How to Buy Off-the-Plan as a First Home Buyer

Buying off-the-plan as a first home buyer puts you in a unique position.

You lock in a price today for a property that won't exist for another 12 to 24 months, which can work in your favour in a rising market. But the gap between contract and settlement creates specific challenges, particularly if you're self-employed. Lenders assess your income twice, valuations can fall short, and your deposit structure needs to account for both the initial contract deposit and the settlement amount. Understanding how these pieces fit together determines whether the purchase proceeds smoothly or stalls at the final hurdle.

Why Self-Employed Buyers Face Different Hurdles with Off-the-Plan Finance

Lenders treat off-the-plan purchases differently because the property doesn't exist when you apply for finance, and your financial position may change substantially between contract and settlement.

If you're a company director, most lenders require two full years of financials to assess your income. When you sign an off-the-plan contract in mid-2026 with an expected settlement in late 2027, the lender will assess your application at both pre-approval and again closer to settlement. If your business income has dropped between those two points, perhaps due to a quieter period or reinvestment into the company, your borrowing capacity at settlement may not support the loan amount initially approved. The property still settles, but you may no longer qualify for the finance. That scenario leaves you scrambling for alternative lenders or facing contract penalties if you can't proceed.

In our experience, the buyers who manage this process most confidently are those who structure their income documentation early and maintain consistent drawings or salary throughout the build period. Fluctuating income isn't disqualifying, but it does require a more deliberate approach to how you present your financial position to the lender.

How Deposit Requirements Work Differently for Off-the-Plan Purchases

You'll typically pay a 10% deposit to the developer when you exchange contracts, but that deposit doesn't always count as your genuine savings for the lender's assessment.

Most lenders require you to demonstrate genuine savings separately, usually at least 5% of the purchase price held in your name for three months or more. If you're accessing the First Home Guarantee, that 5% deposit must still meet the genuine savings test. A gifted deposit from family can help, but the lender will want to see a statutory declaration confirming the funds are a genuine gift, not a loan that increases your liabilities. The 10% contract deposit you pay the developer is held in a trust account until settlement, so it sits outside your control and isn't treated the same way as funds you've saved yourself.

Consider a buyer purchasing an apartment for $750,000 under an off-the-plan contract in Sydney's inner west. They pay $75,000 to the developer at exchange. At settlement 18 months later, they need to demonstrate they still have genuine savings, cover stamp duty (which may be reduced or exempt under the First Home Buyers Assistance Scheme if eligible), and account for settlement costs including legal fees and adjustments. If their savings were borderline at contract, they need a plan to maintain or grow that buffer over the build period, not deplete it.

What Happens If the Valuation Comes in Below Contract Price

The valuation at settlement is based on the completed property, not the price you agreed to pay 18 months earlier.

If the valuer assesses the finished apartment at $720,000 but your contract price is $750,000, the lender will only lend against the lower figure. Under the First Home Guarantee with a 5% deposit, the lender would approve a loan of $684,000 (95% of $720,000). You contracted to pay $750,000, so you now need to find the $66,000 shortfall in cash at settlement, on top of your existing deposit and costs. That gap catches buyers off guard because they assumed the contract price and the valuation would align.

Valuation shortfalls are more common in markets where developers are pricing optimistically or where the local market softens during the build period. You can't control the valuer's assessment, but you can build a buffer into your savings plan to account for the possibility. If you're stretching your budget to meet the contract price, a 5% to 10% valuation gap could make settlement unaffordable.

First Home Buyer Grants and Stamp Duty Concessions on Off-the-Plan Properties

Off-the-plan purchases usually qualify for the full range of first home buyer concessions because they're classified as new homes, and most state grants prioritise new builds.

In New South Wales, eligible first home buyers can access a $10,000 grant for a new home valued up to $600,000, or a house and land package up to $750,000. You may also qualify for a stamp duty exemption on properties under $800,000 under the First Home Buyers Assistance Scheme, which applies at settlement, not at contract. If the property is purchased pre-construction, you may pay no duty at all, depending on the final valuation and your eligibility. These concessions stack with the federal First Home Guarantee, allowing you to purchase with a 5% deposit and no Lenders Mortgage Insurance.

The expanded First Home Guarantee, which removed income caps and place limits from October 2025, has made off-the-plan purchases more accessible for self-employed buyers who previously struggled to meet the stricter income tests. You still need to demonstrate genuine savings and serviceability, but the removal of the income threshold means your application is assessed on affordability rather than an arbitrary ceiling.

How Lenders Assess Your Income Twice During the Build Period

Pre-approval for an off-the-plan purchase is conditional, and lenders will reassess your income and financial position closer to settlement.

If you're a company director, that reassessment typically happens three to six months before the expected settlement date. The lender will request updated financials, recent tax returns if a new financial year has passed, and current bank statements to confirm your savings and liabilities haven't changed. If your business structure has shifted, such as moving from a sole trader to a company during the build period, the lender treats that as a new application and may require a full two years of company financials before proceeding. That delay can push you past settlement, forcing you to request an extension from the developer or seek alternative finance under time pressure.

The smoothest settlements occur when the buyer's financial position at final assessment mirrors or improves on the position at pre-approval. If you're planning to reinvest profits back into the business or take parental leave during the build period, flag that with your broker early so the loan structure accounts for the income variation.

Structuring Your Home Loan Application Before You Sign the Contract

The time to secure pre-approval is before you sign the off-the-plan contract, not after.

Pre-approval confirms your borrowing capacity, locks in the loan structure, and gives you certainty around the deposit you'll need at settlement. For self-employed buyers, it also surfaces any documentation gaps early, such as missing tax returns, unsigned financials, or insufficient genuine savings. Developers rarely grant cooling-off periods on off-the-plan contracts, so if you sign first and then discover you can't secure finance, you're liable for the deposit and potentially other penalties under the contract.

We regularly see buyers who assume pre-approval from 18 months ago still applies at settlement. It doesn't. Rates, lending policies, and your financial position all shift during that period. A formal pre-approval gives you a window, usually three to six months, during which the lender's offer stands. For off-the-plan purchases, you'll need to refresh that approval closer to settlement, but the initial assessment confirms you're in a viable position to proceed with the contract.

Fixed or Variable Rates for a Loan That Settles in 18 Months

You can't lock in an interest rate at pre-approval for a loan that won't settle for another 12 to 24 months.

Lenders price fixed interest rates based on current wholesale funding costs, and those costs change daily. If you're approved today for an off-the-plan purchase settling in late 2027, the rate you'll actually pay is determined at settlement, not at application. That means if variable rates rise during the build period, your repayments at settlement will be higher than the estimates you received at pre-approval. Conversely, if rates fall, you benefit from the lower cost.

Some buyers ask whether they should structure the loan as fixed or variable when the property settles. The answer depends on your risk tolerance and cash flow stability as a business owner. A variable loan with an offset account allows you to park surplus business income and reduce interest, which works well if your cash flow fluctuates. A fixed rate provides repayment certainty, which can help with budgeting if your drawings are consistent but you want to eliminate rate risk over the next few years. You don't need to decide at pre-approval, but understanding the trade-offs helps you make an informed choice at settlement.

What to Watch for in the Off-the-Plan Contract

The contract terms set by the developer determine your obligations and the lender's willingness to finance the purchase.

Sunset clauses, which allow either party to terminate the contract if settlement hasn't occurred by a certain date, are standard in off-the-plan agreements. If the developer delays construction and the sunset date passes, you can walk away and receive your deposit back. But if you've arranged your finances around that settlement timeline, a delayed or cancelled contract disrupts your plans. Lenders also review the contract for clauses that limit their security, such as restrictions on the buyer's ability to settle independently or requirements that force you to use the developer's preferred lender. If the contract contains unfavourable terms, some lenders will decline the application outright.

Before signing, have a solicitor review the contract and confirm the deposit structure, sunset clause, and any penalties for failing to settle. That review should happen in parallel with your finance pre-approval, so you know both the legal and financial position before committing.

Buying off-the-plan as a self-employed first home buyer requires more planning than purchasing an established property, but the structure is manageable when you understand the moving parts. Your income documentation, deposit strategy, and loan structure all need to account for the time gap between contract and settlement. If those elements are aligned, the purchase proceeds on schedule. If they're not, settlement becomes a scramble.

Call one of our team or book an appointment at a time that works for you. We'll review your contract terms, structure your application around your business income, and make sure your finance is positioned to settle when the property is ready.

Frequently Asked Questions