Top Strategies to Buy Off-the-Plan as a First Home Buyer

Off-the-Plan Purchase Basics for First Home Buyers

Buying off-the-plan means you're committing to a property that hasn't been built yet. You sign the contract now, pay a deposit, and settle months or even years later when construction finishes. For first home buyers, this structure changes how you approach your home loan application, what grants and concessions you qualify for, and how much deposit you'll actually need to save.

The delay between contract and settlement is the defining feature. If you're entering a contract in late 2026 for an apartment completing in mid-2028, your lender will assess your borrowing capacity now but won't release funds until completion. Your financial situation needs to remain stable across that entire period. Income changes, job changes, or credit issues that emerge before settlement can derail finance approval even if you had pre-approval at contract stage.

Deposit Structure and When You Actually Pay

You typically pay a 10% deposit on exchange of contracts when buying off-the-plan. That deposit is held in trust by the solicitor or agent until settlement. Some developers accept a smaller initial deposit, with the balance of the 10% paid in stages as construction progresses. If you're using the Australian Government 5% Deposit Scheme, you still need to pay that 5% upfront at contract exchange, not at settlement.

Consider a buyer entering a contract for an off-the-plan apartment valued at $650,000 in a regional Queensland centre. Using the 5% Deposit Scheme, they need $32,500 at contract stage. They also need to budget for contract deposit costs, which can include solicitor fees for contract review and sometimes a small booking deposit before formal exchange. If the apartment doesn't complete for 18 months, that buyer needs to keep their employment stable, avoid taking on new debt, and maintain their credit profile until the lender conducts a final assessment at settlement.

First Home Buyer Grants and Off-the-Plan Eligibility

Off-the-plan purchases count as new homes for grant purposes. That means you can access first home owner grants in states where they're available for new builds. In Queensland, that's $30,000 for contracts signed on eligible new homes under $750,000. In New South Wales, it's $10,000 for new builds under the purchase cap of $600,000 or land and build cap of $750,000. South Australia offers $15,000 with no price cap for contracts entered into on or after 6 June 2024. Western Australia provides $10,000 for eligible contracts under the applicable value cap, which varies by latitude.

The grant is usually paid at settlement, not at contract stage. You can't use it to fund your initial deposit unless your state allows early release in specific circumstances. The property must meet the definition of a new home, which generally means it has never been occupied or sold as a place of residence. Check your state revenue office definition before assuming your off-the-plan purchase qualifies.

Stamp Duty Concessions on Off-the-Plan Purchases

Victoria offers a temporary off-the-plan concession for strata subdivision dwellings including apartments and townhouses for contracts signed between 21 October 2024 and on or before 20 April 2027. Duty is calculated on land value at contract date only, not the finished property value. If you're buying an apartment with a completed value of $680,000 but the land value at contract date is assessed at $320,000, you'll pay duty on $320,000. The concession applies to all buyers during the eligible period, not just first home buyers, but first home buyers in Victoria can combine it with the standard first home buyer duty exemption or concession if their property value falls within those thresholds.

In Western Australia, the off-the-plan duty concession applies to all new dwellings purchased off-the-plan or under construction in strata scheme, survey-strata scheme or community titles scheme arrangements. For pre-construction contracts entered into on or after 12 March 2026, a 100% concession capped at $50,000 applies on dwellings valued up to $800,000. First home buyers in WA can layer this concession with the First Home Owner Rate of duty, which from 7 May 2026 provides no duty on homes valued up to $600,000 statewide and a concessional rate on homes between $600,001 and $800,000.

In the Australian Capital Territory, no duty applies to off-the-plan unit owner occupier purchases with no property value threshold from 1 July 2026. The buyer must occupy the property as their principal place of residence continuously for at least one year commencing within 12 months of completion. This exemption operates separately from the broader Home Buyer Concession, which also provides full duty exemption for eligible first home buyers regardless of property value.

Sunset Clauses and What Happens if the Project Fails

A sunset clause sets a deadline for the developer to complete construction. If the project doesn't reach practical completion by that date, either party can walk away and the buyer's deposit is refunded. Sunset clauses typically range from 24 to 48 months depending on project size and complexity. Developers sometimes try to extend the sunset date if construction falls behind schedule. You're not obligated to agree to an extension, but if you refuse and the developer can't meet the original deadline, the contract may be rescinded.

If the project is cancelled or the developer becomes insolvent before completion, your deposit should be protected because it's held in trust. You won't lose the funds, but you also won't own a property. The risk is that market conditions, interest rates, or your personal financial situation may have changed by the time you get your deposit back and start looking again. Lock in your borrowing capacity early and keep it updated if the project timeline shifts.

Revaluation Risk at Settlement

Your lender will revalue the property at settlement, not just rely on the contract price from months or years earlier. If the completed apartment is valued below the contract price, you may need to make up the difference in cash or accept a smaller loan. In a scenario where you contracted to buy an apartment for $580,000 with a 5% deposit but the lender's valuer assesses the completed property at $550,000, the lender will only lend against $550,000. You'll need to find an additional $30,000 to settle, or negotiate with the developer, or walk away if you have grounds under the contract.

This risk is higher in markets where off-the-plan apartments are being delivered in high volume or where price growth has stalled. Lenders are aware of this and may apply more conservative valuations on new apartment stock in oversupplied precincts. Ask your broker to check comparable sales and recent valuations in the development's area before you exchange contracts.

Finance Approval Timing and Cooling-Off Periods

Most off-the-plan contracts have a shorter cooling-off period than established property contracts, sometimes as little as five business days. You need to move quickly to get finance pre-approval, have your solicitor review the contract, and confirm you're comfortable with the purchase. Pre-approval is not a guarantee of final approval. Lenders will reassess your application closer to settlement, and they'll also reassess the property's value.

Some developers require proof of finance approval or a finance clause waiver before exchange. If you waive finance as a condition, you're committed to the purchase even if you can't secure a loan at settlement. That's a significant risk over an 18 or 24 month construction period. Use a finance clause wherever possible and make sure it's worded to cover circumstances at settlement, not just at contract stage.

Off-the-Plan and the 5% Deposit Scheme

The Australian Government 5% Deposit Scheme is available for off-the-plan purchases as long as the property meets the scheme's price caps and the buyer meets eligibility criteria. Applications are made through a participating lender panel and cannot be made directly to Housing Australia. Not all lenders on the panel will accept off-the-plan applications under the scheme, and those that do may apply additional criteria around developer reputation, project location, or presale levels.

If you're approved under the scheme at contract stage, the lender will reassess at settlement. You'll need to confirm that the completed property still falls within the price cap for your area, that you still meet income and employment criteria, and that the property meets the lender's standard security requirements. Keep in regular contact with your broker during the construction period so any potential issues can be identified early.

What Happens if Your Income or Employment Changes

Lenders assess your borrowing capacity based on your current income and employment at the time of application. If you change jobs, take parental leave, move to casual or contract work, or experience a reduction in income before settlement, the lender will reassess and may reduce your approved loan amount or decline to proceed. You're required to notify your lender of any material changes to your financial circumstances between pre-approval and settlement.

In our experience, buyers who enter contracts during stable employment and then move into new roles or industries before settlement often face unexpected hurdles. If you're planning a career change, buying off-the-plan adds complexity. Speak to your broker about how different employment types are assessed and what documentation you'll need to provide if your situation changes before completion.

Choosing Between Fixed and Variable Rates for Off-the-Plan Purchases

You can't lock in a fixed rate at contract stage for a settlement that's 18 months away. Lenders won't hold a fixed rate over that period. You'll know what rates are available closer to settlement, not at the time you exchange contracts. If you're relying on a specific repayment amount to make the purchase affordable, that's a risk. Rates may have moved by the time you settle.

Some buyers obtain pre-approval based on variable rate assumptions and then decide on a fixed, variable, or split structure closer to settlement. That flexibility is useful, but it also means you're exposed to rate changes in the interim period. If rates rise significantly, your borrowing capacity may be lower at settlement than it was at contract stage. Work with your broker to stress-test your budget at higher rates before committing to an off-the-plan contract.

Call one of our team or book an appointment at a time that works for you. We'll review your deposit options, confirm which grants and concessions apply to your purchase, and structure your home loan application to match the timing of your off-the-plan settlement.

Frequently Asked Questions