Your first home starts with a clear plan.
From working out your deposit and borrowing capacity to government support, pre-approval and finally getting the keys, Loan Location can help make the first-home-buying process easier to understand and much less daunting.
Buying your first home starts before you inspect a property
The exciting part is walking through homes and imagining where the couch will go. However, the safest first step is understanding your financial position before making offers or bidding at auction.
A proper first-home-buyer plan should establish how much you may be able to borrow, what purchase price feels comfortable, how much cash you need and whether any government assistance could apply.
It should also account for the costs that sit outside the deposit, including conveyancing, inspections, government charges, insurance, moving and settlement adjustments.
Core point: the amount a lender may approve is not automatically the amount you should spend. Your comfortable budget matters just as much as your maximum borrowing capacity.
Ready to work out where you stand?
Before you start making offers, Loan Location can help you understand your borrowing position, deposit, purchasing costs and suitable first-home-buyer options.
1. What does “first-home buyer” actually mean?
In everyday language, a first-home buyer is someone purchasing their first residential property. Government programs can make the definition more complicated because each scheme has its own eligibility rules.
One program may consider whether you have ever owned residential property. Another may look at whether you owned a home or land during a recent period. State grants and stamp duty concessions may also consider your spouse or partner’s previous ownership.
Therefore, a person may qualify for one form of first-home-buyer support but not another.
Questions that may affect eligibility
- Have you previously owned residential property or land?
- Has your spouse or partner previously owned property?
- Are you an Australian citizen or permanent resident?
- Will you live in the property?
- Are you buying a new home, established home or vacant land?
- Does the property fall below the relevant price limit?
- Are you buying alone, with a partner, sibling, friend or family member?
Important: there is no single eligibility test that applies to every first-home-buyer benefit.
2. How much can you afford?
Affordability is not just a lender calculation. It is a personal decision about the repayments and ownership costs you can manage without placing the rest of your life under unnecessary pressure.
A lender will assess your income, living expenses, debts and financial commitments. It may also test your ability to repay the loan at an interest rate above the actual rate.
Income a lender may consider
- Base salary
- Casual or contract income
- Overtime, allowances, commission and bonuses
- Second-job income
- Self-employed income
- Eligible government payments or maintenance income
Different lenders may assess the same income differently. For example, one lender may accept regular overtime after a shorter period, while another may require a longer history.
Debts and commitments
Credit cards, personal loans, car finance, HECS or HELP debt, Buy Now Pay Later facilities, child support and other commitments may reduce borrowing capacity.
An unused credit card can still matter because many lenders assess the available limit rather than only the current balance.
Three useful numbers: maximum borrowing capacity, maximum purchase price and comfortable purchase price. They are not always the same.
3. How much deposit do you need?
A 20% deposit is often discussed because it may help a buyer avoid Lenders Mortgage Insurance. However, it is not the only path into a first home.
Depending on eligibility and lender policy, a buyer may purchase with a smaller deposit, government support, gifted funds or a family guarantee.
| Deposit approach | What it may mean |
|---|---|
| 20% deposit | May avoid Lenders Mortgage Insurance and reduce the loan amount. |
| 10% deposit | May provide more lender options than a very low-deposit purchase, although LMI may still apply. |
| 5% deposit | May be possible through ordinary lending or an eligible government guarantee arrangement. |
| 2% deposit | May be available through particular government programs for eligible applicants. |
| Family guarantee | A family member may provide limited additional security using equity in another property. |
A smaller deposit can help someone buy sooner, but it can also create a larger loan, higher repayments and less equity at the beginning.
The right approach depends on the buyer’s savings, income, property price, eligibility and appetite for risk.
4. Your deposit is not the full amount you need
A common first-home-buyer mistake is calculating the deposit and assuming the rest will be covered by the home loan.
In reality, buyers may also need money for:
- Land transfer or stamp duty where applicable
- Transfer and mortgage registration fees
- Conveyancing or legal costs
- Building and pest inspections
- Strata or owners corporation reports
- Loan or valuation fees where applicable
- Building insurance
- Settlement adjustments
- Moving and utility connection costs
- Immediate repairs, furniture and appliances
- An emergency buffer after settlement
Simple example
A 5% deposit on a $700,000 property is $35,000. That does not mean $35,000 will necessarily cover the entire purchase.
The buyer may need additional funds for costs and may need even more if the lender values the property below the purchase price.
Better question: instead of asking only “How much deposit do I need?”, ask “How much money do I need to complete the purchase and still keep a safe buffer?”
Ready to calculate the real cost of buying?
Loan Location can help estimate the deposit, additional costs, likely repayments and funds required before you commit to a property.
5. Government support may reduce some upfront barriers
First-home buyers may have access to Australian Government programs, state grants and stamp duty concessions. Each option works differently.
Some programs help buyers purchase with a smaller deposit. Others reduce Lenders Mortgage Insurance, contribute towards the purchase price, allow eligible super contributions to be released or reduce state government charges.
Australian Government 5% Deposit Scheme
Eligible first-home buyers may be able to buy with a minimum 5% deposit without paying Lenders Mortgage Insurance. Single parents and eligible legal guardians may have access with a minimum 2% deposit.
The scheme does not provide the deposit or approve the loan. A participating lender still assesses income, expenses, debts, credit conduct and the property.
Help to Buy
Help to Buy is a shared-equity arrangement. Eligible buyers may purchase with a minimum 2% deposit while the Australian Government contributes a share of the property price.
The smaller bank loan may reduce repayments. However, the government receives an equity interest in the home, so buyers need to understand the ongoing obligations and eventual repayment of that share.
First Home Super Saver Scheme
Eligible buyers may use certain voluntary super contributions and associated earnings towards a first home. Contribution limits, release procedures and timing rules apply.
State grants and concessions
Each state and territory sets its own First Home Owner Grant and stamp duty rules. The amount available can depend on location, property value, whether the home is new and whether the buyer will occupy it.
Do not assume every benefit can be combined: each scheme has separate rules, and eligibility for one program does not automatically create eligibility for another.
6. First-home-buyer support in Victoria
Victorian buyers may be eligible for state assistance in addition to any suitable Australian Government program.
Victorian First Home Owner Grant
The Victorian First Home Owner Grant currently provides $10,000 towards an eligible new home valued up to $750,000.
An established home generally does not qualify for the grant. However, the buyer may still qualify for other assistance.
Victorian stamp duty relief
Eligible Victorian first-home buyers may pay no land transfer duty on a home with a dutiable value up to $600,000.
A reduced amount may apply from $600,001 to $750,000. The relief may apply to a new home, established home or eligible vacant land.
Occupancy and previous ownership
Buyers generally need to satisfy residence requirements. Previous property ownership by the buyer, spouse or partner can also affect eligibility.
Scheme limits and rules should be checked before an offer or auction bid because purchasing above a threshold may remove an expected benefit.
7. What is genuine savings?
Some low-deposit lenders want evidence that part of the buyer’s contribution has been saved or held for a period of time.
Depending on the lender, genuine savings may include:
- Regular savings held in a bank account
- Term deposits
- Shares or managed funds
- Eligible First Home Super Saver funds
- Consistent rental history in some situations
A recent gift can still be an acceptable deposit contribution, but it may not satisfy a genuine-savings requirement by itself.
Similarly, money borrowed through a personal loan may create both a deposit problem and an additional debt that reduces borrowing capacity.
Useful distinction: money can be available for the purchase without necessarily meeting a lender’s genuine-savings policy.
8. Can family help with the deposit?
Family assistance can take several forms. The structure matters because each option affects the loan differently.
Cash gift
A parent or relative may provide a non-repayable gift. The lender may request a signed declaration and evidence showing where the funds came from.
Family loan
If the money must be repaid, the lender may treat it as a liability. That can reduce borrowing capacity.
Family guarantee
A family member may provide limited additional security using equity in their own property. This may help the buyer reduce or avoid LMI without the family member giving away cash.
A guarantee creates real risk for the guarantor. Independent legal advice is normally important, and everyone should understand how and when the guarantee may be released.
Buying together
Parents, siblings or friends may consider co-borrowing or co-ownership. This requires careful legal planning around ownership shares, repayments, future sale, relationship changes and exit arrangements.
Ready to compare your first-home-buyer options?
Whether you are using your own savings, a government program, gifted funds or family assistance, the structure should be checked before you make an offer.
9. What is home loan pre-approval?
Pre-approval is an initial indication that a lender may be prepared to lend a particular amount, subject to conditions.
It can help a buyer understand their likely price range and begin searching with more confidence.
However, pre-approval is not unconditional approval. The lender may still need to:
- Assess the specific property
- Complete a valuation
- Review updated income documents
- Confirm the deposit and source of funds
- Check government scheme eligibility
- Satisfy outstanding credit conditions
What a useful pre-approval should establish
- Likely borrowing capacity
- Comfortable purchase range
- Estimated repayments
- Deposit and total funds required
- Government assistance being considered
- Acceptable property types
- Approval conditions and expiry date
Do not treat pre-approval like a blank cheque: your situation and the property still need to meet the lender’s final requirements.
10. What documents may you need?
Preparing documents early can make the application smoother and reduce last-minute delays.
Identification
- Driver licence
- Passport
- Medicare card
- Citizenship, residency or visa evidence where required
Income
- Recent payslips
- Employment contract where relevant
- Bank statements showing salary credits
- Evidence of overtime, bonuses or commission
- Tax returns and financial statements for self-employed applicants
Deposit and liabilities
- Savings statements
- Gift documentation
- Rental ledger where relevant
- Credit card statements
- Personal and car loan statements
- Evidence of other financial commitments
Once a property is found, the lender may also require the signed contract, property details, insurance and any construction documents.
11. Choosing a first-home-buyer home loan
The lowest advertised interest rate is not automatically the best loan.
A useful comparison should consider:
- Interest rate and comparison rate
- Application, package and ongoing fees
- Variable, fixed or split structure
- Offset account
- Redraw
- Extra repayment rules
- Government scheme participation
- Property restrictions
- Approval timeframes
- Income and employment policy
- Online banking and customer service
Fixed, variable or split?
A variable loan may offer flexibility, while a fixed loan may provide repayment certainty for a set period. A split loan combines portions of both.
The right structure depends on your savings, future plans, need for flexibility and comfort with changing repayments.
Offset versus redraw
An offset account generally keeps savings separate while reducing the loan balance used to calculate interest. Redraw usually gives access to eligible extra repayments already placed into the loan.
These features can have different practical and future tax consequences, particularly if the home later becomes an investment.
12. Finding the right property
A suitable property needs to work for both the buyer and the lender.
Buyers should research:
- Recent comparable sales
- Transport, schools, childcare and local services
- Flood, bushfire and insurance risk
- Zoning, easements and planning overlays
- Nearby development and infrastructure
- Building condition and maintenance
- Owners corporation fees and special levies
- Parking, storage and title boundaries
- Internet, utilities and ongoing ownership costs
Building and pest inspections
A building inspection may identify structural, moisture, roofing, drainage or safety concerns. A pest inspection may identify termite activity, timber damage or conditions that increase pest risk.
These inspections do not guarantee that every defect will be found, but they may reveal issues that materially affect the purchase.
Apartments, units and townhouses
Strata buyers should review owners corporation fees, meeting minutes, planned works, special levies, insurance, cladding, water ingress, defects and building management arrangements.
Remember: a cheaper purchase price does not always mean a cheaper property to own.
13. Making an offer or bidding at auction
Private sale
A private-sale offer may include conditions such as finance approval, building inspection, pest inspection or legal review.
The wording and timing of those conditions matter. A conveyancer or solicitor should review the contract before signing.
Auction
Auction purchases in Victoria are generally unconditional. If you win, you normally need to sign the contract, pay the required contract deposit and complete the purchase under the contract terms.
There is generally no cooling-off period and no automatic finance condition.
Before bidding
- Have meaningful pre-approval
- Confirm your maximum price
- Check government scheme price caps
- Have the contract reviewed
- Complete property inspections
- Confirm the required contract deposit
- Discuss valuation risk
- Check the lender accepts the property type
Auction warning: a winning bid above your approved limit or scheme cap can create a serious funding problem.
Ready to make an offer or attend an auction?
Before committing, confirm your purchase limit, deposit, finance position and any government scheme restrictions.
14. Contract deposit versus home loan deposit
These two deposits are often confused.
Contract deposit
The contract deposit is the amount payable under the contract of sale, commonly 10% unless another amount is agreed.
Home loan deposit
The home loan deposit is the buyer’s total contribution towards the purchase as calculated by the lender.
A buyer using a 5% home loan deposit may still receive a contract requesting 10%.
A lower contract deposit can sometimes be negotiated before signing, but the seller does not have to agree.
15. The bank valuation
The lender usually obtains a valuation to decide whether the property provides acceptable security for the loan.
The valuation may be automated, completed from available data or involve a physical inspection.
It is prepared for the lender. It is not a building inspection and does not confirm that the buyer has negotiated the perfect price.
What if the valuation is lower?
Imagine a buyer agrees to pay $700,000, but the lender values the property at $670,000.
The lender may calculate the available loan against the lower figure. The buyer may then need to contribute more cash or reconsider the purchase.
Valuation risk can be especially important for auctions, unusual properties, new estates and off-the-plan purchases.
16. Conditional approval, unconditional approval and loan documents
Conditional approval
Conditional approval means the lender has accepted the application subject to outstanding requirements.
Conditions may include:
- Satisfactory valuation
- Updated payslips
- Evidence of deposit
- Closure of a debt or credit card
- Signed contract of sale
- Insurance
- Government scheme confirmation
Unconditional approval
Unconditional approval means the lender has formally approved the loan after completing its assessment.
The buyer still needs to sign loan documents, satisfy settlement requirements and avoid material changes to their financial position.
Loan documents
Buyers should check the borrower names, property address, loan amount, loan term, rate type, repayment type, offset arrangements, fees and special conditions before signing.
17. Settlement and getting the keys
Settlement is the legal and financial completion of the purchase.
At settlement:
- The lender provides the approved loan funds
- The buyer provides the remaining contribution
- Rates and charges are adjusted
- Ownership transfers
- The mortgage is registered
- The buyer can generally collect the keys
Before settlement
- Sign loan documents correctly
- Complete identity verification
- Arrange insurance where required
- Transfer remaining funds
- Complete the final inspection
- Arrange utilities and moving
The final inspection is an opportunity to confirm that the property remains in substantially the same condition and that agreed inclusions remain.
Keep a buffer: try not to empty every account simply to reach settlement. Home ownership can produce unexpected expenses surprisingly quickly.
18. Common first-home-buyer mistakes
- Starting with property searches instead of a budget: this can lead to emotional attachment to unaffordable homes.
- Relying on an online calculator: calculators cannot fully assess lender policy or scheme eligibility.
- Using every dollar as the deposit: this leaves no room for costs or emergencies.
- Assuming pre-approval is final: the lender still needs to approve the property and satisfy conditions.
- Taking new debt before settlement: car finance or a credit card can change the application.
- Changing jobs without discussing it: a new probation period may affect approval.
- Skipping contract review: the contract may contain conditions or risks the buyer has not considered.
- Skipping inspections: significant defects may be expensive to repair.
- Bidding above a scheme cap: this may remove expected government support.
- Choosing a loan based only on rate: fees, policy, features and approval time also matter.
- Confusing the two deposits: the contract deposit and home loan deposit may differ.
- Ignoring valuation risk: a short valuation can require extra cash.
19. The first-home-buying process from start to finish
- Plan: Review your goals, income, expenses, debts and deposit.
- Set the budget: Establish borrowing capacity, comfortable repayments and total funds required.
- Check assistance: Review government schemes, grants and concessions.
- Obtain pre-approval: Submit documents and understand all conditions.
- Search for property: Research areas, prices, risks and ongoing costs.
- Complete checks: Arrange legal review, inspections and scheme confirmation.
- Make an offer or bid: Stay within the confirmed purchase limit.
- Complete formal approval: Provide the contract, valuation and remaining documents.
- Sign loan documents: Review the loan structure, fees and settlement requirements.
- Settle: Complete the final inspection, provide remaining funds and collect the keys.
20. First-home-buyer checklist
Before pre-approval
- Review income and expenses
- List debts and credit limits
- Confirm available savings
- Calculate purchasing costs
- Check government assistance
- Keep an emergency buffer
Before making an offer
- Confirm the approved price range
- Confirm the property is acceptable to the lender
- Check price caps and eligibility
- Arrange contract review
- Arrange inspections
- Confirm the contract deposit
- Understand finance and settlement dates
Before settlement
- Complete all lender conditions
- Sign loan documents
- Arrange insurance
- Transfer remaining funds
- Complete final inspection
- Avoid new credit or major financial changes
The bottom line
Buying your first home involves much more than choosing a property and applying for a loan.
The strongest starting point is a clear plan that combines borrowing capacity, a comfortable budget, deposit strategy, purchasing costs and any suitable government support.
Once those pieces are understood, pre-approval, property research, contract review, formal approval and settlement become much easier to manage.
Final thought: the goal is not simply to receive approval. It is to buy a suitable home with a loan structure and repayment level that continue to work after the excitement of settlement has passed.
Ready to take the next step towards your first home?
Loan Location can help you understand your borrowing position, compare suitable lenders, review first-home-buyer assistance and manage the loan process from pre-approval through to settlement.
Note: This is general information only and does not take into account your personal objectives, financial situation or needs. Government schemes, grants, lender policies, interest rates and property price limits may change. Eligibility and loan approval remain subject to applicable program and lender requirements. Legal, taxation and superannuation matters should be discussed with an appropriately qualified adviser.