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.
Pros and Cons of Borrowing to Cover Stamp Duty
Adding stamp duty to your mortgage can make buying a home easier—but it’s not always the best move. Let’s break down the advantages and disadvantages so you can make an informed choice
Pros of Adding Stamp Duty to Your Mortgage
Helps You Buy Sooner
One of the biggest advantages is being able to buy sooner. Instead of waiting years to save for stamp duty, you can roll it into your home loan and get into the market faster. This approach can be especially helpful for first home buyers facing rising property prices. According to CoreLogic, Australian home values rose by 7.6% nationally in 2024, meaning every month of delay could cost thousands.
Keeps Your Savings Intact
Using a home loan to cover stamp duty can preserve your emergency fund. Having cash on hand gives you a financial buffer for unexpected costs like repairs or job changes. Many borrowers prefer to keep three to six months’ worth of expenses in savings rather than draining every cent upfront.
Eases Short-Term Cash Flow Pressure
If you expect your income to increase or you’re moving from renting to owning, this option can ease the transition. Borrowing to cover stamp duty can smooth out your early months of ownership while you adjust to mortgage payments and home costs. This flexibility helps you focus on stability rather than short-term stress.
Cons of Borrowing to Cover Stamp Duty
Increases Your Total Loan and Interest
The biggest drawback is that you’ll pay interest on the stamp duty amount for the life of your loan. For example, adding $25,000 in stamp duty to a $600,000 mortgage at 6% interest could cost over $29,000 extra in repayments over 30 years. That’s a lot of money for convenience.
Could Trigger Lenders Mortgage Insurance (LMI)
Adding stamp duty may push your loan-to-value ratio (LVR) above 80%, which can trigger LMI. LMI can add thousands of dollars in costs and doesn’t protect you—it protects the lender. Before borrowing extra, check how it affects your LVR and whether you can avoid LMI with a larger deposit or guarantor.
May Affect Interest Rates and Approval
Some lenders see higher LVR loans as higher risk. This can lead to higher interest rates or stricter approval conditions. A mortgage broker can compare lenders to help you find the most flexible option if you’re adding stamp duty to your mortgage.
Reduces Your Starting Home Equity
Borrowing for stamp duty lowers your initial equity. This means you’ll own less of your home from day one and take longer to reach 20% equity. Lower equity can make refinancing or selling early more difficult, especially if property prices fall.
Key Takeaway
Including your stamp duty in your mortgage can help you buy a home faster and protect your cash flow—but it comes at a cost. If you decide to go this route, compare lenders carefully, factor in LMI and interest, and get advice from a qualified mortgage broker to make sure it fits your long-term goals.
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 greatly improve the affordability of your first home. Each state and territory has different rules, thresholds, and exemptions. Understanding these variations helps you plan your budget, maximise savings, and get into your home sooner.
New South Wales (NSW)
In NSW, first-home buyers can access exemptions and concessions under the First Home Buyer Assistance Scheme.
- Homes up to $800,000 may qualify for a full stamp duty exemption, saving tens of thousands upfront.
- Homes between $800,001 and $1 million may be eligible for a partial concession on a sliding scale.
These savings reduce the cash required at settlement, making homeownership more attainable for first-home buyers in NSW.
Victoria (VIC)
Victoria’s First Home Buyer Duty Exemption or Concession offers relief for homes valued at $600,000 or less, providing a full exemption from stamp duty.
- Homes priced $600,001 to $750,000 receive a sliding-scale concession, giving meaningful savings.
- These reductions can stretch your deposit and may help avoid Lenders Mortgage Insurance (LMI).
This is particularly useful for buyers in Melbourne’s outer suburbs and regional areas.
Queensland (QLD)
Queensland has generous thresholds for first-home buyers.
- Homes up to $700,000 may qualify for a full stamp duty exemption under the First Home Concession.
- Homes between $700,001 and $800,000 may still receive a partial concession.
These concessions help buyers in Brisbane and surrounding areas where property prices are near the upper limits.
Western Australia (WA)
Stamp duty exemptions in WA are more limited.
- Homes up to $430,000 may qualify for a full exemption.
- Homes $430,001 to $530,000 can receive a partial concession.
WA also offers a First Home Owner Grant, which can be combined with stamp duty concessions for additional financial relief.
South Australia (SA)
South Australia currently does not provide stamp duty exemptions or concessions for first-home buyers.
- All buyers pay standard stamp duty based on the property value.
- First-time buyers should budget carefully and explore other support programs, like grants or shared equity schemes.
Use the SA Stamp Duty Calculator to estimate your costs
Tasmania (TAS)
Tasmania does not offer specific stamp duty concessions for first-home buyers.
- All buyers pay standard stamp duty rates, regardless of experience.
- Lower property prices in Tasmania may reduce the overall burden, but stamp duty remains a significant upfront cost.
Australian Capital Territory (ACT)
ACT concessions are based on household income, not just first-home status.
- The Home Buyer Concession Scheme offers a full exemption if your gross household income is below specific thresholds.
- Thresholds vary by household size.
This income-based approach targets buyers who need financial assistance the most.
Northern Territory (NT)
In the NT, first-home buyers may access the Territory Home Owner Discount.
- Homes up to around $650,000 may receive a discount of up to $18,601.
- This applies to both new and existing homes and eases the financial pressure of entering the property market.
While not a full exemption, it significantly reduces upfront costs for first-home buyers in the Northern Territory.
Expert Tips To Cover Stamp Duty When Getting A Home Loan
Stamp duty can be a major upfront cost—but with the right strategy, you can manage it without delaying your homeownership goals. Here are practical, expert-backed tips to help you prepare and stay ahead.
1. Budget for Extras Like Stamp Duty Early
Before house hunting, plan for all buying costs—not just the property price.
Stamp duty is one of the biggest upfront expenses, so include it from the start.
A good rule of thumb is to set aside at least 5% of the property’s value for extras like:
- Stamp duty
- Legal and conveyancing fees
- Building inspections
- Loan application or valuation costs
This preparation shows lenders you’re financially ready and prevents last-minute stress at settlement.
2. Use First Home Buyer Schemes to Offset Costs
If you’re a first home buyer, government support can make a huge difference. The First Home Guarantee Scheme lets eligible buyers purchase with just a 5% deposit, without paying Lenders Mortgage Insurance (LMI).
Avoiding LMI can save you $10,000 to $30,000, which you can redirect towards stamp duty or moving costs. Plus, many states offer stamp duty exemptions or concessions, potentially cutting the cost altogether.
By combining these programs, you can free up a significant portion of your budget and reduce your borrowing needs.
3. Boost Your Deposit to Indirectly Cover Stamp Duty
You can’t borrow directly for stamp duty—but you can adjust your deposit strategy. For example, if you’ve saved $50,000, you could use $15,000 to pay stamp duty and borrow slightly more to fill the gap.
As long as your post-cost deposit meets the lender’s minimum (usually 5% to 10%), you can still qualify for a loan. This approach offers flexibility while keeping your borrowing manageable.
4. Consider a Personal Loan or Family Gift
If you’re just short of funds, a small personal loan or family gift could help.
Pros:
- Provides quick access to extra cash.
- Lets you proceed with your purchase sooner.
Cons:
- Adds another repayment to your budget.
- May reduce how much you can borrow.
If the money comes from family, lenders will need a gift letter confirming it doesn’t need to be repaid. This simple document helps keep your loan approval smooth and transparent.
5. Delay and Save a Bit Longer
If your budget feels tight, it might be worth waiting another 6–12 months.
During that time, you can:
- Build up your deposit.
- Take advantage of rising savings interest rates.
- Avoid unnecessary debt or higher LVRs.
Even a few extra months of saving can make a big difference to your long-term financial comfort.
6. Use a Guarantor to Reduce Your LVR
A family guarantor—usually a parent—can help you buy sooner and avoid LMI. They use a portion of their property’s equity to secure part of your loan.
This lowers your loan-to-value ratio (LVR) and may free up your savings for stamp duty or other upfront costs. However, guarantors take on real financial responsibility, so both parties should seek legal and financial advice before proceeding.
7. Negotiate Costs With the Seller
While rare, some sellers are open to negotiation.
They might agree to:
- Cover small settlement or legal costs.
- Slightly reduce the property price to help offset your stamp duty.
This strategy works best in a buyer’s market, where sellers are motivated to close deals quickly. It never hurts to ask—small savings here can go a long way.
8. Stick to a Realistic Budget
It’s tempting to stretch for your dream home, but overcommitting can lead to stress later. Work out your true all-in budget, including stamp duty, moving costs, and legal fees, before setting your property price range.
Making decisions based on total affordability—not just your borrowing limit—keeps your finances healthy from day one.
9. Work With a Mortgage Broker
A mortgage broker can help you bring all these strategies together. They know lender policies, government scheme requirements, and ways to structure your loan effectively.
A good broker will:
- Compare lenders that allow flexible loan setups.
- Help you apply for concessions or grants.
- Identify hidden costs and optimise your cash flow.
This expert support can save you time, stress, and thousands of dollars.
Final Takeaway
You usually can’t add stamp duty directly to your mortgage—but with smart planning, you can manage it with ease. Whether it’s through government schemes, family help, or careful budgeting, the goal is the same: get into your home without financial strain. Preparation, expert advice, and the right strategy make all the difference
FAQs About Including Stamp Duty In Your Mortgage
Can I borrow the stamp duty amount in my home loan?
Most lenders don’t allow you to directly include stamp duty in your home loan. However, you may be able to borrow slightly more than the property price if your deposit and equity allow, effectively covering stamp duty as part of your total borrowing.
What happens to my LVR and interest rate if I include stamp duty in borrowing?
Increasing your loan to cover stamp duty raises your loan-to-value ratio (LVR). A higher LVR can lead to higher interest rates, require Lenders Mortgage Insurance (LMI), and increase the overall cost of your loan.
Which lenders allow extra borrowing for upfront costs like stamp duty?
Some lenders may approve a larger loan if your income, deposit, and credit profile meet their criteria. A mortgage broker can help identify lenders that offer flexible borrowing options for upfront costs.
What are the long-term cost implications of borrowing more now?
Borrowing extra increases your loan size and interest paid over time. For example, adding $20,000 to a 25-year loan at 6% interest could cost nearly $19,300 more in interest over the life of the loan.
What documentation or credit criteria do lenders look at when you borrow more?
Lenders assess your income, expenses, existing debts, credit score, and deposit size. They also check your ability to service the increased loan without stretching your budget.
How do I calculate the full cost of borrowing the stamp duty portion?
You can estimate using a simple table:
Extra Borrowed | Interest Rate | Loan Term | Total Interest Paid |
$10,000 | 6% | 25 years | $9,650 |
$20,000 | 6% | 25 years | $19,300 |
$30,000 | 6% | 25 years | $28,950 |
A home loan calculator can also provide a quick estimate of monthly repayments and total cost.
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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