Home Loans for Apartments and Units in South East Melbourne, No LMI to 90%
If you're buying an apartment or unit in South East Melbourne, the lending picture looks very different from a standard house purchase. Most people assume it's simpler, because the price is lower. In practice, lenders assess high-density stock under a separate set of criteria that can change your deposit requirement, your lender options and whether LMI applies at all.
The good news is that South East Melbourne's unit market is genuinely one of the most accessible entry points into this region. With unit medians sitting under $600,000 in suburbs like St Kilda, Prahran, Windsor and Oakleigh, there are real opportunities for first home buyers to buy with a small deposit and pay no stamp duty. Seven of the 28 approved suburbs in this area have unit medians that sit below the $600,000 full duty exemption threshold for eligible buyers.
Our team helps apartment and unit buyers across South East Melbourne compare options across 60+ lenders. The apartment home loan assessment varies significantly between lenders, and getting in front of the right one changes your outcome.
Key takeaways
- Most lenders require a minimum internal area of 50 sqm for standard lending.
- Seven South East Melbourne suburbs have unit medians under the $600,000 duty exemption.
- The First Home Guarantee covers unit purchases up to $950,000 in this area.
Can you get a standard home loan on any apartment in South East Melbourne?
Not every apartment qualifies for standard residential lending, and the difference between a straightforward approval and a restricted one often comes down to the physical size of the property. Most mainstream lenders require a minimum internal living area of 50 sqm, excluding balconies and car spaces. Below that threshold, the lender panel narrows, LMI becomes harder to obtain, and some lenders won't write the loan at all.
A small number of specialist lenders accept apartments from around 40 sqm, and a narrow panel goes as low as approximately 35 sqm, but at those sizes you're looking at fewer choices, tighter LVRs and a resale profile that can affect valuation. Studio apartments in inner-city South East Melbourne suburbs regularly come in under 40 sqm, so measuring the internal area before you make an offer is worth doing.
How do lenders assess apartment and unit purchases differently from houses?
For a standard house, lenders focus almost entirely on your income and the purchase price. For an apartment, they also assess the property itself, because the security matters as much as the borrower. There are three factors that routinely change the outcome for unit buyers.
Size and density: the 50 sqm floor is the clearest line. Below it, lenders cap LVR and some exit the application entirely. High-density postcodes, where a large number of similar units are being built or have recently settled, can also attract additional LVR restrictions from some lenders, typically capping at 70% to 80% LVR regardless of your deposit.
Title type: strata title is the standard, and most lenders are comfortable with it. Company title and leasehold title both attract a narrower lending panel and often require a larger deposit. If you're looking at an older block in St Kilda or South Yarra, it's worth checking the title type early.
Owners corporation fees: lenders treat strata levies as an ongoing commitment, the same way they treat car loan repayments. High fees in a building with a large sinking fund or significant upcoming works can reduce your borrowing capacity, even if the purchase price itself looks manageable.
"We regularly see buyers surprised that the apartment they've fallen in love with doesn't qualify for the loan they expected. The issue is almost never income. It's the building. Knowing the size, the title type and the strata fees before you apply saves weeks of back-and-forth with lenders."
Evelyn Clark · Director, Mortgage & Finance Broker · Chat to Evelyn →
What government schemes can apartment and unit buyers use in South East Melbourne?
Several federal schemes apply to unit purchases in South East Melbourne, and the local unit medians mean many buyers sit comfortably within the price caps. First home buyer duty concessions at the state level also do meaningful work here, because unit medians are far more likely to fall under the relevant thresholds than house medians.
The schemes worth checking:
- › First Home Guarantee (5% Deposit Scheme): 5% deposit, no LMI, no income cap. The price cap for South East Melbourne is $950,000, which covers most unit purchases in the area and many house purchases in the more affordable suburbs.
- › Family Home Guarantee: single parents, 2% deposit, no LMI. Applies to first home buyers and to people who have previously owned. The $950,000 South East Melbourne cap applies here too.
- › First Home Owner Grant:$10,000 on new homes only, including new apartments and off-the-plan units, where the purchase price is $750,000 or below. Established units don't qualify.
- › First home buyer duty exemption: full exemption on dutiable values up to $600,000, sliding concession to $750,000. Seven approved suburbs in this area have unit medians under $600,000, making this genuinely accessible for buyers who qualify.
Source: Housing Australia and State Revenue Office Victoria.
Source: Housing Australia (price caps, postcode tool, 12 Oct 2026) and State Revenue Office Victoria (duty exemption, updated 15 Sep 2026).
How much deposit do apartment and unit buyers need in South East Melbourne?
CoreLogic data shows South East Melbourne's unit medians running from $470,000 in Ripponlea to $1,247,500 in Brighton, with most of the accessible suburbs clustering between $500,000 and $750,000. That range means the deposit story is genuinely different depending on which suburb and which building you're looking at.
The realistic deposit routes for this market:
- › First Home Guarantee (5% deposit): 5% deposit · no LMI · South East Melbourne cap $950,000 · first home buyers only
- › Standard loan with LMI: 5% to 10% deposit · LMI premium added to the loan · no price cap · all buyer types
- › Standard loan without LMI: 20% deposit · no LMI · no price cap · no income test · all buyer types
For a unit in Cheltenham at the $700,000 median, a 5% deposit is $35,000. A 20% deposit on the same purchase is $140,000. The gap between those two is real, and which route is better depends on whether the LMI premium on the smaller deposit costs more over time than the opportunity cost of holding the larger one in cash. That's a conversation specific to your own situation.
Source: CoreLogic (via YIP, June 2026).
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When does an apartment loan not make sense?
Not every buyer is better off in a unit, even when it's more affordable. If you're buying an investment and your priority is long-term capital growth, house-and-land in the outer suburbs has historically delivered stronger growth than inner-city apartments in the same price bracket, though there are no guarantees and past performance is exactly that.
If the strata fees are high and the building has known defects or a thin sinking fund, the real holding cost can make the unit more expensive than the purchase price suggests. A levy special assessment after settlement can run to tens of thousands on an older block, and it's not something a standard building inspection always flags.
For buyers who expect to need more space within five years, a unit also limits your ability to extend or renovate without owners corporation approval. In a suburb like Bentleigh, where the unit median sits at $935,000, you're often within reach of a smaller house in the same suburb, and the flexibility can be worth the stretch if your income supports it.
How to buy an apartment or unit in South East Melbourne, step by step
The process for an apartment purchase has one additional layer compared to a house purchase: the property assessment runs alongside the borrower assessment, and both can affect the outcome.
Step 1: Talk to us
We start by understanding your deposit, your income and what you're looking at. If you have a specific building in mind, we can flag any known lender restrictions on that postcode or building type before you make an offer.
Step 2: Confirm borrowing capacity and lender suitability
We assess your income, existing commitments and the property criteria together, then identify which lenders on the panel will write the loan on the type of apartment you're buying.
Step 3: Apply and manage the property valuation
We submit to the right lender and manage the valuation process. If the valuation comes in below the purchase price, we work through your options, including renegotiating with the vendor or identifying an alternative lender with a different valuation approach.
Step 4: Support through to settlement
We track approval conditions, liaise with your conveyancer on timing and make sure the finance is in place before your settlement date.
"Where a buyer is torn between a 5% deposit with LMI and waiting to save 20%, I'd usually lean toward the 5% route if the unit fits the lender's size criteria cleanly and the building is solid. The cost of LMI on a $600,000 unit is real, but so is the cost of two more years of rent. Which one wins depends on the numbers in front of us, not a general rule."
Evelyn Clark · Director, Mortgage & Finance Broker · Chat to Evelyn →
What approval challenges do apartment buyers face?
The hurdles worth knowing about:
- › Property below the size threshold: a unit under 50 sqm limits the lender panel significantly. Some lenders have unpublished size floors, and a pre-assessment before signing a contract saves the cost of a cooling-off loss.
- › High-density postcode restrictions: some lenders apply additional LVR caps in postcodes with high apartment supply. This rarely appears in rate comparisons but shows up at application, which is why postcode assessment matters before you commit.
- › Valuation below the contract price: apartments are harder to value than houses because comparable sales within the same building can vary significantly by floor, aspect and renovation. A lower valuation means the buyer covers the shortfall in cash or renegotiates.
- › Strata levy impact on servicing: owners corporation fees of $5,000 or more per year are treated as a commitment by lenders and reduce borrowing capacity. Buyers sometimes discover this only at the servicing assessment stage, after they've already formed a preference for a building.
Frequently Asked Questions
Can you get a home loan on an apartment under 50 sqm in South East Melbourne?
Yes, but the lender panel narrows considerably below 50 sqm. Some specialist lenders accept from around 40 sqm, though LVR caps apply and LMI may not be available, which usually means a larger deposit is needed.
Does the First Home Owner Grant apply to apartments in South East Melbourne?
The $10,000 grant applies to new apartments only, including off-the-plan units, where the contract price is $750,000 or below. Established apartments and units don't qualify, regardless of price.
Is a 5% deposit enough to buy a unit in South East Melbourne?
Yes, in many suburbs. First home buyers can use the First Home Guarantee to buy with a 5% deposit and no LMI on units priced up to $950,000. The property still needs to meet the lender's size and title requirements.
Do strata fees affect how much I can borrow for a unit?
Yes. Lenders treat owners corporation fees as an ongoing commitment and include them in the servicing assessment. Higher strata levies reduce your borrowing capacity in the same way a car loan or credit card limit does.
Is buying an off-the-plan unit in South East Melbourne harder to finance than an established one?
It carries additional risk. Formal approval can't be locked for the full build period, and the lender values the property at completion, not at the contract price. If values fall during the build, the buyer covers the shortfall.
Should apartment buyers use a mortgage broker rather than going directly to a lender?
A mortgage broker, every time. Lender policies on apartment size, density and title type vary significantly, and a single application to the wrong lender can result in a decline that sits on your credit file. A broker assesses the property before applying.
Your Next Steps
Apartment lending in South East Melbourne rewards preparation. Knowing the building's size, title type and strata obligations before you apply puts you in a position to move quickly when the right property comes up, and to avoid the delay and cost of an unexpected lender decline.
Ready to find out which lenders will work best for your apartment purchase? Contact the EverLend team or call 03 7036 3356. We'll canvas our 60+ lender panel and find the most suitable options for your circumstances.
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External Resources
EverLend · South East Melbourne · Ever Lend Pty Ltd (ACN 625 080 515), authorised under Australian Credit Licence 517192 · General information only - this article does not constitute financial advice. Please consider your own circumstances and seek professional advice before making any financial decisions.
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