Should my first home be a unit or a house?

Whatever you can comfortably afford. For many first home buyers, especially in cities, that's a unit. It gets you into the market sooner, and you can upsize later.

Is it worth buying a stepping stone property?

For a lot of people, yes. Owning something means repayments chip away at the loan and any growth builds equity, which can become the deposit for the next home.

Can I keep my first unit as an investment later?

Often, yes. Some people keep their first place as an investment and use its equity towards the family home. Whether it works depends on your income and the numbers at the time.

Do banks lend on small apartments?

Generally yes, but some lenders are fussy about very small units and certain complexes, which can mean a bigger deposit or fewer lenders. Check before you commit.

How do I work out what first home I can afford?

Start with your numbers: what you can borrow and what the repayments will be each month and each week. Then search in that price bracket.

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Straight Answers · First home

Can my first home be something cheaper, like a unit, instead of holding out for my forever home?

Bayley Clarke · Mortgage broker on the road · Last checked 11 November 2026 · 3 min read

The short answer

Yes, and for a lot of people it should be. Part of the work I do is readjusting expectations for first home buyers. We're not in the 2010s anymore, when a house with a backyard was relatively affordable as a first home, so sometimes your first place is a stepping stone, a means to an end.

Buy something you can afford, with repayments you can afford, and look to upsize later on. If you're in a city, there's a good chance that first step is a unit. The idea is that you start, because you may never get to the forever home if you don't.

The two minute version, filmed from the driver's seat. The rest of this page is the detail underneath it.

You don't jump to step 19

A lot of first home buyers have a picture in their head of what their first place looks like: three or four bedrooms, a yard, room for the kids they don't have yet. Then they find out what the repayments on that house would be, and of course they can't afford it. So they wait. And wait. And the forever home stays just out of reach.

Maybe you're a couple with no kids. Do you really need a four bedroom house right now? Probably not. You don't jump to step 19. You take the first step, which is getting your feet wet, owning a property that's affordable and makes sense for your financial world, and letting it do some of the work for you over time.

Know your numbers first, then look

The expectation to set isn't the type of property, it's knowing your numbers. Know what you can borrow. Know what the repayments are going to be each month and each week, and whether you can live with them alongside everything else. Only after that should you go and look at what's around in that price bracket.

When you start from the numbers, the search changes. You look at different locations, different styles of property, units, townhouses, a smaller house further out, and you find the places that actually fit. That's a much better feeling than falling for something on a listing site and then trying to make the finance stretch to it.

How the stepping stone gets you to the forever home

Once you own something, you're in the market. Every repayment chips away at the loan, and if the property grows in value, you're building equity. Down the track, that equity can become the deposit for the next place, either by selling and upsizing, or by keeping the unit as an investment and buying the family home with the equity it's built.

If you know you want to buy one day, putting it off is only shooting yourself in the foot. Get your foot in the door to something that makes sense for you and your partner or your family, and over time the dream family home may become a when, not an if.

The honest bit: not every unit is a good first step

Some lenders are fussy about very small apartments and certain types of complexes, and that can mean a bigger deposit or fewer lenders to choose from. Strata levies also add to your costs every quarter, so they need to sit in your budget alongside the repayments.

So pick the stepping stone carefully. Check with me before you fall for one, and we'll make sure the bank is comfortable with the property and the total cost works for you.

Want to know what your first step could look like?

A 30 minute call. We work out what you can borrow, what the repayments look like each week, and the price bracket you should be searching in.

Book a 30 minute call Call 0437 189 939

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Next question

Do I have to sell, or can I keep this place as a rental?

You can keep it if the numbers pass: your income, the expected rent and the new loan all run through the bank's tests together.