Stamp duty can significantly increase upfront costs for Australian first home buyers, often amounting to tens of thousands of dollars. Understandably, many first home buyers wonder: Can a home loan cover stamp duty?
Short answer: Directly, no, lenders typically won’t directly include stamp duty in your loan. However, indirectly, yes, your home loan can help cover it. This guide will clarify exactly how that works, explain state-by-state stamp duty rules, and provide clear, actionable steps for handling stamp duty when buying your first home. We will also explore how working with a mortgage broker in Brisbane can get you the best deals.
Stamp duty can be confusing, especially for first-time buyers—but understanding how it works, how much you might need to pay, and how to budget for it will help you approach the buying process with more confidence and less stress.
Stamp duty—also referred to as transfer duty—is a government-imposed tax that you must pay when purchasing property or land in Australia. It’s one of the most significant upfront costs buyers face during the home-buying process, and understanding how it works is essential for planning your finances.
The amount of stamp duty you’ll pay isn’t fixed across the country. Instead, it varies by state or territory, with each having its own calculation methods, thresholds, and exemptions. Generally, the value of the property is the biggest factor determining how much duty you’ll owe—the more expensive the property, the higher the stamp duty. Some states also consider the type of buyer you are. For example, first home buyers may qualify for discounts or even full exemptions, while investors and foreign buyers often pay more.
When Is Stamp Duty Paid?
Unlike your home loan, which you pay off gradually over time, stamp duty is payable upfront. In most cases, you’ll need to pay it either before settlement or on the day of settlement, depending on local requirements. Because it’s not included in your home loan amount, you’ll need to have enough savings set aside to cover it separately.
This makes stamp duty one of the biggest out-of-pocket expenses when buying a home—alongside your deposit, legal fees, inspections, and moving costs. For example, on a $700,000 property in New South Wales, stamp duty can cost over $26,000 unless you qualify for an exemption or concession.
Why Is Stamp Duty Charged?
Stamp duty is essentially a transaction tax. It’s levied by state and territory governments as a way to generate revenue from the transfer of ownership in property. The funds raised typically go toward infrastructure, healthcare, education, and other public services in the region.
While it can feel like a financial hurdle, stamp duty has been a long-standing part of the property market in Australia.
Read more: First home buyer stamp duty
Why Can't I Use A Home Loan To Cover Stamp Duty?
Stamp duty is a government-imposed tax on property purchases and is completely separate from the property’s actual purchase price. Unlike your home loan, which is used specifically to pay for the property itself, stamp duty is considered an upfront government charge that must be paid directly—usually at settlement or shortly after signing the contract of sale.
Because stamp duty is not part of the purchase transaction between you and the seller, lenders do not allow loan funds to be used to pay for it directly. From the bank’s perspective, stamp duty is your responsibility, and they expect you to cover it out-of-pocket.
How Does Your Home Loan Help Indirectly With Stamp Duty?
While the bank won’t pay stamp duty for you, the way you structure your deposit and loan can create room for your loan to indirectly absorb the cost. Here’s how it works:
- You pay stamp duty using your savings or deposit funds. This reduces the total cash you have available for your deposit.
- Because your remaining deposit is now smaller, you may need to increase your loan amount to cover the difference between your reduced deposit and the total property cost.
- In effect, this pushes more of the property’s cost into the loan, helping you manage upfront costs, even though you’re technically not borrowing for the stamp duty itself.
Example Scenario:
Item | Amount |
Total Deposit Savings | $50,000 |
Stamp Duty Paid | $15,000 |
Remaining for Deposit | $35,000 |
Additional Borrowing | +$15,000 |
In this case, you’re still able to buy the home, but now you’re borrowing more to make up for the deposit amount used to pay stamp duty. The loan covers more of the purchase price—not the stamp duty directly, but it helps you still secure the home.
Important Consideration:
Lenders have strict requirements regarding the minimum deposit you must have after accounting for upfront costs like stamp duty, legal fees, and lender’s mortgage insurance (LMI). Most banks require that you still have at least 5% to 10% of the property value available as a deposit after stamp duty is paid.
If your deposit dips below this threshold, your loan application might be declined—or you might be required to pay LMI, increasing your total costs.
Read more: How is LMI calculated?
Case Study: How Claire Bought Her First Home With Smart Loan Structuring
Claire is a 29-year-old graphic designer from Brisbane. After years of diligent saving, she had $50,000 and was eager to purchase her first home. She found a charming two-bedroom unit priced at $850,000, which met her needs perfectly.
Upon consulting with her solicitor, Claire discovered that in Queensland, the first home concession for transfer (stamp) duty applies only to homes valued under $800,000. Since her chosen property exceeded this threshold, she was ineligible for the first home concession. However, she qualified for the home concession, which, while less generous, still offered some relief.
Using the Queensland Revenue Office’s Transfer Duty Estimator, Claire learned that the transfer duty payable on her $850,000 home, with the home concession applied, would be approximately $24,100.
Concerned about the impact of this additional cost on her finances, Claire decided to consult a mortgage broker. The broker assessed her financial situation and provided a strategic plan:
- Stamp Duty Payment: Claire would use $24,100 from her savings to cover the stamp duty.
- Remaining Deposit: This would leave her with $25,900 for the home deposit.
- Loan Structuring: To compensate for the reduced deposit, the broker arranged for Claire to borrow a slightly higher amount, ensuring she still met the lender’s minimum deposit requirement of 5% of the property’s value.
With the broker’s assistance:
- Claire successfully navigated the complexities of stamp duty concessions.
- She secured a loan that accommodated her financial situation.
- She purchased her dream home without overextending her finances.
So, can your home loan help with stamp duty? Not directly—but with the right planning, it can be structured in a way that allows you to manage the cost and still move forward with your purchase. Like Claire, working with a mortgage broker can make a huge difference—helping you make informed decisions, qualify for grants, and get into your home sooner without surprises.
Why Are Stamp Duty Concessions Important for First Home Buyers?
For first-home buyers, every dollar counts. Stamp duty can add tens of thousands of dollars to your upfront costs, and that’s often the biggest hurdle in getting onto the property ladder. That’s where government stamp duty concessions come in—they can significantly reduce or even eliminate the amount you need to pay, depending on your eligibility and the value of the property you’re buying.
Benefits of Stamp Duty Concessions:
- Lower Upfront Costs: Reducing or waiving stamp duty can save you thousands, making it easier to afford the total cash needed to buy a home.
- Keep a Larger Deposit: Without the need to dip into your savings to pay stamp duty, you’re able to contribute a larger deposit—reducing how much you need to borrow and potentially avoiding LMI.
- More Property Options: With reduced financial pressure, you may be able to consider slightly higher-priced homes or properties in better locations, increasing your buying power.
Stamp Duty Concessions State-by-State for First Home Buyers
Stamp duty concessions can make a significant difference in the affordability of your first home. However, these concessions vary widely depending on which state or territory you’re buying in. Understanding how each jurisdiction handles stamp duty for first-home buyers can help you plan better, maximise your savings, and get into your home sooner. Here’s a state-by-state breakdown:
New South Wales (NSW)
In NSW, first-home buyers can benefit from generous stamp duty exemptions and concessions under the First Home Buyer Assistance Scheme. If you’re purchasing a new or existing home valued at up to $800,000, you may be eligible for a full exemption, meaning you won’t pay any stamp duty at all. This could potentially save you tens of thousands of dollars upfront.
If the property is priced between $800,001 and $1 million, you could still qualify for a partial concession, reducing the amount of stamp duty payable on a sliding scale. These savings can significantly reduce the amount of cash you need on hand at settlement, making homeownership more attainable for many first-home buyers in NSW.
Victoria (VIC)
In Victoria, the First Home Buyer Duty Exemption or Concession provides relief for homes valued at $600,000 or less, with a full exemption on stamp duty. This can remove a major barrier for young buyers trying to enter the market, particularly in Melbourne’s outer suburbs or regional areas.
For homes priced between $600,001 and $750,000, a sliding-scale concession applies. While not a full exemption, the reduction still provides meaningful savings, helping to stretch your deposit and potentially avoid the need for lender’s mortgage insurance (LMI).
Queensland (QLD)
Queensland offers one of the more generous thresholds for first-home buyers. If you’re buying a home worth up to $700,000, you may be eligible for a full stamp duty exemption under the First Home Concession.
If your property is valued between $700,001 and $800,000, you may still receive a partial concession. These concessions are especially helpful in Brisbane and surrounding areas, where property prices can push close to the upper thresholds.
Western Australia (WA)
In WA, stamp duty exemptions are slightly more limited. First-home buyers purchasing a home valued at up to $430,000 are eligible for a full exemption. If the home is priced between $430,001 and $530,000, a partial concession is available.
These benefits are especially valuable in Perth’s outer suburbs and regional areas, where property values often fall within the eligible range. Additionally, WA offers a First Home Owner Grant that can be combined with stamp duty concessions, offering further financial relief.
South Australia (SA)
Unlike most other states, South Australia currently does not offer any stamp duty concessions or exemptions for first-home buyers. All buyers are required to pay the standard stamp duty based on the property value.
This can make upfront costs significantly higher, so it’s crucial for first-home buyers in SA to budget carefully and consider other government support programs that might be available, such as grants or shared equity schemes.
Use the SA Stamp Duty Calculator to estimate how much stamp duty you’ll need to pay.
Tasmania (TAS)
Similarly, Tasmania does not offer specific stamp duty concessions or exemptions for first-home buyers at this time. All buyers are subject to the normal rates regardless of whether it is their first home.
That said, Tasmania’s generally lower property prices can offset some of the impact of stamp duty. However, it still remains a considerable upfront cost that first-time buyers should plan for.
Australian Capital Territory (ACT)
In the ACT, stamp duty concessions are based on household income rather than just being a first home buyer. The Home Buyer Concession Scheme allows eligible buyers to receive a full exemption from stamp duty, provided their total gross income falls below certain thresholds, which are adjusted based on household size.
This income-based approach aims to support those who need financial assistance the most. Because the ACT has a unique land leasehold system, it’s important to consider how concessions apply differently here compared to other states.
Northern Territory (NT)
In the NT, first-home buyers may qualify for the Territory Home Owner Discount, which provides a stamp duty discount of up to $18,601. This concession is generally available for homes valued up to around $650,000.
While this isn’t a full exemption, it’s a significant discount that can ease the financial pressure of buying a home in Darwin or other areas within the Northern Territory. This benefit is available for both new and existing homes and helps keep the cost of entering the property market more manageable.
Expert Tips To Cover Stamp Duty When Getting A Home Loan
1. Budget for Extras Like Stamp Duty Early On
Before you even start house hunting, it’s important to budget not just for the purchase price of the property but also for the additional costs that come with buying a home—stamp duty being one of the biggest. A good rule of thumb is to set aside at least 5% of the property’s value to cover stamp duty and other upfront costs like legal fees, inspections, and loan application charges. This ensures you’re not caught off guard when it’s time to pay, and it helps you demonstrate financial readiness to lenders.
2. Use First Home Buyer Schemes to Offset Costs
Australia offers several government schemes that reduce the financial burden of buying your first home. One of the most valuable is the First Home Guarantee Scheme, which allows eligible buyers to purchase a home with as little as a 5% deposit—without paying Lenders Mortgage Insurance (LMI). By eliminating the need for LMI, you free up thousands of dollars that can instead be used to pay stamp duty. And in some states, if you’re eligible, stamp duty concessions or exemptions may eliminate the cost altogether.
Combining these schemes can free up a significant portion of your budget, which you can use toward stamp duty or reduce your borrowing needs overall.
3. Boost Your Deposit to Indirectly Cover Stamp Duty
While you can’t borrow specifically for stamp duty, having a larger deposit allows you to stretch your funds further. Here’s how it works: you can use part of your deposit or savings to pay the stamp duty, then increase your loan amount slightly to make up for the reduced deposit. For example, if you originally planned to put down $50,000 as a deposit, you might instead use $15,000 of that to pay stamp duty and borrow a little more to cover the difference.
This strategy gives you greater flexibility and still allows you to secure a loan—provided you meet the lender’s borrowing criteria and deposit thresholds (usually at least 5% to 10% of the property’s value, post-costs).
4. Stick to a Realistic Budget and Don't Overextend
It’s easy to get caught up in the excitement of buying a home and stretch your budget too thin. But it’s essential to factor in all associated costs, including stamp duty, into your overall purchase plan. Overcommitting financially can put stress on your monthly repayments, especially in the early years of your mortgage.
A smart approach is to calculate your “all-in” budget—that means the property price, stamp duty, legal fees, and moving costs—and work backwards from there. That way, you’re making decisions based on your true affordability, not just the maximum amount you can borrow.
5. Work with a Mortgage Broker to Maximise Your Strategy
Navigating home loans, stamp duty costs, and government schemes can be overwhelming, especially for first home buyers. That’s where a professional mortgage broker can add real value. Brokers understand the ins and outs of lender policies and know how to structure your loan in a way that works best for your situation.
They’ll help you explore options to free up funds, guide you through eligibility for stamp duty concessions, and ensure you don’t overlook hidden costs. Plus, they often have access to lenders with more flexible criteria—which can make a big difference if you’re trying to juggle your deposit, stamp duty, and loan approvals all at once.
So, can a home loan be used to cover stamp duty? Not directly—but with the right strategy, you can structure your finances in a way that ensures this important cost is covered without delaying your dream of homeownership. Careful planning, smart use of government support, and expert guidance can make all the difference.
Next Steps And Getting Your Home Loan
Our team at Hunter Galloway is here to help you buy a home in Australia. Unlike other mortgage brokers who are just one person operations, we have an entire team of experts dedicated to help make your home loan journey as simple as possible.
If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.
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