Building a First Home
Thinking about building your first home? Clear, current answers from an Adelaide mortgage broker on deposits, grants, costs, timelines, builders and the risks worth knowing before you start.
Building a first home in Australia can be a strong path for first home buyers, because new homes attract the most government support: the First Home Owner Grant, stamp duty savings, and the 5 per cent deposit scheme. Building uses a construction loan and takes longer than buying established, so it suits buyers with time. These guides cover deposits, grants, costs, timelines, builders and the risks.
If you are researching whether and how to build your first home, these guides walk through the things that matter most: how much deposit you need, whether building or buying is cheaper, how house and land packages work, the grants and stamp duty savings available, build timelines and hidden costs, choosing a builder, what happens if a builder fails, contracts, and building on a self-employed or casual income. Current for 2026, with figures dated and pointed to official sources.
Why building can suit first home buyers
New homes attract the most generous government support for first home buyers, the First Home Owner Grant, stamp duty concessions on new homes and vacant land, and the federal 5 per cent deposit scheme. Stacked together, that support is something buyers of established homes generally do not receive.
The deposit can be lower than you think
Eligible first home buyers can often build with a small deposit. The Australian Government 5% Deposit Scheme allows a 5 per cent deposit with no LMI, and in South Australia HomeStart allows about 8 per cent to build, or 5 per cent for eligible graduates.
How building finance differs
Building uses a construction loan that pays your builder in stages, is interest only during the build, and is secured against the homes value on completion. You also generally need a fixed price building contract from a licensed builder.
Build or buy is a genuine trade off
Building can be competitive once the grants and stamp duty savings are counted, but it takes far longer than buying established, during which you usually pay rent and loan interest at the same time. Neither path is always cheaper, so it is worth pricing both.
The risks worth understanding
Building carries risks worth knowing about: valuation shortfalls on new builds, hidden site and finishing costs, build delays, and the small but real chance a builder runs into trouble, which is why mandatory builder insurance exists. Knowing them lets you plan and protect yourself.
Where to get help
Because building has more moving parts than buying established, a broker who knows construction lending can help you set a realistic budget, line up the land and the build, check which grants and schemes you qualify for, and avoid the common pitfalls, usually at no cost to you.
- New homes attract the most government support for first home buyers: the grant, stamp duty savings and the 5 per cent deposit scheme.
- Eligible first home buyers can often build with a 5 per cent deposit, or about 8 per cent through HomeStart in South Australia.
- Building uses a construction loan, paid in stages, interest only during the build, secured on the homes value on completion.
- Building can be competitive once grants are counted, but it takes longer and you usually pay rent and interest at the same time.
- Grants, caps and stamp duty rules change, so confirm the current detail with your state revenue office and Housing Australia.
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Building a First Home: common questions
How much deposit do I need to build a first home?
It depends on the path you choose, but eligible first home buyers can often build with a smaller deposit than people expect. Under the Australian Government 5% Deposit Scheme you may build with a 5 per cent deposit and no LMI, and in South Australia HomeStart allows about 8 per cent to build, or 5 per cent for eligible graduates. You also need to allow for upfront costs on top of the deposit.
Is it cheaper to buy an existing house or build a new one?
There is no single answer, it depends on where you are buying, the current market, and your timeframe. Building can be competitive, especially with the larger grants and stamp duty savings available on new homes for first home buyers, but build costs have risen and building takes far longer, during which you usually pay rent and loan interest. Buying established is faster and gives price certainty.
What is a house and land package and how does it work?
A house and land package bundles a block of land with a home design from a builder, usually sold together in a new estate. You sign two contracts, one for the land and one to build the home, and finance it with a construction loan that pays the builder in stages. Stamp duty is generally charged only on the land, and being a new home it can attract first home buyer grants.
How much can I afford to borrow to build a house?
How much you can borrow to build is based on the same things as any loan, your income, expenses, debts and deposit, with a serviceability buffer applied. The difference is that a construction loan is secured against the homes value on completion, as if finished, and low deposit schemes like the 5 per cent scheme or HomeStart can extend what an eligible first home buyer can do.
What government grants are available for building a first home?
Building a new home unlocks the most support for first home buyers. The main help is the First Home Owner Grant, which applies to new homes and varies by state, plus state stamp duty concessions on new homes and vacant land, and the federal Australian Government 5% Deposit Scheme that lets you build with a 5 per cent deposit and no LMI. South Australians may also use HomeStart.
How long does it take to build a first home from start to finish?
It varies widely, but a realistic timeline from signing a contract to moving in is often around 9 to 18 months. A standard project home usually takes roughly 6 to 12 months of actual construction, with another 3 to 6 months beforehand for design, engineering and council or certifier approvals. Custom homes and difficult sites take longer.
Can I use the First Home Owner Grant as my deposit?
Often, yes. Eligible first home buyers can generally put the First Home Owner Grant toward their deposit and upfront costs, which reduces what they need to have saved. The catch is timing: the grant applies to new homes and, for a build, is usually paid at a construction milestone rather than upfront, so it may not be available at the very start. Rules and amounts vary by state.
What are the hidden costs when building a new house?
The biggest trap is assuming the builder quote is your total cost, because it usually is not. A quote covers the dwelling itself, but commonly excludes site costs, landscaping, driveways, fencing, window coverings, utility connections, council and professional fees, and any variations or provisional sum overruns. Budgeting a contingency on top of the contract price is essential.
Do first home buyers pay stamp duty on vacant land?
In most states, eligible first home buyers buying vacant land to build their first home pay reduced or no stamp duty, but it depends on the state, the land value, and a requirement to build within a set time. South Australia and Queensland are particularly generous, while states like New South Wales and Western Australia exempt land up to a threshold with a concession above it. Confirm the current rules with your state revenue office.
What is the step-by-step process of building a house?
At a high level: get your finance pre-approved, choose your land and a licensed builder, finalise the design and a fixed price contract, obtain council or certifier approval, then build through staged construction, site prep, slab, frame, roof, lock up, fix out and completion, with your lender paying the builder at each stage. It finishes with a final inspection, handover, and a defects period.
How do you pay rent and a mortgage at the same time while building?
During a build you usually do pay both, rent where you live now and the loan on your build, but it is more manageable than it sounds. A construction loan is interest only during the build, and you are charged interest only on what has been drawn so far, so payments start small and rise as the home progresses. Budgeting for both, and for the rising payments, is the key.
How do I choose the right builder for a first home?
Choose a builder who is properly licensed, carries the mandatory builder warranty insurance, offers a clear fixed price contract, and has a verifiable track record. Check their licence on your state register, look at completed homes and references, read the inclusions carefully, and be wary of a price that looks too good. The cheapest quote is rarely the best builder.
What happens if a builder goes broke during construction?
It is the risk every building client worries about, and there is a safety net: mandatory builder insurance, called building indemnity insurance in South Australia, that protects you if your builder dies, disappears or becomes insolvent before finishing. In South Australia it covers non-completion up to 250,000 dollars. It is not a quality guarantee, and there are caps, so checking the policy is valid before you pay is vital.
What is a fixed-price building contract vs a quote?
A quote is an estimate of what a build might cost, a sales figure with no legal force. A fixed price building contract is the binding legal agreement that locks in the price, inclusions, progress payments and timeframe before construction starts. Lenders fund the contract, not the quote. A fixed price contract is not fully fixed though, variations and provisional sums can still move it.
Can I build a first home on a casual or self-employed income?
Yes, but you need to prove your income the way lenders require. Self-employed buyers generally need around two years of tax returns and business financials, though some lenders accept one year or low-doc options. Casual workers usually need six to twelve months of consistent income. The construction side is the same as any build; the key is matching you to a lender comfortable with your income.
General information only. This page provides general information about home loans and is not financial or credit advice, a quote, or a guarantee, and your personal circumstances have not been considered. Lending policies, interest rates, fees and eligibility vary by lender and change over time. Always confirm your own situation with a licensed mortgage broker or lender before acting. Ross McFarlane (Credit Representative 526725) is an authorised Credit Representative of Australian Associated Advisers Pty Ltd t/a Keylend, Australian Credit Licence 392169.