What Are Off-the-Plan Loans for First Home Buyers

What Makes Off-the-Plan Finance Different from Standard Home Loans

Off-the-plan finance requires a two-stage approval process. You need pre-approval when you sign the contract, then a second valuation and formal approval when the property completes, which can be 12 to 24 months later. Lenders assess the property's value at completion, not at contract, which means the valuation could come in lower than the purchase price if the market shifts.

Consider a buyer who signs a contract for a townhouse in Warnbro priced at $540,000 with a 10% deposit. At contract, the lender gives pre-approval based on the plans and your financial position. Eighteen months later, when the property is finished, the lender commissions a full valuation. If the valuation comes back at $520,000, the lender will only lend against that lower figure, not the contract price. The buyer would need to cover the shortfall between the purchase price and the loan amount, which could mean finding another $20,000 plus the original deposit.

This is one reason many lenders apply stricter deposit requirements for off-the-plan purchases. A larger deposit gives you a buffer if the valuation falls short. Some lenders will accept a 10% deposit for off-the-plan properties, but others require 15% or 20%, particularly if you're using a government guarantee scheme.

First Home Buyer Eligibility for Off-the-Plan Purchases in Western Australia

You can access the $10,000 First Home Owner Grant for off-the-plan properties in Western Australia, provided the property value is under $800,000 south of the 26th parallel, which includes Warnbro and all Perth metropolitan areas. The grant applies only to new homes, so off-the-plan purchases qualify.

For stamp duty, the First Home Owner Rate applies to off-the-plan homes just as it does to other new builds. No duty is payable on homes valued up to $600,000. A concessional rate applies on homes valued between $600,001 and $800,000, calculated at $16.15 for every $100 or part thereof above $600,000.

From 12 March 2026, Western Australia introduced an expanded off-the-plan duty concession that applies to all buyers, not just first home buyers. For pre-construction contracts, a 100% concession applies on dwellings valued up to $800,000, capped at $50,000. The concession reduces proportionally for dwellings valued between $800,001 and $899,999, then drops to a 50% concession for dwellings valued at $900,000 or more. For contracts signed while the property is already under construction, the concession is 75% rather than 100%, with the same value thresholds.

You can combine the First Home Owner Grant, the First Home Owner Rate and the off-the-plan duty concession in a single transaction, provided you meet the eligibility criteria for each. You can also use these concessions alongside the Australian Government 5% Deposit Scheme.

How the 5% Deposit Scheme Works for Off-the-Plan Properties

The Australian Government 5% Deposit Scheme allows eligible first home buyers to purchase with a 5% deposit without paying Lenders Mortgage Insurance. The scheme applies to off-the-plan properties, but there are additional conditions.

Both the purchase price and the lender's assessed value at completion must be at or below the applicable price cap. For Western Australia, the cap is $850,000 for Perth and metropolitan postcodes, which includes Warnbro. If the valuation at completion comes in below the purchase price, the lender will only advance funds based on the lower valuation, and the guarantee from Housing Australia is calculated on that lower figure as well.

Applications are made through a participating lender, not directly through Housing Australia. Not all lenders on the panel accept off-the-plan purchases under the scheme, and those that do may apply additional serviceability buffers or require evidence of price stability in the local area. Check with your lender before you sign the contract.

Timing Your Home Loan Application for an Off-the-Plan Purchase

You should apply for pre-approval before you sign the off-the-plan contract. Pre-approval confirms your borrowing capacity and gives you confidence that a lender is willing to finance the purchase, subject to valuation and final conditions.

Pre-approval is not a guarantee. It typically lasts three to six months, but off-the-plan settlements can take 12 to 24 months or longer. You will need to reapply closer to completion, and the lender will reassess your income, employment, credit history and the property's value. If your financial situation changes during the construction period, such as a job change, additional debt or a reduction in income, the lender may reduce the approved loan amount or decline the application.

In our experience, buyers who keep their finances stable during the construction period and maintain regular contact with their broker have fewer issues at final approval. If you're planning to change jobs, take on new debt or make a large purchase, speak to your broker first.

What Deposit Options Are Available for Off-the-Plan Buyers

Most lenders require a 10% deposit at contract for off-the-plan purchases, though some will accept less if you're using the 5% Deposit Scheme. The deposit is typically paid in stages: a smaller amount at contract, then the balance at a later milestone such as slab down or frame up.

You can use genuine savings, a gift from a parent, or funds from the First Home Super Saver Scheme to meet the deposit requirement. Some lenders will also accept equity from a guarantor if your parents or another family member are willing to provide security using their own property. This can reduce or eliminate the cash deposit you need, though the guarantor takes on additional risk.

If you're using a gift, most lenders require a signed gift letter confirming the funds are a genuine gift and not a loan that needs to be repaid. The lender will also want to see evidence of where the gift came from, so your parent or family member will need to provide bank statements showing the funds leaving their account.

How Property Valuations Impact Off-the-Plan Settlements

The valuation at completion determines how much the lender will lend. If the valuation matches or exceeds the purchase price, there's no issue. If it comes in lower, you'll need to cover the difference.

As an example, you sign a contract for a unit in Warnbro at $480,000 with a 10% deposit of $48,000. Your lender agrees to lend 90% of the property value. When the unit is finished, the valuer assesses it at $460,000. The lender will now only lend 90% of $460,000, which is $414,000. You've already paid $48,000 as a deposit, but the total funds you'll have at settlement are $462,000. You're $18,000 short of the $480,000 purchase price.

This shortfall is more common in a falling or flat market, or in developments where supply exceeds demand at the time of completion. Warnbro has seen steady development activity over recent years, particularly in the Parklands estate and surrounding growth corridors. Buyers should consider whether the local market is likely to support the contract price by the time the property is finished.

Offset Accounts and Loan Features for First Home Buyers

Not all lenders offer the same loan features on low deposit loans, and some features are restricted when you're using a government guarantee scheme. An offset account can reduce the interest you pay by linking a transaction account to your loan, but not all participating lenders in the 5% Deposit Scheme offer this feature.

If you want an offset account, check with your lender before you apply. Some lenders offer a redraw facility instead, which allows you to access extra repayments you've made, though it's not as flexible as an offset.

Fixed rate loans are available under the 5% Deposit Scheme, but you can't split your loan between fixed and variable unless the lender allows it. A variable rate loan gives you more flexibility to make extra repayments without penalty, while a fixed rate loan offers certainty on your repayments but usually comes with restrictions on extra payments and may carry break costs if you refinance or sell before the fixed term ends.

What Happens If You Can't Settle on the Off-the-Plan Property

If you can't settle, you risk losing your deposit and the developer may take legal action to recover any shortfall between the contract price and the price they achieve when they resell the property. The contract you sign will set out the consequences of failing to settle.

This is why it's important to stay in touch with your broker during the construction period. If your financial position changes, or if you're concerned about the valuation, raise it early. In some cases, it may be possible to renegotiate terms with the developer, extend the settlement date, or find alternative finance, but these options are much harder to pursue if you wait until the week before settlement.

If you're using a family member as a guarantor, and the valuation comes in short, the guarantor may be able to provide additional security to cover the shortfall. If that's not possible, you may need to bring additional cash to settlement or consider whether to proceed at all.

Buying off-the-plan can open up access to newer stock in areas like Warnbro where established housing can be limited, but the finance process is more complex than a standard purchase. The key risks are valuation shortfalls, changes in your financial position during construction, and shifts in the local property market between contract and completion. Planning for these risks, maintaining a buffer in your savings, and keeping your broker informed will give you a much clearer path to settlement.

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