Buying Your First Apartment: What You Need to Know

Apartments make up a significant portion of Perth's inner suburbs, particularly around precincts like East Perth, Northbridge, and the Scarborough foreshore.

The financing works differently compared to a standalone house, and understanding those differences before you submit your application can save weeks of back-and-forth with lenders.

Do All Lenders Treat Apartments the Same?

No, they don't. Some lenders avoid apartments in buildings with more than three storeys, while others won't touch anything with commercial space on the ground floor. A lender might value a two-bedroom apartment in a 15-storey building at $380,000 when the sale price is $400,000, which immediately affects how much you can borrow and whether you'll need Lenders Mortgage Insurance (LMI).

Consider a buyer with $40,000 saved, looking at a $400,000 apartment in Subiaco. That's a 10% deposit, which normally positions you well. But if the lender's valuer comes back at $380,000, your deposit is suddenly 10.5% of the valuation, and the loan-to-value ratio shifts. Some lenders apply stricter criteria to apartments built before 1990, particularly around strata reports and defect histories. Others have postcode restrictions that exclude certain high-density areas entirely.

We regularly see buyers assume their pre-approval covers any property under the approved amount, only to find their chosen apartment doesn't meet the lender's property security guidelines. Matching the right lender to the specific apartment you're buying matters more than finding the lowest advertised interest rate.

What Costs Change When You're Buying an Apartment?

Beyond the purchase price, apartments carry ongoing body corporate fees and sinking fund contributions that affect your borrowing capacity. Lenders assess your ability to service the loan by including these quarterly fees, which typically range from $800 to $1,500 per quarter in metro Perth, though luxury developments can run higher.

As an example, a first home buyer earning $75,000 annually might comfortably service a $400,000 loan for a house. Add $1,200 quarterly in body corporate fees for an apartment at the same price, and that buyer's maximum borrowing drops by $15,000 to $20,000 depending on the lender's assessment rate. That reduction can push you out of a price bracket or require a larger deposit to make the numbers work.

Stamp duty concessions for first home buyers still apply to apartments, with the same thresholds as houses. In WA, you'll pay no transfer duty on properties up to $430,000 and reduced duty on values between $430,000 and $530,000. Most apartment purchases in Perth's inner and middle-ring suburbs fall within this range, which helps offset some of the body corporate costs over the first few years.

How Does the First Home Loan Deposit Scheme Work for Apartments?

The scheme allows eligible first home buyers to purchase with a 5% deposit without paying LMI, but not all apartments qualify. The property must meet the government's eligibility criteria, which includes price caps and building standards. In Perth, the price limit sits well above most apartment values, but the building itself needs to pass the assessment.

Some older strata buildings or those with known defect issues won't be accepted under the scheme, even if the price falls within the cap. Your application might be approved in principle, but the specific apartment determines final acceptance. If you're relying on the scheme to avoid LMI, have a broker check the property details before you make an offer. That conversation takes five minutes and can prevent a collapsed contract.

Alternatively, if you've got 10% saved and the property doesn't meet scheme criteria, paying LMI becomes the pathway forward. Some lenders offer slightly lower LMI premiums for apartments in established, well-maintained complexes, recognising the lower risk profile.

What Should You Look for in a Strata Report?

Lenders require a strata report before settlement, and what's in that document directly affects whether your loan proceeds. They're checking for special levies, ongoing disputes, and the financial health of the owners corporation. A building with $200,000 in the sinking fund and no planned major works presents differently to one with $15,000 in reserve and a roof replacement flagged for next year.

If a special levy has been approved but not yet paid, lenders may require you to have additional funds available at settlement to cover your portion. That might be $3,000 or $8,000 depending on the scope of works and the number of units sharing the cost. You won't necessarily need to pay it upfront, but lenders want proof you can meet the obligation without affecting loan serviceability.

Some buyers in older apartment blocks around Mount Lawley or Leederville encounter buildings where the body corporate has deferred maintenance for years. Those properties can still be financed, but expect the lender to apply stricter conditions or a higher interest rate to offset the perceived risk. The strata report reveals this before you're locked into the purchase.

Can You Use Gifted Funds for an Apartment Deposit?

Yes, most lenders accept gifted deposits from immediate family, provided you've got a signed declaration confirming the funds are a genuine gift with no repayment obligation. The declaration needs to specify the amount and relationship, and lenders will trace the funds through your bank statements to verify they've been deposited and cleared.

If you're combining genuine savings with a gift to reach 10%, make sure the genuine savings component meets the lender's minimum threshold, usually 5% of the purchase price. A $20,000 gift plus $15,000 in savings works for a $350,000 apartment, but $10,000 saved and $25,000 gifted may not meet the requirement, depending on the lender's policy. Each lender structures this differently, so confirm the split before you finalize the deposit amount in your offer.

Fixed or Variable Rates for Your First Home Loan?

Most first home buyers we work with choose a split, locking part of the loan on a fixed interest rate for certainty and keeping the rest variable for flexibility. That approach lets you make extra repayments against the variable portion without hitting fixed-rate restrictions, while protecting against rate rises on the fixed component.

An offset account typically only works on the variable portion, so if you're planning to park savings and reduce interest, keep enough of your loan variable to make that effective. A 50/50 split gives you options without overcommitting to either structure. If rates drop, you benefit on half the loan immediately. If they rise, you've got protection on the other half.

Variable rates also allow access to features like redraw, which can be useful if you're making extra repayments and need to access those funds later for body corporate levies or unexpected apartment-related costs.

Buying an apartment as your first property brings specific financing and ongoing cost considerations that don't apply to houses. The lender you choose, the strata quality, and how you structure your deposit all shape what you can afford and how the loan performs once you've settled. Call one of our team or book an appointment at a time that works for you to talk through your situation and the properties you're considering.

Frequently Asked Questions