Buying the right property as a first home buyer
By Ali Hasani, Founder and Principal Mortgage Broker at Buyvest, MFAA accredited. Last updated July 2026. Strata levies and lender policies vary.
Quick summary: A house gives you land, space and renovation freedom at the highest price and the most maintenance. A townhouse gives you most of a house at a lower entry price, with strata levies of $2,000 to $6,000 a year. An apartment buys you location on the smallest budget, with levies of $4,000 to $12,000+ a year. Building gives you full control and access to the First Home Owner Grant. Use our property deposit calculator to see what each option means for your deposit.
What is the difference between a house, townhouse and apartment?
A house, townhouse and apartment differ in land ownership, maintenance and cost. A house sits on its own title with full land ownership. A townhouse and an apartment usually sit within a strata scheme, sharing walls, common property and levies.
The differences show up in what you own, what you pay each quarter and what you can change. A freestanding house holds the land on a single title. A townhouse and an apartment sit inside an owners corporation that sets levies, controls common property and approves alterations.
| Feature | House | Townhouse | Apartment |
|---|---|---|---|
| Land ownership | Full, own title | Usually strata | Strata only |
| Sydney entry price | Highest | Middle | Lowest |
| Strata levies a year | None | $2,000 to $6,000 | $4,000 to $12,000+ |
| Private outdoor space | Yard and garden | Courtyard or balcony | Balcony, if any |
| Renovation freedom | Council approval | Internal, strata for external | Cosmetic, strata approval |
| Maintenance burden | Entirely yours | Shared | Mostly the strata |
| Growth driver | Land value | Land and scarcity | Building and location |
Levy ranges vary with building size, age and facilities. A small block without a lift sits at the bottom. A tower with a pool, gym and concierge sits well above it.
What shapes the choice between a house, townhouse and apartment?
The choice between a house, townhouse and apartment is shaped by budget, ongoing levies and the trade-off between location and space. In Sydney, a smaller deposit generally reaches an apartment first, a townhouse next, and a house last.
Budget and levies
Budget decides which types are on the table before lifestyle gets a say. Two figures matter more than the purchase price: your Loan to Value Ratio, which sets whether lenders mortgage insurance applies, and your levies, which a servicing assessment counts against you. A $4,000 annual levy cuts borrowing power. Deposit options and the First Home Super Saver scheme widen the range, and our mortgage repayment calculator models the difference.
Location, space and upkeep
Location determines which types exist at your price. Inner and middle ring Sydney is dominated by apartments and townhouses, with detached houses further out and house and land packages in growth corridors. Upkeep splits the same way. A house hands you every gutter and repair, a townhouse shares structural work with the owners corporation, and an apartment removes almost all of it and charges for it through levies.
House vs townhouse: what are the trade-offs?
A house gives a first home buyer full land ownership, renovation freedom and no strata levies. A townhouse trades some of that for a lower entry price and a better location, usually within a strata scheme with shared walls and quarterly levies.
In most Sydney markets the land component drives long-term growth, which is why houses have historically led on capital growth. You control the whole site and can extend subject to council approval. The cost is the mirror image. Houses are the most expensive type in any suburb, every repair is yours, and affording one often means a longer commute.
A townhouse closes much of that gap with multi-level layouts, a private courtyard, and a position in suburbs where houses are out of reach. Townhouses are also getting scarcer as developers favour apartment blocks on the same land, and constrained supply supports resale.
Townhouse vs apartment: how do they compare?
A townhouse gives a first home buyer more floor space, private outdoor area and its own front door. An apartment costs less to buy in the same suburb and carries less personal maintenance, but strata levies on an apartment usually run higher.
Both sit inside a strata scheme, so the comparison is not about ownership structure but about space and running cost. A townhouse behaves like a small house: two or three levels, its own front door, neighbours beside rather than above. An apartment is a single level, cheaper to buy in the same suburb and cheaper to heat and cool.
The levy gap decides it for many buyers. A small townhouse scheme with no lift or facilities has little to maintain. A building with a lift, pool or concierge carries far more running cost, funded quarterly by every owner. The strata records for either show levy history, the capital works fund balance, previously called the sinking fund, and any special levies.
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How does buying land and building compare?
Buying land and building takes longer than buying an established home. Building gives full control over design and opens access to the NSW First Home Owner Grant, while adding time, cost risk and a construction loan that draws down in stages.
Buying vacant land and building is the only path that produces exactly the home you designed, and the only one that opens the NSW First Home Owner Grant of $10,000, which applies to new homes only, up to $750,000 for land and building contract combined. You pay stamp duty on the land value rather than the finished home.
Against that, a build typically takes 6 to 12 months after land settlement, cost overruns are common, and construction loans draw down in stages. The block factors that commonly affect a build are orientation, slope, soil quality, services, easements, covenants, and bushfire or flood risk.
Worth knowing: where you buy land and build under separate contracts, the Australian Government 5% Deposit Scheme counts the land price and the build cost together against the price cap, not separately.
How do government scheme price caps affect property choice?
Government scheme price caps set a hard ceiling on what a first home buyer can purchase. The Australian Government 5% Deposit Scheme caps Sydney purchases at $1,500,000, which in many suburbs decides whether a house is reachable or only an apartment.
The Australian Government 5% Deposit Scheme, formerly the Home Guarantee Scheme, allows a 5% deposit with no LMI because Housing Australia guarantees part of the loan. It covers new or existing houses, townhouses, apartments, house and land packages, off the plan purchases and vacant land with a building contract, so property type is not the constraint. The price cap is: $1,500,000 for Sydney, Illawarra, Newcastle and Lake Macquarie, and $800,000 for the rest of NSW. Both the purchase price and the lender's valuation must sit at or below it, and scheme eligibility is not loan approval. The benefits and risks of low deposit buying are covered separately.
Help to Buy takes a government equity share instead, caps Sydney at $1,300,000, is open to Australian citizens only, and cannot be combined with the 5% Deposit Scheme. Separately, NSW stamp duty is waived to $800,000 under the First Home Buyers Assistance Scheme, with a concession to $999,999. General transfer duty at $800,000 under the 2026/27 rates is $30,187. Duty and tax outcomes turn on personal circumstances, so a conversation with your accountant or financial adviser is worthwhile.
How do professional LMI waivers work?
Professional LMI waivers let buyers in eligible occupations borrow up to 90% LVR, and 95% at some lenders, without paying lenders mortgage insurance. A professional waiver carries no price cap, so it can reach a house where a scheme cap cannot.
Selected lenders waive lenders mortgage insurance entirely for borrowers in certain occupations, with no income cap and no property price cap. The 2026 list covers medical and health practitioners, veterinarians, lawyers, accountants, banking and finance, technology, engineers, senior federal government roles and allied health. Nurses and midwives are now covered at select lenders, though enrolled nurses are generally excluded.
The effect on property choice is direct. Where the 5% Deposit Scheme caps Sydney at $1,500,000, a waiver has no ceiling, so a house above the cap stays reachable on a 10% deposit with no LMI. Waivers also apply to investment purchases and refinances. Some lenders set income minimums on allied health, commonly around $90,000 or $150,000. No waiver is universal, each lender treats it as a commercial decision, and the lists change without announcement.
How does the buying process change by property type?
The buying process runs the same way for a house, townhouse or apartment, though the checks differ. A house usually involves a building and pest inspection. A townhouse or apartment usually involves a strata report covering levies, the capital works fund and special levies.
Private treaty, auction and off the plan change your cooling off rights and deposit timing more than the property type does. There is no cooling off at auction, which matters most for houses, since they go to auction more often than apartments.
Pre-approval is usually arranged before searching begins, and the gap between a fully assessed and a system generated one is wide. Genuine savings come into play above roughly 85% to 90% LVR, where most lenders want 5% of the purchase price held for three months. Costs beyond the deposit commonly run 3% to 5% of the purchase price: conveyancing $1,500 to $3,000, building and pest $400 to $800, and duty where it applies.
Frequently asked questions
Is a house, townhouse or apartment better for a first home buyer?
No property type is better in itself. A house offers land, space and renovation freedom at the highest price. A townhouse offers a house feel for less, with shared walls and levies. An apartment offers location and low maintenance with the least space. Budget usually narrows the range first.
Which property type offers the best investment potential?
Houses tend to offer stronger long-term capital growth because land drives value, with lower rental yields. Apartments offer better yields and slower growth. Townhouses sit between the two, and scarcity in inner and middle ring suburbs supports their growth. Land earns nothing until it is built on.
What are the ongoing costs for each property type?
Houses carry council rates, water rates, insurance and maintenance, which vary by council and insurer. Townhouses and apartments add strata levies, in Sydney typically $2,000 to $6,000 a year for townhouses and low-rise schemes and $4,000 to $12,000 or more for apartments, rising with lifts, pools and concierge services.
Are apartments a good first home purchase?
Apartments are the most common entry point into the Sydney market, carrying the lowest purchase price in a given suburb and the least personal maintenance. They offer less space, growth driven by building and location rather than land, and strata by-laws limiting renovations and pets.
What should I look for when buying land to build on?
The block factors that commonly affect a build are orientation, slope, soil quality, services, easements, covenants, dimensions, surrounding development, and bushfire or flood risk. Where a scheme price cap applies, the land price and build contract count towards it together rather than separately.
How do strata levies work for apartments and townhouses?
Strata levies cover building insurance, common area maintenance, structural repairs, shared facilities, administration, and the capital works fund, previously called the sinking fund, which pays for major future repairs. Levies vary with building size, age, amenities and the number of lots sharing costs.
Can I renovate or extend different property types?
Houses offer the most flexibility, subject mainly to council approval. Townhouses allow internal renovations, while external changes usually need owners corporation approval. Apartments allow cosmetic internal changes, with structural and external work heavily restricted. Council or the owners corporation is the authority in each case.
What is the difference between capital growth and rental yield?
Capital growth is the increase in property value over time. Rental yield is annual rent as a percentage of value. A $500,000 property earning $25,000 a year yields 5%. Houses in established areas offer stronger growth and lower yields. Inner city apartments offer higher yields and slower growth.
Take the next step
Borrowing power is what narrows the property type, which is why it is usually established before the search begins. Our budgeting guide sets the baseline, pathways to home ownership covers how the schemes combine, and choosing the right finance covers loan structure. Model the numbers with our property deposit calculator, home equity calculator and mortgage repayment calculator.
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Related resources for first home buyers
Freestanding properties guide | Strata title guide | First-time land buyers guide | Construction guide | Location, condition and vibes guide | Deposit options | Pre-approval guide
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This article is general information only and does not take your personal circumstances into account. Strata levies, professional LMI waiver policies, government scheme price caps and transfer duty rates vary between lenders and buildings and change over time. Figures were verified in July 2026 against Revenue NSW transfer duty rates and First Home Buyers Assistance Scheme thresholds for 2026/27, and the Australian Government 5% Deposit Scheme property price caps published on firsthomebuyers.gov.au. Confirm your position with a licensed broker or lender before relying on it. Ali Hasani is an Authorised Credit Representative (CRN 567392) of Connective Credit Services Pty Ltd (Australian Credit Licence 389328).
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