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When I bought my first home I was totally overwhelmed by the whole process. From working out how much I could borrow to understanding all the paperwork at settlement it seemed like an endless maze of confusing steps and financial jargon.
If you’re feeling the same way don’t worry – you’re not alone. The path to homeownership might seem daunting at first but with the right guidance it can be one of the most rewarding experiences of your life.
In this ultimate guide I’ll take you through everything you need to know about buying your first home in Australia based on my personal experience and expertise in the property market.
Before you even start looking at property listings you need to work out exactly where you stand financially. This means taking a hard look at your current financial situation and determining your borrowing capacity
Many people believe you need a 20% deposit to buy a home but this isn’t always the case. Most lenders require a deposit of at least 20% of the purchase price to avoid Lenders Mortgage Insurance (LMI). However with a good credit score and steady income you can get a loan with as little as 5-10% deposit.
For example if you’re looking at a $600,000 property:
If you’re eligible for the First Home Guarantee (previously called the First Home Loan Deposit Scheme) you may be able to buy with just 5% deposit without paying LMI. For single parents the Family Home Guarantee allows eligible applicants to buy with just 2% deposit.
Your borrowing capacity is influenced by several key factors:
Income stability: Lenders prefer applicants with stable income from permanent employment. If you’re self employed you’ll need alternative documentation like tax returns and financial statements to prove income stability.
Credit score: Your credit history plays a big role in determining your loan eligibility. A higher credit score makes you more attractive to lenders and could help you get better interest rates.
Debt-to-income (DTI) ratio: This measures your existing debt against your income. The lower your DTI the more you can potentially borrow.
Living expenses: Lenders will assess your regular spending habits to make sure you can make mortgage repayments. Remember that lenders test your repayments at a rate higher than the one you’ll actually pay — APRA requires them to assess you with a 3% serviceability buffer on top of the loan rate.
I highly recommend contacting a mortgage broker as your first step. They can work out your borrowing capacity (you can get a quick estimate first with our borrowing power calculator) and explain any government schemes you may be eligible for.
Beyond the deposit you’ll need funds for:
Stamp duty: This varies by state and can be thousands of dollars but first home buyers may be eligible for concessions or exemptions.
Conveyancing fees: $1,000-$2,500 for legal services.
Building and pest inspections: $400-$600 for a full inspection.
Mortgage registration and transfer fees: Vary by state.
Moving costs: Don’t forget to budget for the actual move!
Buffer for unexpected expenses: I recommend having at least 3-6 months of living expenses saved as a safety net.
All up beyond your deposit you should have at least an extra 5% of the property’s value for these costs. For a $600,000 property that’s an extra $30,000 approximately.
Switching lenders can be a strategic move to increase your borrowing power. By researching different lenders and their loan products, comparing competitive interest rates and fees, and applying for a loan with the lender that best meets your needs, you can potentially save on interest rates and secure a loan with more favourable terms.
Keep an open mind and explore various lenders to ensure you find the credit provider that best fits for your financial situation.
The property market has its own language and understanding these terms is crucial for making informed decisions.
Loan-to-Value Ratio (LVR) is the percentage of a property’s value you can borrow. For example if you have a 20% deposit your LVR would be 80%. Most lenders prefer an LVR of 80% or lower to avoid Lenders Mortgage Insurance.
If your deposit is less than 20% (making your LVR higher than 80%) you’ll typically need to pay Lenders Mortgage Insurance. This insurance protects the lender if you default on your loan. While it’s an extra cost LMI can help you get into the market sooner with a smaller deposit.
LMI can be substantial – tens of thousands of dollars – but can be capitalised (added to your loan amount) rather than paid upfront.
The First Home Owner Grant (FHOG) is a government initiative to help first time buyers into the market. The grant amount and eligibility criteria vary by state and territory, and the figures change — these are current as of May 2026, so always confirm with your state revenue office:
Remember the FHOG generally applies to new or substantially renovated homes not established properties. However most states also offer stamp duty concessions or exemptions for first home buyers purchasing established homes.
A pre-approval (sometimes called conditional approval) is a lender’s indication of how much they will lend you. It gives you confidence to make offers within your budget and shows sellers you’re serious about buying.
There are two types of pre-approvals: fully assessed and automated desktop pre-approvals. Fully assessed pre-approvals involve a thorough check of your finances and are more reliable, while automated pre-approvals are quicker but less comprehensive.
If you want to increase your borrowing capacity consider these strategies:
Lenders assess your creditworthiness using the “5 C’s”:
Character: Your trustworthiness based on credit history
Capacity: Your ability to repay the loan
Capital: Your financial resources
Collateral: Security for the loan
Conditions: The terms of the loan
By understanding and improving these areas you can increase your loan eligibility.
One of the fastest ways to increase your borrowing power is to pay down existing debts, especially high interest debts like credit cards. Even unused credit card limits can reduce your borrowing capacity – a $10,000 credit card limit could reduce your borrowing power by up to $50,000 even if you’re not using it!
To maximise your chances of loan approval:
There are several government initiatives for first home buyers in Australia. The figures and rules below are current as of May 2026 — scheme caps and eligibility change most financial years, so confirm the current settings with the official source linked under each one before you rely on them.
This scheme (previously known as the First Home Loan Deposit Scheme) allows eligible first home buyers to buy with a deposit as low as 5% without paying LMI. The government essentially guarantees the remaining amount up to 20% of the property’s value. From 1 October 2025 the scheme was significantly expanded: there is no longer a cap on the number of places, income limits have been removed, and the property price caps were lifted. The Regional First Home Buyer Guarantee was also folded into the First Home Guarantee, so it now applies in regional areas too. Property price caps still apply and vary by location — check the current caps with Housing Australia.
This program helps eligible single parents — and single legal guardians — with at least one dependent child buy a home with a deposit as low as 2% without paying LMI. Like the First Home Guarantee, it has property price caps that vary by location. The scheme rules can change each financial year, so confirm the current settings with Housing Australia.
This scheme supported eligible first home buyers in regional areas to buy with a 5% deposit without paying LMI. From 1 October 2025 it was folded into the First Home Guarantee (above), which now covers both city and regional areas. If you’re buying in a regional area, the First Home Guarantee is the scheme to look at.
This allows you to save for your first home inside your superannuation fund. You can make voluntary contributions of up to $15,000 per financial year into your super, up to a total of $50,000, then withdraw these contributions (plus associated earnings) to put towards your home deposit. The benefit is the tax advantages of saving through super. You can check your eligibility and request a determination through the ATO.
In addition to the FHOG mentioned earlier, states and territories offer stamp duty concessions or exemptions for first home buyers. In Victoria, first home buyers pay no stamp duty on homes valued up to $600,000, with a concession on a sliding scale between $600,000 and $750,000. In NSW, eligible first home buyers pay no stamp duty on homes valued up to $800,000, with concessions up to $1,000,000 (these thresholds were lifted from $650,000 and $800,000 on 1 July 2023).
Most lenders and mortgage brokers will help you apply as part of the home loan process making it relatively straightforward.
Understanding the various types of home loans is key to finding the right one for you:
These loans have interest rates that can change over time, usually in response to economic conditions and the Reserve Bank of Australia’s cash rate decisions. They offer flexibility with features like offset accounts and the ability to make extra repayments without penalty. If interest rates fall your repayments will decrease – but will increase if rates rise.
With a fixed rate loan your interest rate is locked in for a set period (usually 1-5 years). This provides certainty with your repayments making budgeting easier. However these loans often have fewer features and may charge break fees if you want to refinance or make substantial extra repayments during the fixed period.
These allow you to fix a portion of your loan while keeping the remainder variable, giving you a balance of certainty and flexibility.
These loans require you to pay only the interest portion for a specified period (usually 1-5 years). After this period the loan reverts to principal and interest repayments. While initial repayments are lower you won’t reduce your principal during the interest-only period.
Designed for self-employed borrowers who may not have traditional income documentation, these loans typically come with higher interest rates and require a larger deposit.
To find the right loan:
Remember the lowest interest rate isn’t always the best option if the loan lacks features you need or comes with restrictive conditions.
Now that you’re financially ready it’s time for the fun part – house hunting!
Before browsing property listings clearly define what you’re looking for:
Having clear criteria will save you time and prevent disappointment.
This common dilemma depends on several factors:
Choose what works for you, your budget and long term plans. If location is your priority and your budget is limited, an apartment might be the way to go. If space and the ability to renovate are important, a house might be worth the extra investment.
Another option is to consider a townhouse, which is often the middle ground between apartments and houses.
Another decision many first home buyers face is whether to buy an established home or build new (including buying a brand-new home or off-the-plan). Each has trade-offs.
Established homes let you see exactly what you’re buying, move in sooner, and they’re usually in settled suburbs with established amenities – but you inherit the wear and tear, and you may face renovation or maintenance costs down the track.
Building new (or buying a new home) can come with government grants – most First Home Owner Grants apply only to new homes, as covered above – plus modern design, builder warranties and lower early maintenance. The trade-offs are a longer timeline (you may be paying rent while you wait) and the work of managing a build contract.
In Victoria, the $10,000 First Home Owner Grant applies to new homes only, so if a grant is central to your budget, that points toward building or buying new. If location matters most and your budget is tight, an established home a little further out is often the better value.
One of the biggest mistakes I see first home buyers make is falling in love with properties out of their price range. To avoid this, research recent sales in your target suburbs to understand current market prices.
Look at sales from the last 3 months, as older data may not reflect current market conditions. Property prices can move quickly, and what sold twelve months ago may not reflect what a similar home costs today.
When inspecting properties, be thorough. Check:
For apartments or townhouses, also review the strata report, which includes financial statements, meeting minutes and maintenance plans. This gives you insight into the building’s financial health and management.
There’s no magic number, but most first home buyers inspect between 10-20 properties before buying. The key is quality over quantity – research and inspect properties that meet your criteria rather than viewing dozens that don’t.
The more properties you inspect, the better you understand the market. You’ll develop a clearer sense of what’s good value and be able to spot the right property when you see it.
Don’t rush this process – a hasty decision could lead to buyer’s remorse or missing out on a better option. However, in hot markets, being too cautious might mean missing out. Strike a balance between thorough research and decisive action when you find the right property.
When you’ve found the right home, it’s time to make an offer. There are two main ways to buy property in Australia:
Most properties are sold via private treaty, where you negotiate with the seller through their agent. When making an offer consider:
Price: Research comparable sales to determine a fair price
Terms: Consider settlement periods and any conditions you want to include
Strategy: Your first offer might not be accepted, so leave room to negotiate
In most private treaty sales offering below the asking price is fine and often expected. But your approach should be informed by:
A good strategy is to start with an offer that’s reasonable but below your maximum budget, leaving room to negotiate upwards if needed. Backing up your offer with evidence (like comparable sales) can strengthen your position.
Remember the worst that can happen is they say no or counter with a higher price. In a hot market however starting with your best offer might be necessary to avoid missing out.
Buying at auction requires preparation:
Set a maximum bid and stick to it – auctions can be emotional and it’s easy to get carried away.
If you’re successful at auction you’ll need to pay the deposit immediately – typically 10% of the purchase price. This is different from your home loan deposit and must be available on auction day.
For example if you buy a property for $700,000 at auction you’ll need to provide a $70,000 deposit straight away, usually via personal check, bank check or electronic transfer. The deposit is held in the real estate agent’s trust account until settlement and forms part of your overall payment for the property and will be counted towards your home loan deposit.
Make sure you have this money available before bidding at auction – it’s not negotiable and if you can’t provide the deposit the property will be offered to another buyer or you may face legal consequences.
Once your offer is accepted you’ll move to the contract phase:
Standard contract conditions may include:
Finance clause: Protects you if your loan isn’t approved
Building and pest inspection clause: Allows you to withdraw or renegotiate if serious issues are found
Settlement period: Typically 30-90 days
The timeframe from having your offer accepted to settlement is usually 30-90 days, 42-60 days being most common. This period includes:
The timeframe depends on the settlement period specified in your contract, how quickly your lender processes your loan application, the complexity of the transaction, any issues found during the conveyancing process, and whether you or the seller request an extension.
In some states like NSW the standard settlement period is 42 days, in Queensland it’s 30 days. These can be negotiated between buyer and seller.
Your mortgage broker will submit your full loan application with the signed contract. The bank will do a valuation of the property to ensure it’s worth what you’re paying.
A few days before settlement do a final inspection to ensure the property is in the same condition as when you agreed to buy it. Check that all fixtures and fittings included in the contract are there and working.
On settlement day your conveyancer will liaise with the seller’s lawyer and your lender to transfer the remaining funds, register you as the new owner, and hand over the keys. And you’re a homeowner!
Once you’ve settled and got the keys several important things will happen:
To reduce your loan term and save on interest:
Before doing these, check your loan terms to see if there are any penalties for extra repayments, especially on fixed rate loans.
After helping many first home buyers through this process (and going through it myself) here are my top tips:
Buying your first home is a big milestone that combines excitement, nerves and a lot of paperwork. By understanding each step of the process and preparing well you can turn what seems overwhelming into a manageable and enjoyable experience.
Everyone’s experience is different. Some find the right home quickly, others take months of searching. The key is to stay informed, be patient and keep your long term goals in mind. It’s all worth it when you walk through that front door. With planning, realistic expectations and the right team behind you, you’ll be ready to take on the hurdles and enjoy the highs of buying your first home.
