provide finance subject to satisfactory property valuation and no material change in the buyer's financial circumstances. Pre-approval is typically valid for between 90 and 180 days depending on the lender. Pre-approval provides buyers with clarity regarding borrowing capacity prior to making an offer.

Pre-approval does not constitute a binding commitment. The lender retains discretion to decline final approval or to vary the terms of the approval if the property valuation is below the purchase price, if the buyer's income decreases, or if the buyer incurs additional liabilities during the pre-approval period. Buyers should not exchange contracts without confirming with the lender that the property type and location are acceptable and that the valuation is likely to support the purchase price.

Strata Considerations Specific to Townhouse Purchases

Townhouses in the Australian Capital Territory are typically held under unit title or community title. Unit title is the most common form for attached dwellings including townhouses and apartments. Community title is used for some mixed-use developments and larger residential precincts. Both structures impose ongoing levies to fund common property maintenance, insurance, and administrative costs.

Lenders assess strata levies as an ongoing liability that reduces borrowing capacity. Lenders also assess the financial health of the owners corporation by reviewing the sinking fund balance, the administrative fund balance, and any history of special levies. Buyers should obtain a copy of the owners corporation disclosure statement prior to exchange. The disclosure statement includes levy amounts, fund balances, insurance details, and any proposed special levies or major capital works. A low sinking fund balance or a history of frequent special levies may indicate deferred maintenance and may affect the lender's willingness to approve finance.

Off-the-Plan Purchase Timing and Finance Approval

Off-the-plan purchases involve a delay between contract exchange and settlement, typically ranging from 12 months to 36 months depending on construction progress. Lenders typically issue conditional approval at the time of contract exchange but require the buyer to reconfirm income, employment, and liability details closer to settlement. Pre-approval obtained at the time of contract exchange may expire prior to settlement.

Buyers should confirm the lender's policy regarding reconfirmation of financial position prior to settlement. Changes in employment, income, or liabilities during the construction period may affect final approval. Buyers who anticipate a change in employment or who are planning to take parental leave during the construction period should disclose that intention to the lender prior to contract exchange. Some lenders decline to approve buyers who will not be employed at settlement, even if approval was granted at contract exchange.

Using the First Home Super Saver Scheme to Build a Deposit

The First Home Super Saver Scheme permits first home buyers to make voluntary concessional and non-concessional contributions into their superannuation fund and apply to release eligible amounts toward a home deposit. Up to $15,000 of personal contributions from any one financial year can be released, with a total cap of $50,000. Concessional contributions are taxed at 15% rather than at marginal income tax rates.

Buyers generally need to obtain a determination from the Australian Taxation Office before signing a purchase contract. The determination confirms the amount available for release. Buyers should apply for the determination at least 30 days prior to the anticipated contract date to allow sufficient processing time. Released amounts are paid directly to the buyer, not to the lender or vendor. Buyers must include the released amount in their deposit evidence when applying for finance.

Call to Action

OAUM Securities holds an Australian Credit Licence and provides finance broking services to clients based across the Australian Capital Territory. Call one of our team or book an appointment at a time that works for you to discuss home loan options and borrowing capacity for your first townhouse purchase.

Frequently Asked Questions