Everything You Need to Know About Buying Your First Home

You Don't Need 20% to Buy in Canberra

You can buy with as little as 5% deposit through the Australian Government 5% Deposit Scheme. In the ACT, the property cap is $1,000,000, and there's no income limit. The government guarantees the gap between your deposit and 20%, so you don't pay Lenders Mortgage Insurance. You apply through a participating lender, not directly through Housing Australia.

Consider a buyer who has saved $50,000. At the ACT cap, that's a 5% deposit on a $1,000,000 property. Without the scheme, they'd need $200,000 to avoid LMI or face an LMI bill of around $25,000 to $35,000. With the scheme, they avoid that cost entirely and can buy now rather than saving for another three years.

The Australian Government 5% Deposit Scheme removed annual place caps from October last year, so there's no queue. You either meet the eligibility criteria or you don't. Fixed, variable and split loan options are available depending on your lender.

Canberra's Stamp Duty Position Changed in July

From 1 July 2026, first home buyers in the ACT are fully exempt from conveyance duty regardless of property value or household income. The previous cap of $1,020,000 and the income threshold no longer apply. You need to be a first home buyer, or someone who hasn't owned property in the last five years, and you must live in the home as your principal place of residence for at least 12 months starting within one year of settlement.

A buyer purchasing at the suburb's current median saves several thousand dollars compared to someone who settled a week earlier under the old rules. That saving can go toward furniture, settlement costs, or sitting in an offset account reducing interest from day one.

There's no First Home Owner Grant in the ACT. It closed in 2019 and was replaced by the Home Buyer Concession, which is now the full duty exemption.

Pre-Approval Tells You What You Can Borrow

Pre-approval is a conditional commitment from a lender confirming how much they'll lend you, subject to property valuation and final checks. It's not a guarantee, but it gives you a borrowing limit before you start looking.

Lenders assess your income, expenses, debts, and deposit. They look at payslips, tax returns, bank statements, and existing liabilities like HECS debt or car loans. A buyer earning $90,000 with a $40,000 HECS debt and a $15,000 car loan will have a different borrowing capacity than someone on the same income with no debt.

Pre-approval usually lasts 90 days, though some lenders offer longer. If rates rise or your circumstances change during that period, the approval may need updating. Getting pre-approval through a broker means you're not locked to one lender, and we can structure the application to give you the strongest position when you're ready to make an offer.

Offset Accounts and Redraw Serve Different Purposes

An offset account is a transaction account linked to your home loan. Every dollar in the offset reduces the balance on which interest is calculated. If you have a $500,000 loan and $20,000 in your offset, you're charged interest on $480,000. You can access the money anytime without restriction.

Redraw lets you withdraw extra repayments you've made above the minimum. Not all lenders offer it, and some charge fees or limit how often you can access it. If you're relying on that money for an emergency or renovation, an offset gives you more control.

A buyer using low deposit options and entering the market with a smaller buffer will benefit more from an offset because they can build liquidity while still reducing interest. Fixed rate loans don't usually come with offset accounts, though some lenders offer limited offset on fixed portions of a split loan. If you fix your rate, confirm what features you're giving up before you lock it in.

Variable Rates Give You Flexibility, Fixed Rates Give You Certainty

A variable rate moves with the market. If the Reserve Bank cuts rates, your repayments drop. If rates rise, so do your repayments. You can make extra repayments without penalty, and most variable loans come with offset accounts and redraw.

A fixed rate locks in your repayments for a set period, usually one to five years. You know exactly what you'll pay, which helps with budgeting. The trade-off is less flexibility. Most fixed loans limit extra repayments to around $10,000 to $30,000 per year, and if you break the loan early, you may face break costs.

Some buyers split their loan, fixing part for certainty and keeping part variable for flexibility. In our experience, a 50/50 split works well for buyers who want predictable repayments but don't want to be locked in completely. Speak to your broker about what structure fits your income and plans.

You'll Need More Than Just Your Deposit

Buying a home costs more than the purchase price. Settlement costs include legal fees, building and pest inspections, loan establishment fees, and potentially valuation fees. Budget another $3,000 to $6,000 depending on the property and lender.

If you're buying with a 5% deposit, some lenders require proof of genuine savings, meaning the deposit has been in your account for at least three months. Others accept gifted funds from immediate family without a savings history. If your parents are contributing toward your deposit, confirm with your lender whether that counts as genuine savings or needs to be treated differently.

First home buyers using the stamp duty exemption in Canberra no longer need to set aside tens of thousands for duty, but you still need to cover everything else. Don't assume the deposit is your only upfront cost.

Borrowing Capacity Isn't the Same as What You Should Borrow

Lenders assess your borrowing capacity based on your income, expenses, and existing debts. They apply a buffer, usually around 3%, to test whether you can still afford repayments if rates rise. A buyer earning $95,000 with minimal expenses might be approved for $650,000, but that doesn't mean they should borrow that much.

Consider what your repayments look like at current variable rates, then add 1% to 2% and see if you're still comfortable. If you're stretching to the maximum now, a rate rise or an unexpected expense will hurt. Borrowing less than your maximum gives you breathing room and means you're not relying on everything going perfectly for the next 30 years.

If you're not sure where your ceiling is, use a borrowing capacity calculator to get a rough figure before you speak to a lender.

Help to Buy Puts the Government in as a Co-Owner

Help to Buy is a shared equity scheme where the Australian Government contributes up to 30% of the purchase price for an existing home or 40% for a new home. In exchange, they take an equivalent equity stake. You need a minimum 2% deposit, and there are income caps: $100,000 for individuals, $160,000 for joint applicants or single parents.

The ACT participates in the scheme, and the property cap for Canberra is $1,000,000. You can't combine Help to Buy with the 5% Deposit Scheme, but you can use it alongside the stamp duty exemption.

When you sell or refinance, the government receives their equity share based on the property's value at that time. If the property increases in value, they benefit. If it falls, they share the loss. The scheme suits buyers who want to enter the market with a very small deposit and are comfortable with shared ownership.

Call one of our team or book an appointment at a time that works for you. We'll walk through your deposit, your borrowing capacity, and which structure gives you the strongest position when you're ready to buy.

Frequently Asked Questions