The Complete First Home Buyer Guide for 2026
Everything you need to know about buying your first home in 2026, from government grants to deposit strategies.
Raj Bhangu
Principal Mortgage Broker
Key Takeaways
- 1Step 1: Assess your budget including deposit, stamp duty, legal fees, and ongoing costs
- 2First Home Guarantee allows 5% deposit purchase with no LMI; FHOG offers $10,000-$30,000 for new builds
- 3Get pre-approved before house hunting - shows sellers you're serious and gives confidence on budget
- 4Always get professional building and pest inspection before purchasing
- 5Don't borrow the maximum approved amount - factor in potential rate rises
Buying your first home is one of the biggest financial decisions you will ever make. It is exciting, but it can also feel overwhelming when you are navigating deposits, government schemes, pre-approvals, inspections, and settlement for the first time.
This comprehensive guide walks you through every step of the first home buying process in 2026, from understanding your budget to settlement day. Whether you are buying a house, townhouse, or apartment, these steps apply across all property types and states.
Step 1: Understand Your Budget
Before you start looking at properties, you need a clear understanding of what you can afford. This is more than just the property price. You need to factor in all the upfront costs and ongoing expenses that come with home ownership.
Calculate Your Borrowing Power
Your borrowing power depends on your income, expenses, existing debts, and the lender's serviceability assessment. Use our borrowing power calculator to get an estimate of how much you could borrow based on your financial situation.
Keep in mind that lenders assess your ability to repay at a rate 3% higher than the actual loan rate (the APRA serviceability buffer). This means your borrowing capacity is lower than you might expect based on current rates alone.
Know All the Costs
The purchase price is just the beginning. Here is a breakdown of the additional costs you should budget for when buying your first home.
| Cost | Typical Amount | Notes |
|---|---|---|
| Stamp duty | $0 to $40,000+ | May be exempt for first home buyers (varies by state) |
| Conveyancing/legal fees | $1,500 to $3,000 | Solicitor or conveyancer to handle the legal process |
| Building and pest inspection | $400 to $800 | Essential before purchasing any property |
| Loan application fees | $0 to $600 | Many lenders waive this for first home buyers |
| Lenders Mortgage Insurance | $0 to $50,000 | Required if deposit is less than 20% (unless using FHG) |
| Moving costs | $500 to $2,000 | Removalists, cleaning, and utility connections |
As a general rule, budget an additional 3% to 5% of the purchase price for upfront costs beyond your deposit.
Step 2: Save Your Deposit
Most lenders require at least a 5% deposit, but 20% is ideal to avoid paying Lenders Mortgage Insurance (LMI). Here is what different deposit levels look like on a $700,000 property.
| Deposit % | Deposit Amount | LMI Cost | Total Upfront |
|---|---|---|---|
| 5% | $35,000 | $15,000 to $25,000 | $50,000 to $60,000 |
| 10% | $70,000 | $8,000 to $12,000 | $78,000 to $82,000 |
| 20% | $140,000 | $0 | $140,000 |
If saving a 20% deposit feels out of reach, do not lose hope. The First Home Guarantee allows you to buy with just 5% deposit and no LMI. There are also guarantor loan options that can help.
Tips to Save Faster
- Set up automatic transfers. Move money to a dedicated savings account on payday before you can spend it
- Use a high-interest savings account. Even a small difference in interest rate adds up over time
- Consider the First Home Super Saver Scheme. Voluntary super contributions are taxed at 15% instead of your marginal rate, helping you save faster
- Track your spending. Use budgeting apps to identify areas where you can cut back
- Set a timeline. Having a target date creates accountability and helps you stay on track
Step 3: Explore Government Assistance
The Australian government offers several schemes specifically designed to help first home buyers enter the market. Understanding which programs you qualify for can save you tens of thousands of dollars.
- First Home Guarantee. Buy with just 5% deposit, no LMI. Available for properties up to $1.5M in Sydney. Income caps of $125,000 (singles) and $200,000 (couples) apply. Read our detailed FHG guide
- First Home Owner Grant (FHOG). A cash grant of $10,000 to $30,000 depending on your state. Usually available for new builds or substantially renovated homes
- Stamp Duty Concessions. Most states offer exemptions or reductions for first home buyers. In NSW, properties up to $800,000 are fully exempt
- First Home Super Saver Scheme (FHSSS). Withdraw up to $50,000 in voluntary super contributions for your deposit, benefiting from concessional tax treatment
- Family Home Guarantee. For single parents with children, allowing purchase with just a 2% deposit. 5,000 places available per year
These programs can be combined. For example, a first home buyer purchasing a new $600,000 home could receive the $10,000 FHOG, pay zero stamp duty, use the FHG to buy with 5% deposit, and withdraw super through the FHSSS. Learn more about your options on our First Home Buyer page.
Step 4: Get Pre-Approved
Pre-approval (also called conditional approval) is a written confirmation from a lender that they are willing to lend you a specific amount based on your financial situation. It gives you confidence when house hunting and shows sellers and agents that you are a serious buyer.
Pre-approval typically lasts 3 to 6 months and requires the following documentation.
- Proof of income. Recent payslips (last 2 to 3 months), group certificate, or tax returns for self-employed borrowers
- Proof of savings. Bank statements showing your deposit and savings history (lenders want to see genuine savings over at least 3 months)
- Existing debts. Details of any credit cards, personal loans, car loans, HECS-HELP debt, or buy-now-pay-later accounts
- Living expenses. A breakdown of your monthly spending to assess your ability to manage mortgage repayments
- Identification. Passport, driver's licence, and Medicare card
For a complete walkthrough of the pre-approval process, read our comprehensive pre-approval guide.
Step 5: Find Your Property
With pre-approval in hand, you can start house hunting with confidence. When inspecting properties, look beyond the surface presentation and assess the property critically.
What to Check During Inspections
- Structural integrity. Look for cracks in walls and ceilings, uneven floors, doors that do not close properly, and signs of water damage
- Plumbing and electrical. Test all taps, flushing, hot water, power points, and light switches
- Natural light and ventilation. Visit at different times of day to understand how sun moves through the property
- Neighbourhood. Research schools, transport, future development plans, and check noise levels at different times
- Pest issues. Look for signs of termite damage, especially in older homes
Building and Pest Inspection
Always get a professional building and pest inspection before exchanging contracts. This typically costs $400 to $800 and can uncover issues that could cost tens of thousands to repair. If significant issues are found, you can negotiate on price or walk away before committing.
Step 6: Make an Offer and Exchange
Once you have found the right property, the process of making an offer differs depending on whether the property is sold by private treaty or auction.
- Private treaty. You submit an offer through the agent. The vendor can accept, reject, or counter-offer. Once agreed, you sign the contract and pay a deposit (usually 0.25% to 10%)
- Auction. You bid on the day. If successful, the contract is binding immediately with no cooling-off period. Read our guide to buying at auction to prepare
In NSW, private treaty purchases include a 5-business-day cooling-off period during which you can withdraw from the contract (with a 0.25% penalty). This period can be waived if you choose.
Step 7: Settlement
Settlement is the final step where ownership of the property transfers from the seller to you. In NSW, this typically occurs 6 weeks (42 days) after exchange, though it can be negotiated. Your conveyancer handles the legal aspects, and your lender arranges the funds.
On settlement day, your lender transfers the loan amount to the seller, your deposit is released, and you receive the keys. Congratulations, you are now a homeowner.
Common Mistakes to Avoid
First home buyers often make preventable mistakes that can cost them thousands of dollars or result in a poor purchasing decision. Here are the most common ones to watch for.
- Borrowing the maximum approved amount. Just because a lender approves you for a certain amount does not mean you should borrow it all. Leave a buffer for rate rises and unexpected expenses
- Not factoring in rate rises. If rates increase by 1% to 2%, can you still afford the repayments? Always stress-test your budget
- Skipping the building inspection. Saving $600 on an inspection can cost you $60,000 in hidden repairs. Never skip this step
- Falling in love before due diligence. Emotional attachment can lead to overpaying or overlooking serious issues. Stay objective until inspections and research are complete
- Not comparing lenders. The difference between the best and worst home loan rates can be over 1%, which translates to tens of thousands of dollars over the life of the loan. Use our home loan comparison tool to find the best deal
- Ignoring government schemes. Many first home buyers miss out on grants and concessions simply because they did not know about them or assumed they were ineligible. Always check
Frequently Asked Questions
How much deposit do I need for my first home?
The minimum deposit is 5% of the purchase price. However, if you deposit less than 20%, you will typically need to pay Lenders Mortgage Insurance (LMI), which can cost $15,000 to $50,000 depending on the loan amount. The First Home Guarantee allows you to buy with 5% deposit and no LMI if you meet the eligibility criteria.
What is the First Home Owner Grant and am I eligible?
The First Home Owner Grant (FHOG) is a one-off cash payment to help first home buyers. In NSW, the grant is $10,000 for new homes valued up to $600,000. You must be an Australian citizen or permanent resident, over 18, and must not have previously owned property in Australia. The property must be brand new or substantially renovated.
Should I buy a house or an apartment as my first home?
It depends on your budget, lifestyle, and long-term goals. Houses generally offer stronger capital growth but are more expensive upfront. Apartments are more affordable and low-maintenance but come with strata fees and may have slower growth. Consider what you can afford now and your plans for the next 5 to 10 years.
How long does the home buying process take from start to finish?
On average, the process takes 3 to 6 months from when you start saving and researching to settlement day. Getting pre-approved takes 1 to 2 weeks. Finding the right property varies widely but allow at least 2 to 3 months. After exchanging contracts, settlement in NSW is typically 6 weeks (42 days).
Do I need a mortgage broker or should I go directly to a bank?
A mortgage broker compares loans across 30+ lenders to find the best rate and features for your situation. Their service is usually free to you (they are paid by the lender). Going directly to a bank limits you to that bank's products. For first home buyers, a broker is particularly valuable because they can help you navigate government schemes and find lenders that are most competitive for your profile. Book a free consultation to discuss your options.
Ready to take the first step? Book a free consultation with our first home buyer specialists who can assess your situation and create a personalised plan.
Sources & References
This article references information from the following authoritative sources:
Raj Bhangu
Principal Mortgage Broker
Expert mortgage broker helping Australians achieve their property dreams with personalized home loan solutions.