Queensland's Stamp Duty Concessions Apply to Terrace Homes
Queensland first home buyers purchasing an established terrace house can claim a first home concession that reduces transfer duty by up to $17,350 on properties valued under $709,999. The concession phases out in $10,000 property value bands and reaches nil for properties valued at $800,000 or more. Duty is not eliminated entirely under this concession, it is reduced by the applicable concession amount.
Consider a buyer purchasing a terrace in Wilston valued at $680,000. The standard home concession rate applies first, then the additional first home concession deduction of $17,350 is applied. The buyer would still pay duty, but at a substantially reduced rate. If the same terrace were valued at $820,000, no first home concession would apply, and the buyer would pay duty at the standard home concession rate only. The difference in upfront cost is substantial enough to affect which suburbs remain within reach.
For contracts signed on or after 1 August 2026, at least one applicant must be an Australian citizen, permanent resident, or specified foreign retiree to access the concession. The buyer must also occupy the terrace as their principal place of residence.
How the 5% Deposit Scheme Works for Terrace Purchases
Eligible first home buyers can purchase with a 5% deposit under the Australian Government 5% Deposit Scheme, operative from 1 October 2025. Housing Australia guarantees the difference between the deposit and 20% of the property value, and no LMI is payable.
In Queensland, the property price cap is $1,000,000 for capital city and regional centres, and $700,000 for other areas. Whether a specific terrace falls under the $1,000,000 or $700,000 cap depends on its postcode classification under Housing Australia's postcode search tool. Both the purchase price and the lender's assessed value of the home must be at or below the applicable cap.
A buyer purchasing a terrace in New Farm at $950,000 with a 5% deposit would contribute $47,500 upfront, plus settlement costs. Without the scheme, the same buyer would need a 20% deposit of $190,000 or pay LMI on a smaller deposit. The scheme removes LMI from the equation entirely, which on a property at this price point could otherwise cost between $15,000 and $25,000 depending on the lender and deposit size.
Applications are made through a participating lender, not directly to Housing Australia. Loan features including offset accounts and split loan structures depend on the participating lender, so buyers should confirm available options before committing to a lender.
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Combining the 5% Deposit Scheme with Queensland Stamp Duty Concessions
The Australian Government 5% Deposit Scheme can be used alongside Queensland's first home stamp duty concession. A buyer purchasing an established terrace at $680,000 could access both the 5% deposit option and the $17,350 duty reduction, provided they meet the eligibility criteria for each scheme.
This combination reduces both the deposit required and the upfront duty payable. The buyer in this scenario would need $34,000 for the deposit, plus settlement costs and the reduced duty amount. Without the schemes, the same buyer would need a 20% deposit of $136,000, full duty, or a smaller deposit with LMI added to the loan balance. The difference in required cash changes which properties are within reach and how quickly a buyer can move from pre-approval to settlement.
Buyers considering this approach should confirm their eligibility for both schemes before signing a contract. The duty concession requires the property to be the buyer's principal place of residence, and the 5% Deposit Scheme requires the buyer to meet the participating lender's credit criteria. Both schemes apply at the time of contract, so eligibility must be confirmed before exchange.
What Terrace Buyers Need to Know About Offset Accounts and Redraw
Most lenders offering home loans provide either an offset account or redraw facility, but not all participating lenders in the 5% Deposit Scheme offer offset accounts on low deposit loans. An offset account is a transaction account linked to the home loan where the balance reduces the interest charged on the loan without affecting access to the funds.
A buyer with a $950,000 loan and $20,000 sitting in an offset account pays interest only on $930,000, while retaining full access to the $20,000. Redraw allows the borrower to make extra repayments and withdraw those funds later, but access is not always immediate and may be restricted depending on the lender's terms.
For terrace buyers planning renovations or expecting variable income, the difference matters. Offset accounts provide immediate liquidity without affecting the loan structure. Redraw facilities may involve processing times, minimum withdrawal amounts, or restrictions during certain loan periods. Buyers should confirm which feature is available on their chosen loan product before proceeding with a home loan application.
Fixed, Variable, or Split: Choosing the Right Rate Structure
A fixed interest rate locks in the rate for a set period, typically one to five years, while a variable interest rate moves with the market. A split loan combines both, allowing the borrower to fix a portion of the loan and leave the remainder variable.
Buyers who fix their rate gain certainty over repayments during the fixed period, but lose flexibility. Most fixed rate loans do not allow extra repayments beyond a small annual threshold without incurring break costs. Buyers who expect to make lump sum repayments from bonuses, tax refunds, or savings should consider a variable or split structure.
A split loan allows the buyer to fix a portion of the loan for rate certainty while keeping the remainder variable for flexibility. A buyer with a $900,000 loan might fix $600,000 for three years and leave $300,000 variable with an offset account attached. This structure provides stability on the majority of the loan while retaining the ability to make extra repayments and reduce interest on the variable portion.
Rate structures depend on the lender and loan product. Buyers using the 5% Deposit Scheme should confirm whether their participating lender offers split loan structures, as not all lenders provide this option on scheme-backed loans.
How Gift Deposits Work in Queensland
A gift deposit is a contribution from a family member, typically a parent or grandparent, given to the buyer without the expectation of repayment. Most lenders accept gift deposits as part of the buyer's genuine savings, provided the donor signs a statutory declaration confirming the funds are a gift and not a loan.
Some lenders require a portion of the deposit to come from the buyer's own genuine savings, even when a gift deposit is provided. A buyer with a 5% deposit of $50,000 might need to demonstrate that $25,000 came from their own savings held for at least three months, with the remaining $25,000 provided as a gift. Requirements vary by lender, so buyers should confirm the acceptable deposit composition before relying on a gift.
Gift deposits can be combined with the 5% Deposit Scheme, provided the total deposit meets the 5% threshold and the lender's credit criteria are satisfied. Buyers using a gift deposit should obtain the signed declaration before applying for pre-approval, as lenders will request this documentation during the assessment process.
What First Home Buyers Should Know About LMI Waivers
Lenders Mortgage Insurance is charged when a borrower takes a loan with a deposit below 20%. The insurance protects the lender, not the borrower, in the event of default. LMI is typically added to the loan balance or paid upfront at settlement.
Under the Australian Government 5% Deposit Scheme, no LMI is payable because Housing Australia guarantees the difference between the deposit and 20% of the property value. This removes a significant upfront cost for buyers purchasing with a small deposit.
Buyers who do not qualify for the scheme, or who are purchasing a property above the scheme's price caps, will pay LMI unless they provide a 20% deposit. Some lenders offer LMI waivers for certain professionals including doctors, accountants, and lawyers, allowing them to borrow with a 10% deposit without paying LMI. Eligibility depends on the buyer's occupation, income, and the lender's criteria.
Buyers considering a terrace purchase above the scheme's price caps should assess whether a 20% deposit is achievable, or whether paying LMI on a smaller deposit is the more practical path. The cost of LMI depends on the loan amount, deposit size, and lender, and can range from a few thousand dollars on a modest loan to tens of thousands on a loan above $800,000.
Inner-City Terrace Characteristics That Affect Borrowing Capacity
Terraces in inner-city Brisbane suburbs including New Farm, Paddington, and Red Hill are typically older-style homes, often with heritage overlays or character protection. Lenders assess these properties differently than modern detached homes, particularly if the terrace requires renovation or has structural issues.
A terrace with a building and pest report noting stumps in poor condition, weatherboard cladding with rot, or a roof requiring replacement may be valued lower by the lender's valuer than the purchase price, even if the buyer and seller have agreed on a figure. If the lender's valuation comes in below the purchase price, the buyer's required deposit increases to maintain the same loan-to-value ratio.
Buyers should arrange a building and pest inspection before signing the contract and provide the report to their broker or lender during the pre-approval process. If significant issues are identified, the buyer can negotiate a lower purchase price, request the seller to complete repairs, or adjust their deposit and loan structure to account for the lender's conservative valuation.
Terraces in suburbs close to Brisbane's CBD, including Fortitude Valley and Spring Hill, are often on smaller blocks with limited or no off-street parking. Some lenders apply stricter lending criteria to properties with these characteristics, particularly if the terrace is part of a strata or community title scheme with high body corporate fees. Buyers should confirm their borrowing capacity based on the specific property type and location before making an offer.
First Home Super Saver Scheme: Timing the Withdrawal
The First Home Super Saver Scheme allows first home buyers to make voluntary concessional and non-concessional contributions into their superannuation fund and apply to release eligible amounts toward a home deposit. Up to $15,000 of personal contributions from any one financial year can be released, with a total cap of $50,000.
Buyers must obtain a determination from the ATO before signing a purchase contract. The determination confirms the amount available for release and the tax that will be withheld. Once the determination is issued, the buyer can request the release, and the funds are paid to the buyer within a specified timeframe, typically five to 25 business days after the release request is processed.
A buyer who has contributed $40,000 into superannuation over three financial years and receives a determination showing $38,000 available after tax can use these funds as part of their deposit. The buyer must time the release request so the funds are available before settlement, which requires lodging the determination request well before signing the contract.
Buyers using the FHSS should confirm with their broker or lender that the released funds will be treated as genuine savings by the lender. Most lenders accept FHSS funds as genuine savings, but the buyer may still need to demonstrate a savings history if the lender requires a portion of the deposit to come from savings held outside superannuation.
What Happens at Settlement for a Terrace Purchase
Settlement is the date ownership transfers from the seller to the buyer. The buyer's solicitor or conveyancer coordinates with the lender to ensure the loan funds are available, and the balance of the purchase price is paid to the seller's solicitor. The buyer's deposit, paid at exchange of contracts, is deducted from the total amount due at settlement.
For a terrace purchase at $680,000 with a 5% deposit of $34,000 paid at exchange, the buyer's lender advances $646,000 at settlement. The buyer must also pay settlement costs including conveyancing fees, title search fees, loan establishment fees, and any duty not covered by the first home concession. These costs typically range from $3,000 to $6,000 depending on the property value and the complexity of the transaction.
Buyers should confirm the total amount required at settlement at least two weeks before the settlement date. The lender will issue a settlement statement showing the loan amount, any fees deducted from the loan advance, and the net amount to be paid to the seller. The buyer's conveyancer will issue a separate statement showing the buyer's out-of-pocket costs due at settlement, including any duty, registration fees, and conveyancing fees not covered by the loan.
If the buyer is using the 5% Deposit Scheme, the lender will confirm that Housing Australia's guarantee is in place before settlement. Any delay in confirming the guarantee may delay settlement, so buyers should ensure their application is lodged well in advance of the proposed settlement date.
When to Lock in a Rate and When to Wait
Buyers with pre-approval typically have the option to lock in an interest rate once they sign a purchase contract. A rate lock protects the buyer from rate increases between contract exchange and settlement, but also prevents the buyer from benefiting if rates fall during that period.
Rate locks are typically offered for 90 days, with some lenders extending to 120 days for off-the-plan purchases or delayed settlements. If settlement is scheduled for eight weeks after exchange, the buyer can lock in the rate at contract and know exactly what the repayments will be from day one.
Buyers who expect rates to fall, or who are settling within a short timeframe, may choose not to lock in the rate and instead take the rate available at settlement. This approach carries risk if rates rise, but allows the buyer to benefit from any rate cuts announced between contract and settlement.
The decision depends on the buyer's tolerance for uncertainty and the current rate environment. Buyers purchasing a terrace in a competitive inner-city market with a short settlement period may prefer the certainty of a locked rate, while buyers with a longer settlement timeframe and a view that rates are likely to fall may choose to float.
Call one of our team or book an appointment at a time that works for you to discuss your home loan options and confirm your eligibility for Queensland's first home buyer concessions and the Australian Government 5% Deposit Scheme.
Frequently Asked Questions
Can I use the 5% Deposit Scheme and Queensland stamp duty concession together?
Yes, the Australian Government 5% Deposit Scheme can be used alongside Queensland's first home stamp duty concession. You can access both the reduced deposit requirement and the duty reduction of up to $17,350 on eligible properties, provided you meet the criteria for each scheme.
Do all lenders offer offset accounts on low deposit home loans?
No, not all participating lenders in the 5% Deposit Scheme offer offset accounts on low deposit loans. Some lenders provide redraw facilities instead, which have different access terms. Confirm which feature is available on your chosen loan product before proceeding with your application.
How does a gift deposit work for first home buyers in Queensland?
A gift deposit is a contribution from a family member given without expectation of repayment. Most lenders accept gift deposits as part of your genuine savings if the donor signs a statutory declaration. Some lenders still require a portion of the deposit to come from your own savings, so confirm the acceptable deposit composition with your lender before relying on a gift.
What settlement costs should I expect when buying a terrace house?
Settlement costs typically include conveyancing fees, title search fees, loan establishment fees, and any duty not covered by concessions. These costs usually range from $3,000 to $6,000 depending on the property value and transaction complexity. Confirm the total amount required at least two weeks before settlement.
When should I lock in my interest rate?
Lock in your rate if you want certainty over repayments and protection from rate increases between contract exchange and settlement. Rate locks typically last 90 days. If you expect rates to fall or are settling quickly, you may choose to take the rate available at settlement instead.
