Buying Off the Plan as a First Home Buyer: Pros, Cons and Risks

Updated October 2026 by Albert Waldron, Awesome Lending Solutions. This article first appeared on awesomelendingsolutions.com.au.

Buying off the plan means signing a contract to buy a home, usually an apartment or townhouse, before it's built or finished. For first home buyers, it can be appealing. But it comes with risks that are easy to miss. Here's what you need to know.

Why first home buyers like off the plan

• Time to save: you usually pay a deposit now and the rest at settlement, which can be a year or more away.
• A brand-new home: modern fittings and fewer early repairs.
• Government help: new homes can qualify for the NSW First Home Owner Grant of $10,000 (for new homes up to $600,000), and first home buyers pay no NSW stamp duty on homes up to $800,000.
• Low-deposit options: the 5% Deposit Scheme can be used for new homes within the price caps.

The risks to understand

1. Your loan isn't approved until close to settlement

Pre-approval usually lasts three to six months. If settlement is 18 months away, the lender will reassess you closer to the date. If rates rise or your situation changes, you might be able to borrow less than you planned. The four rate rises in 2026 are a good example of how quickly this can change.

2. Valuation risk

The lender values the property at settlement, not when you sign. If values have fallen, as they have across many capitals in 2026, the valuation may be lower than the price. You would need to make up the difference.

3. Building delays and sunset clauses

Projects can run late. Contracts include a "sunset date" when either side may be able to cancel. Get legal advice on this clause.

4. What you see isn't always what you get

Finishes, layout and views can change. Read the contract and plans carefully.

5. Lender rules on apartments

Some lenders limit lending on very small apartments or large high-rise developments. Check this before you sign.

Six steps to get ready

1. Get your finances in order: reduce debts and keep saving.
2. Get a broker's view early on how much you could borrow and which lenders accept the development.
3. Research the developer and builder: check past projects and reviews.
4. Have a solicitor review the contract, especially the sunset clause and deposit terms.
5. Keep saving after you sign, so you have a buffer if the valuation comes in low.
6. Avoid big changes to your job or debts before settlement.

An example

Emily signs a contract for a $650,000 off-the-plan apartment in Western Sydney, with settlement due in 15 months. She pays a 5% deposit using a deposit bond. Her broker confirms which lenders accept the building. She keeps saving, and when settlement comes, she uses the 5% Deposit Scheme with no LMI and no stamp duty. Because she kept saving, she has a buffer for a slightly lower valuation.

Frequently asked questions

Can I get pre-approval for off the plan?

You can get an idea of your borrowing power, but formal approval usually happens close to settlement.

Can I use the First Home Owner Grant?

In NSW, the grant is for new homes, including off the plan, if you meet the eligibility rules and price caps.

What happens if the valuation is lower than the price?

You'll usually need to cover the gap with extra savings, or find a lender with a higher valuation.

Talk to Awesome Lending Solutions

Off-the-plan purchases need careful planning from day one. We can check your borrowing power, explain which lenders accept the development and help you stay on track to settlement. Call us on 02 7904 9560 or visit awesomelendingsolutions.com.au to book a chat.

This article is general information only. It does not consider your objectives, financial situation or needs, and it is not financial, tax or legal advice. Scheme rules, interest rates and laws were current as at October 2026 and can change. Speak with a licensed professional before making any decision. Albert Waldron is a Credit Representative (CR 407514) of AFG's Australian Credit Licence 389087.