How to Buy Your First Apartment with Confidence

Apartments Are a Practical Entry Point for Most First Home Buyers

Apartments often cost less than houses in the same area, which means you can get into the market sooner with a smaller deposit. They also tend to have lower ongoing maintenance costs since the body corporate handles external upkeep. For first home buyers who want to stop renting and start building equity, an apartment can be a solid first step.

The process of buying an apartment involves a few extra considerations compared to buying a house, particularly around lender requirements and strata reports. But once you understand what lenders look for and how to structure your home loan, the actual steps are straightforward.

How Much Deposit Do You Need for an Apartment?

Most lenders will accept a 10% deposit for an apartment purchase, plus funds to cover stamp duty and settlement costs. If you have access to the First Home Guarantee, you can purchase with as little as a 5% deposit and avoid paying Lenders Mortgage Insurance, which can save you thousands.

Consider a buyer looking at a two-bedroom unit priced around the median for their target suburb. With a 5% deposit under the First Home Guarantee, they would need genuine savings for the deposit itself, plus separate funds for stamp duty, conveyancing, building and pest inspections, and strata report fees. In some states, first home buyer stamp duty concessions can reduce or eliminate the stamp duty component entirely, which makes the upfront cost much more manageable.

If you are using a gifted deposit from family, most lenders will accept this as long as it is genuinely a gift and not a loan that needs to be repaid. The First Home Super Saver Scheme is another option that lets you save up to $50,000 inside your super fund and withdraw it for your deposit, taxed at a concessional rate.

What Do Lenders Look for When Approving an Apartment Loan?

Lenders assess apartments differently to houses because the property is part of a strata scheme. They will check the body corporate financials to make sure the owners corporation has enough funds in reserve and that there are no major defects or special levies planned. If a building has less than 50% owner-occupiers, some lenders will reduce how much they are willing to lend or decline the application altogether.

You will also need to provide a strata report as part of your loan application. This report outlines the financial health of the body corporate, any upcoming maintenance, and whether there are disputes or legal issues. Lenders use this to assess risk. If the report shows a low reserve fund or a large special levy about to be raised, it can affect your borrowing capacity or the loan terms offered.

In our experience, buyers who order the strata report early in the process avoid delays later. Some lenders will issue pre-approval without the strata report, but they will require it before final approval. Getting it upfront means you know whether the apartment will meet lender requirements before you make an offer.

Fixed or Variable Interest Rate for Your First Apartment Loan?

You can choose a fixed interest rate, a variable interest rate, or a split between the two. A fixed rate locks in your repayments for a set period, which can help with budgeting if you prefer certainty. A variable rate moves with the market, which means your repayments can go up or down, but you usually get access to an offset account and the flexibility to make extra repayments without penalty.

Many first home buyers split their loan, fixing a portion for stability and leaving the rest variable to take advantage of offset and redraw features. If you are buying an apartment and want to pay down the loan faster, a variable rate or split structure gives you more options.

Your choice will depend on your income stability, how much you value certainty, and whether you plan to make extra repayments. There is no single right answer, but understanding the trade-offs helps you make a decision that fits your situation.

Body Corporate Fees and How They Affect Your Borrowing Capacity

Body corporate fees are an ongoing cost that lenders include in their serviceability calculation. If the quarterly levy is high, it reduces how much you can borrow because it affects your ability to service the loan. When you apply for a home loan, lenders will ask for the body corporate fee amount and factor it into their assessment alongside your other expenses.

As an example, a buyer applying for a loan on a unit with body corporate fees of $1,500 per quarter will see that $6,000 annual cost counted against their borrowing capacity. If the fees are unusually high relative to the property value, some lenders may view the apartment as higher risk, particularly if the fees indicate deferred maintenance or planned works.

Before making an offer, ask the selling agent for a copy of the body corporate budget and recent meeting minutes. This gives you a sense of whether fees are likely to increase and whether there are any major works planned that could result in a special levy.

First Home Buyer Grants and Concessions for Apartment Purchases

Most state-based first home buyer grants apply to new homes only, but stamp duty concessions are often available for both new and established apartments. In New South Wales, eligible first home buyers can access a stamp duty exemption on properties valued under $800,000. In Victoria, you pay no duty up to $600,000 and a reduced amount up to $750,000.

Queensland offers up to $30,000 for new homes under $750,000, which includes new apartments, and this grant is available until 30 June 2026. South Australia has no stamp duty for first home buyers purchasing new homes regardless of property value, which can result in significant savings on a new apartment.

If you are buying an established apartment, the stamp duty concession is often the main benefit available. You can still use the First Home Guarantee to reduce your deposit requirement, and you may be eligible for the First Home Super Saver Scheme to help build your deposit. Combining these federal schemes with state-based concessions can reduce your upfront costs considerably.

How to Structure Your Loan Application for an Apartment Purchase

When you apply for a home loan on an apartment, you will need to provide the same documentation as any other property purchase, plus the strata report and body corporate details. Most lenders will want to see payslips, tax returns, bank statements, and proof of your deposit savings. If you are using the First Home Guarantee, your broker will need to submit your application through the government portal as part of the loan process.

Pre-approval gives you a clear idea of your borrowing capacity before you start looking at properties. It also shows sellers and agents that you are a serious buyer, which can be helpful in a competitive market. Once you find an apartment you want to buy, you will move from pre-approval to full approval, which includes the lender reviewing the strata report and conducting a valuation.

If the valuation comes in lower than the purchase price, the lender will base the loan on the valuation figure, not the contract price. This can affect your deposit requirement and loan-to-value ratio, so it is worth being conservative with your offer price or having a buffer in your savings to cover any shortfall.

Offset Accounts and Extra Repayments on Your First Loan

An offset account is a transaction account linked to your home loan. The balance in the offset reduces the interest charged on your loan without locking the funds away. If you have a variable rate loan, most lenders will offer an offset account as part of the package.

If you prefer a fixed interest rate, you will usually lose access to a full offset, though some lenders offer a partial offset or redraw facility instead. Redraw lets you make extra repayments and withdraw them later if needed, but it is not as flexible as an offset because the funds are held within the loan rather than in a separate account.

For first home buyers who expect to have surplus income or savings after settlement, an offset account can reduce the total interest paid over the life of the loan. It also keeps your savings accessible, which is useful if you need funds for urgent repairs or other expenses.

Call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions