The Complete First Home Buyer Guide
Everything you need to know about buying your first home in Australia, from saving a deposit to settlement day.
In This Guide
1. How Much Deposit Do You Need?
The traditional advice is to save a 20% deposit, but many first home buyers can enter the market with much less. Here's what you need to know:
Deposit Options
20% Deposit (No LMI)
The gold standard. Avoids Lenders Mortgage Insurance and often gets better rates.
10-19% Deposit (With LMI)
Most common for first home buyers. LMI can be added to the loan.
5% Deposit (Government Schemes)
Available through First Home Guarantee scheme - no LMI required.
Don't forget additional costs! Budget for stamp duty (varies by state), legal fees ($1,500-$3,000), building inspections ($400-$600), and moving costs.
2. Government Grants and Schemes
The Australian government offers several programs to help first home buyers. Here are the main ones:
First Home Owner Grant (FHOG)
A one-off payment to help with purchase costs. Amount varies by state:
- • NSW: $10,000 (new homes up to $600k)
- • VIC: $10,000 (new homes up to $750k)
- • QLD: $30,000 (new homes up to $750k)
- • WA: $10,000 (new homes up to $750k)
First Home Guarantee
Buy with just 5% deposit without paying LMI. The government guarantees the remaining 15%.
- • 35,000 places available per year
- • Income caps apply (singles/couples)
- • Property price caps by location
- • Must be owner-occupied
Stamp Duty Concessions
Most states offer reduced or waived stamp duty for first home buyers:
- • NSW: Exempt up to $800k, concession to $1M
- • VIC: Exempt up to $600k, concession to $750k
- • QLD: Concession up to $550k
Help to Buy Scheme
Government co-purchases up to 40% of a new home or 30% of existing home.
- • Buy with as little as 2% deposit
- • No rent on government share
- • Buy out government over time
- • Income and price caps apply
3. Getting Pre-Approved
Pre-approval (also called conditional approval) is a lender's indication of how much they're willing to lend you. It's a crucial first step.
Benefits of Pre-Approval
Documents You'll Need
Identity
- • Driver's license or passport
- • Medicare card
Income
- • 2 recent payslips
- • 2 years tax returns (if self-employed)
Assets & Savings
- • 3 months bank statements
- • Superannuation statements
Liabilities
- • Credit card statements
- • Existing loan details
4. The Home Buying Process
From searching to settlement, here's what to expect:
Get Pre-Approved
Know your budget before you start looking
Find Your Property
Search online, attend inspections, do your research
Make an Offer
Submit your offer or bid at auction
Exchange Contracts
Sign the contract and pay the deposit (usually 10%)
Cooling-Off Period
5 business days to change your mind (not at auction)
Final Loan Approval
Lender completes valuation and approves the loan
Settlement
Funds transfer, you get the keys!
5. Understanding Home Loan Types
Not all home loans are created equal. Here are the main types:
Variable Rate
Interest rate changes with the market
✓ More flexibility
✓ Extra repayments allowed
✗ Rate can increase
Fixed Rate
Locked rate for 1-5 years
✓ Payment certainty
✓ Protection from rises
✗ Break costs if you exit early
Split Loan
Part fixed, part variable
✓ Best of both worlds
✓ Hedge your bets
✗ More complex to manage
Offset Account
Savings reduce your interest
✓ Reduce interest paid
✓ Access to funds if needed
✗ May have higher fees
6. Tips for First Home Buyers
Start saving early
Even small regular contributions add up. Automate transfers to a dedicated savings account.
Check your credit report
Get a free copy from Equifax, Experian, or illion. Fix any errors before applying.
Reduce existing debt
Pay down credit cards and personal loans to improve your borrowing capacity.
Get pre-approved first
Know your budget before falling in love with a property you can't afford.
Don't skip inspections
Building and pest inspections can save you from costly surprises.
Use a mortgage broker
Access to more lenders, expert advice, and it's usually free for you.