You Have More Options Than You Think
Buying your first home on a permanent visa gives you access to all the same government support that Australian citizens receive. That includes the Australian Government 5% Deposit Scheme, state stamp duty concessions, and first home owner grants where you qualify. The main thing that changes once you hold a permanent visa is the lender panel. You can now approach nearly every Australian lender without needing specialist overseas income documentation or facing higher deposit requirements.
A two bedroom property often sits at the lower end of the price range in most suburbs, which makes it a practical entry point if your income or savings are still building. It also means you are more likely to sit under the property price caps for state and federal schemes. The apartment you are considering in inner Brisbane at $850,000 will qualify for the 5% Deposit Scheme. The townhouse in outer Melbourne at $680,000 will qualify for both the scheme and Victoria's stamp duty concession.
Which Deposit Size Works for Your Situation
Most lenders will approve a home loan application with a 5% deposit if you are using the Australian Government 5% Deposit Scheme. That scheme removes the need for lenders mortgage insurance, which would otherwise add several thousand dollars to your upfront costs. If you are not using the scheme, a 10% deposit is the next threshold where LMI costs start to reduce.
Consider someone looking at a two bedroom unit in Parramatta priced at $750,000. With a 5% deposit under the scheme, they would need $37,500 plus around $25,000 for stamp duty and other settlement costs. Without the scheme, a 10% deposit of $75,000 would still attract LMI, potentially adding another $15,000 to $20,000 depending on the lender. The scheme makes the difference between needing around $62,500 in total funds versus close to $110,000.
Genuine savings are still required. Most lenders want to see at least 5% of the purchase price held in your account for at least three months. Gift deposits from immediate family can sometimes cover part of the deposit, but not all lenders accept them for the full amount. Speak to someone who can check your specific lender's policy before assuming a gifted deposit will be accepted.
Do You Qualify for a First Home Owner Grant
First home owner grants only apply to new homes (including building a home). If you are buying a two bedroom apartment off the plan or a newly built townhouse, you may qualify for $10,000 to $30,000 depending on where you are purchasing.
Queensland continues its increased grant of $30,000 for contracts signed from 1 July 2026. Tasmania reduced its grant to $20,000 from the same date. South Australia offers $15,000 with no property price cap on new homes, which is unusual. Most other states cap eligibility at $600,000 to $750,000.
Stamp Duty Concessions Can Save You More Than the Grant
Stamp duty concessions for first home buyers often deliver a larger saving than the grant itself. Victoria offers a full exemption on properties up to $600,000, which can save you around $31,000 compared to a standard buyer. New South Wales provides a full exemption up to $800,000, saving as much as $31,600.
If you are purchasing a two bedroom unit in Melbourne's inner north for $580,000, you would pay no stamp duty at all. If the same property were priced at $680,000, you would still receive a partial concession that tapers out at $750,000. The concession is automatic when you apply, but you need to meet residency requirements. You must move into the property within 12 months and live there for at least 12 continuous months. Breaking that commitment can result in the duty being clawed back in full.
The Australian Capital Territory recently removed its property price cap and income threshold for first home buyers from 1 July 2026. If you are buying an established home in Canberra, you now receive full conveyance duty exemption regardless of the property value. That change makes the ACT one of the most accessible jurisdictions for first home buyers with higher incomes who are purchasing above the caps that apply elsewhere.
Fixed or Variable Interest Rates for a Two Bedroom Purchase
A fixed rate locks in your repayment amount for a set period, usually one to five years. A variable rate moves with the market and usually comes with an offset account and unlimited extra repayments. Most lenders allow you to split your loan, fixing part and keeping part variable.
Someone buying a two bedroom apartment in inner Sydney at $1,200,000 with a 5% deposit would borrow $1,140,000. At current variable rates, monthly repayments would sit around $7,300 to $7,600 depending on the lender. Fixing half the loan might reduce repayments slightly in the short term if fixed rates are lower, but you lose flexibility on that portion. If you plan to make extra repayments from bonuses or rental income, keeping the loan variable or splitting it gives you more control.
Lenders also offer different discounts depending on whether you choose a fixed or variable product. The discount on a variable loan is often larger if you take an offset account and agree to monthly principal and interest repayments. Your broker can show you the rate difference across three or four lenders so you can compare the actual monthly cost rather than guessing from advertised rates.
How Pre-Approval Helps You Move Faster
Pre-approval gives you a conditional loan offer before you find a property. It tells you how much you can borrow and confirms that your income, deposit, and credit history meet the lender's requirements. Most pre-approvals are valid for three to six months.
In our experience, buyers with pre-approval are taken more seriously by selling agents, especially in suburbs where two bedroom properties attract multiple offers. If you are looking in areas like Footscray, Moorabbin, or Ashfield, having a pre-approval letter ready when you attend an inspection can make the difference between being invited to negotiate or being told the property is already under offer.
Pre-approval does not guarantee final approval. The lender will still need to value the property and review the contract before settlement. If the valuation comes in lower than the purchase price, you may need to renegotiate or increase your deposit. That risk exists whether you have pre-approval or not, but at least you know your borrowing limit before you start looking.
Can You Use the First Home Super Saver Scheme
The First Home Super Saver Scheme lets you save inside your superannuation fund and withdraw up to $50,000 of your own contributions plus earnings to use toward your first home deposit. You can contribute up to $15,000 per financial year, and the contributions are taxed at 15% instead of your marginal rate.
If you have been contributing to the scheme for two or three years, the amount you can withdraw might cover your entire deposit under the 5% Deposit Scheme. You apply to the ATO to release the funds, and they are usually paid within a few weeks. The funds must be used within 12 months of being released, and you need to sign a declaration confirming your intention to live in the property for at least six months of the first 12 months after it becomes practicable to move in.
Not everyone is eligible. If you have owned property in Australia before, even as a co-owner or through a family trust, you cannot access the scheme. Permanent visa holders are eligible as long as they meet the same first home buyer criteria that apply to citizens.
Borrowing Capacity and Income Assessment on a Permanent Visa
Lenders assess your borrowing capacity using your net income after tax, your regular expenses, and any other debts you are currently repaying. Permanent visa holders are assessed the same way as citizens. If you are on a salary, the lender will ask for payslips and a letter from your employer. If you are self-employed, you will need tax returns and financials.
Some lenders apply a loading to your living expenses if you have dependents or if your declared expenses seem low compared to your income. A loading means they assume you are spending more than you have declared, which reduces the amount they will lend. Other lenders use the Household Expenditure Measure, which applies a benchmark expense figure based on your household size and income level. That benchmark is often higher than what you actually spend, especially if you share costs with a partner or live in a lower-cost area.
If one lender tells you that you can only borrow $650,000 but you need $700,000 to purchase the two bedroom property you want, try a different lender. Serviceability rules vary significantly, and a broker can identify which lender is likely to approve the higher amount based on how they assess your income and expenses.
Should You Consider an Offset Account or Redraw
An offset account is a transaction account linked to your loan. The balance in the offset reduces the interest charged on your loan without affecting your access to the funds. A redraw facility lets you withdraw extra repayments you have made on your loan, but the funds are no longer separate from the loan itself.
If you are buying a two bedroom property and plan to upgrade in five years, an offset account gives you somewhere to park savings while still reducing your interest. Consider someone who bought an apartment in Adelaide for $520,000 and kept $30,000 in an offset account. That $30,000 reduces the interest they pay each month, but they can still access it if they need it for moving costs or a future deposit. With a redraw facility, those funds would be locked inside the loan, and some lenders restrict how much you can redraw or charge a fee each time.
Not all loan products include an offset account. Fixed rate loans rarely offer one, and some low-rate variable loans exclude it to keep the advertised rate lower. If having an offset matters to you, make sure the loan you are comparing includes one before you focus only on the interest rate.
Combining Federal and State Schemes Without Overlap
You can use the Australian Government 5% Deposit Scheme alongside most state and territory grants and stamp duty concessions. You cannot combine it with Help to Buy, which is the federal shared equity scheme. Help to Buy requires a minimum 2% deposit and involves the government taking an equity share in your property in exchange for contributing up to 30% or 40% of the purchase price.
If you are buying a two bedroom property in regional Queensland for $480,000, you could use the 5% Deposit Scheme, claim the $30,000 first home owner grant if the property is new, and receive a full stamp duty concession. That combination would reduce your upfront costs to around $24,000 deposit plus $10,000 in settlement costs, with the grant paid shortly after. The same property purchased under Help to Buy would require a smaller deposit but would involve shared ownership and eventual buyback obligations.
The choice depends on whether you want to own the property outright from day one or whether you prefer a lower deposit and are comfortable with the government holding equity. Most buyers on a permanent visa who have been working in Australia for a few years will have enough savings to use the 5% Deposit Scheme without needing shared equity, but it is worth comparing both if your deposit is tight.
