Smart ways to buy a terrace house as a first home buyer

Terrace houses offer first home buyers a practical middle ground between apartments and detached homes.

You get more space and often a courtyard or small garden without the full maintenance burden of a house on a large block. On the Sunshine Coast, terraces are increasingly common in pockets of Maroochydore, Sippy Downs, and some of the newer estates around Aura and Palmview, where medium-density developments are delivering more diverse housing stock.

How much deposit do you need for a terrace house

You can purchase a terrace house with as little as 5% deposit under the Australian Government 5% Deposit Scheme. Housing Australia guarantees the difference between your deposit and 20% of the property value, meaning you avoid paying lenders mortgage insurance. The scheme has no income cap and no annual place limit, and applications are made through a panel of 31 participating lenders.

Consider a buyer purchasing a terrace house in one of the Palmview developments. The property is priced within Brisbane's regional cap under the scheme, which sits at $1,000,000. With a 5% deposit and access to the scheme, the buyer proceeds without needing to save the full 20% deposit or pay lenders mortgage insurance. The loan settles within standard timeframes, and the buyer moves in within three months of making an offer.

Queensland stamp duty concessions and how they apply

Queensland offers nil transfer duty on established homes valued up to $700,000 for eligible first home buyers, with a concession applying up to $800,000. For new builds, a full transfer duty concession applies with no price cap on residential land from 1 May 2025. Partial concessions apply on new homes priced between $500,000 and $550,000.

Most terrace houses on the Sunshine Coast fall within the established home duty concession bracket, particularly those in estates that were completed several years ago. Newer terrace developments may qualify as new builds, depending on when the contract is signed and whether the property has been previously occupied. The distinction matters because it determines whether you pay duty on the full purchase price or qualify for partial or full relief.

First Home Owner Grant eligibility for terrace buyers

The Queensland First Home Owner Grant is $15,000 for new homes valued under $750,000, applying to contracts signed from 1 July 2026. The grant does not apply to established homes. A terrace house qualifies as a new home if it has not been previously occupied as a residence and meets the eligibility criteria set out by the Queensland Government.

In our experience, buyers sometimes assume a terrace in a recently completed estate automatically qualifies for the grant. It does not if the property has been lived in or if the contract does not meet the definition of a new home under the scheme. If you are considering a property marketed as 'near new' or 'only one owner', confirm with your conveyancer whether it meets the grant criteria before factoring the $15,000 into your budget.

Structuring your home loan for a terrace house purchase

A terrace house is treated the same as any other residential property when you apply for a home loan, but the loan structure you choose can make a difference to how quickly you build equity and how much flexibility you retain. Most first home buyers choose a variable rate loan with an offset account, which allows you to reduce interest without locking funds into the loan itself.

If you are purchasing with a low deposit, check whether the lender allows an offset account on loans with less than 20% equity. Some lenders restrict this feature to borrowers with larger deposits or charge a higher interest rate to include it. A redraw facility is the alternative, but it offers less flexibility because withdrawn funds are treated as a reduction in the loan balance and may affect future borrowing capacity.

Body corporate and ongoing costs

Most terrace houses are part of a community title or strata scheme, which means you will pay body corporate fees. These fees cover shared insurance, maintenance of common areas, and sometimes building repairs. On the Sunshine Coast, body corporate fees for terraces typically range between $1,000 and $3,000 per year, depending on the size of the development and what is included in the scheme.

Lenders factor body corporate fees into your borrowing capacity, so higher fees reduce the amount you can borrow. If you are comparing two properties and one has body corporate fees of $2,500 per year while the other has fees of $1,200, the difference can affect your borrowing capacity by several thousand dollars. Request a copy of the body corporate budget and sinking fund statement during your due diligence period so you know what you are committing to.

Combining government schemes with your deposit strategy

You can use the Australian Government 5% Deposit Scheme alongside Queensland's stamp duty concessions and the First Home Owner Grant if the property qualifies as a new home. You cannot combine the 5% Deposit Scheme with Help to Buy, but Help to Buy can be used with applicable state concessions in most cases.

If you have a gift deposit from a family member, most lenders will accept it as part of your 5% deposit under the government scheme, provided you can demonstrate genuine savings for at least part of the deposit and have enough funds to cover settlement costs. Lenders define genuine savings as funds you have saved over at least three months, and this usually needs to represent a portion of the total deposit, not the entire amount.

Call one of our team or book an appointment at a time that works for you to discuss which loan structure and deposit strategy aligns with your situation and the type of terrace house you are considering.

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