Buying Your First Apartment: What Melbourne Couples Need

Apartments are the entry point for most first home buyers in Melbourne.

If you're part of a couple looking to buy together, you're probably splitting your time between browsing listings in Southbank or Docklands and trying to figure out whether you can actually afford something liveable. The Melbourne apartment market puts homeownership within reach for couples who'd otherwise be priced out of houses, but the lending side has some quirks you need to know upfront.

Why Lenders Treat Apartments Differently

Lenders view apartments as higher risk than houses, which affects both how much you can borrow and how much deposit you'll need. Most lenders require a larger deposit for apartments under 50 square metres or in buildings with more than three storeys. Some won't lend at all on studio apartments or buildings with certain defects.

Consider a couple looking at a one-bedroom apartment in Collingwood listed at $520,000. They've saved a 10% deposit plus costs, which would normally be enough to access the First Home Loan Deposit Scheme. But if that apartment is 48 square metres, several lenders will ask for 15% instead, or decline the application outright. The size restriction alone can shift their deposit requirement from $52,000 to $78,000.

This doesn't mean smaller apartments are off the table. It means you need to know which lenders will support your purchase before you start making offers.

How Much You Can Borrow as a Couple

Your combined income gives you more borrowing power than either of you would have alone, but lenders also add up your combined debts and living expenses. If one of you has a car loan or a higher education debt, that reduces the amount you can borrow together.

In our experience, couples often overestimate how much extra borrowing power they gain by applying together. A couple earning $75,000 and $65,000 respectively might assume they can borrow based on $140,000 of income, but once lenders factor in two people's living costs, existing debts, and the apartment's body corporate fees, the actual borrowing capacity can be closer to what one higher earner could access alone.

Running the numbers through a borrowing capacity calculator before you start looking gives you a realistic price range. Body corporate fees on Melbourne apartments typically sit between $3,000 and $8,000 per year, and lenders treat those as an ongoing expense that reduces what you can afford to repay.

First Home Buyer Concessions for Apartments

Victoria offers stamp duty concessions for first home buyers purchasing properties up to $750,000, with a full exemption for properties under $600,000. That makes apartments in suburbs like Brunswick, Footscray, or Preston particularly appealing, as many one and two-bedroom units sit under that threshold.

You may also qualify for the First Home Owner Grant if you're buying a new apartment, which provides $10,000 for properties valued up to $750,000. This applies to off-the-plan purchases or brand new apartments that haven't been previously occupied. The grant doesn't apply to established apartments.

If you're working with a smaller deposit, the First Home Guarantee allows eligible first home buyers to purchase with as little as a 5% deposit without paying Lenders Mortgage Insurance. For apartments, this can be particularly valuable, as LMI on a $500,000 apartment with a 10% deposit can add $15,000 to $20,000 to your upfront costs.

Choosing Between Fixed and Variable Rates

A fixed interest rate locks in your repayments for a set period, usually between one and five years. A variable interest rate moves with the market, which means your repayments can go up or down.

For couples buying their first apartment, a split loan structure often makes sense. You might fix 60% of your loan to protect against rate rises while keeping 40% variable to maintain access to an offset account and the ability to make extra repayments without penalty. This gives you some stability while keeping your options open if one of you gets a pay rise or you want to pay down the loan faster.

When comparing home loan options, check whether the loan includes features like redraw or offset. An offset account linked to your variable portion lets you park your savings and reduce the interest you pay without losing access to that money. For couples managing joint finances, this can be more useful than making extra repayments you can't easily access later.

What to Expect During the Application Process

The first home loan application process starts with getting pre-approval, which tells you how much you can borrow and shows sellers you're a serious buyer. Pre-approval typically lasts three to six months and requires you to provide payslips, tax returns, bank statements, and proof of your deposit.

If part of your deposit is a gift from family, most lenders will accept it as long as you provide a signed declaration confirming the money doesn't need to be repaid. This is common for first home buyers, but the lender will want to see that the funds have been in your account for at least three months, or they'll need a statutory declaration from whoever gave you the money.

Once you've found an apartment and made an offer, the lender will order a valuation. This is where apartment purchases can hit a snag. If the valuer comes back with a figure lower than your purchase price, the lender will only provide finance based on the lower amount. That means you'll need to make up the difference with additional deposit, renegotiate the price, or walk away.

Understanding Body Corporate and Strata Issues

Every apartment in Victoria is part of an owners corporation, which manages the common property and shared expenses. Lenders review the owners corporation records as part of the application, looking for things like adequate sinking fund balances, building defects, or a high proportion of investor-owned apartments.

A building with ongoing defect claims or a sinking fund balance below $50,000 can cause lenders to decline your application, even if everything else stacks up. Some lenders won't touch buildings where more than 50% of apartments are rented out, as they consider owner-occupier buildings lower risk.

Before you make an offer, ask the selling agent for a copy of the owners corporation certificate. If you're using a mortgage broker, they can flag potential issues before you're too far down the path. We regularly see buyers fall in love with an apartment only to find out later that their lender won't support the purchase due to strata concerns they could have identified earlier.

Planning Your Deposit and Upfront Costs

Your deposit is just one part of what you'll need upfront. Stamp duty, conveyancing fees, building and pest inspections, and lender fees can add another $15,000 to $25,000 to your costs, depending on the purchase price and whether you qualify for concessions.

For a $550,000 apartment in Fitzroy where you qualify for a partial stamp duty concession, your total upfront costs with a 10% deposit might look like $55,000 deposit, $8,000 in stamp duty, $2,000 in conveyancing, $600 for a strata report, and $1,500 in lender and application fees. That's around $67,000 in total.

If you're relying on the First Home Guarantee to buy with a 5% deposit, those upfront costs drop significantly, but you'll still need to budget for everything beyond the deposit itself. The low deposit home loan options available to first home buyers can make the difference between waiting another two years or buying now, but only if you've accounted for all the costs involved.

Getting your finances in order now means you'll be ready to move quickly when the right apartment comes up. If you're ready to start the conversation, call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions