First Home Buyer Guide

You are generally considered a first home buyer if:

• You have never owned property in Australia, or
• You haven’t owned property in Australia for at least 10 years (this can matter for some government schemes)

Owning an investment property in the past can affect your eligibility for certain benefits, even if you never lived in it. That’s why it’s important to get advice before you start house hunting.

How much a bank will lend you depends on more than just your income.

Banks look at:

• Your income (salary, wages, and sometimes overtime or bonuses)
• Your regular living expenses (food, bills, subscriptions, lifestyle costs)
• Existing debts (credit cards, personal loans, car loans, HECS/HELP)
• Whether you have children or other dependants
• A safety buffer (they assess your loan as if interest rates were higher)

Online calculators can give you a rough estimate, but they don’t tell the full story. A mortgage broker can assess your situation properly and give you a realistic figure before you start making offers.

A very common myth is that you need a 20% deposit to buy your first home. While that can be ideal, it’s not always necessary.

Common deposit options:

• 5% deposit – possible for some buyers using government schemes
• 10% deposit – achievable for many buyers, but may involve extra costs
• 20% deposit – avoids additional lender costs entirely

Your deposit can come from:

• Your savings
• A financial gift from family (with the right paperwork)
• Certain government grants (depending on eligibility)

Lenders Mortgage Insurance, often called LMI, is a one-off insurance cost charged by the bank when you borrow more than 80% of a property’s value.

Important things to know:

• LMI protects the bank, not you
• It can cost thousands of dollars
• It is usually added to your loan, increasing the total amount you owe
• It applies when your deposit is less than 20%

Some government schemes allow eligible first home buyers to avoid paying LMI, even with a smaller deposit.

Depending on your situation, you may be eligible for one or more of the following:

First Home Owner Grant (FHOG)

A one-off payment for eligible buyers purchasing or building a new home.

The amount and rules vary by state.

First Home Guarantee Scheme (FHGS)

A government program that allows eligible first home buyers to:

• Buy a home with as little as a 5% deposit
• Avoid paying Lenders Mortgage Insurance
• Purchase within set property price limits
• Live in the property as their main home

Places in this scheme are limited, so timing matters.

Stamp Duty Concessions

Stamp duty is a tax paid when you buy property.

First home buyers may receive a reduction or exemption, depending on:

• The purchase price
• The state you’re buying in
• Whether the property will be your main residence

Here’s how buying your first home usually works:

1. Speak to a mortgage broker
2. Work out how much you can borrow
3. Obtain pre-approval (an initial lender assessment)
4. Start searching for a property
5. Make an offer (with conditions to protect you)
6. Sign the contract
7. The bank completes its final checks
8. Settlement occurs (ownership transfers)
9. You get the keys

Having pre-approval in place helps you buy with confidence and act quickly when the right property comes up.

Variable home loans

• The interest rate can go up or down
• Repayments can change
• Often allow extra features like offset accounts
• More flexibility

Fixed home loans

• The interest rate is locked in for a set period
• Repayments stay the same during that time
• Less flexibility if you want to change or exit early
• Can involve break costs if you leave early

Many buyers choose a split loan, which means part fixed and part variable.

An offset account is a bank account linked to your home loan.

The money in the account reduces the balance the bank charges interest on.

Example:

• Loan balance: $500,000
• Offset balance: $20,000
• Interest charged on: $480,000

This can save you thousands over time, while still giving you access to your money.

Buying a home involves more than just the deposit.

You should also budget for:

• Stamp duty (if applicable)
• Conveyancing or legal fees
• Building and pest inspections
• Loan fees (depending on the lender)
• Moving costs
• Initial council rates and utilities

Knowing these upfront helps avoid surprises.

Some common mistakes we see include:

• Buying before getting finance advice
• Borrowing the absolute maximum
• Focusing only on the interest rate
• Not understanding loan features
• Forgetting about future lifestyle changes

Good advice early can save stress, money, and regret later.

A mortgage broker works for you, not the bank.

A broker can:

• Compare multiple lenders
• Explain options clearly
• Structure your loan properly
• Manage approvals and paperwork
• Guide you through settlement
• Review your loan over time

For most clients, this service comes at no direct cost.