First-home buying often comes with both surprises and challenges, and is the very first step every Aussie takes each year. But only a few people know how and where to get started, and often struggle to find answers to questions, like
- How much deposit do I really need?
- What grants can I get?
- Should I buy at an auction?
- What does the whole process look like?
So, in this first home buyers’ guide, you will find all these answers with in-depth insights.
Budget Consideration
To begin with home buying, setting up a budget is the first step. You need to understand that it isn’t about cutting up your expenses, it’s about understanding how much you can afford. The following are a few steps that you can take to set up a budget:
- List down all your monthly income and expenses first, including your regular income, bills, debts, and rent.
- Figure out how much savings you already have for a deposit.
- Afterwards, estimate your borrowing power either through an online home loan calculator or by consulting a mortgage broker.
- Consider all the upfront costs, including stamp duty, legal fees, and inspection costs.
Even after considering these points, you must remember that regardless of whether your lender offers you a larger loan, stick to your repayments. This is important because it will eventually help you manage any rate hikes that may occur.
Available Government Grants and Schemes
While buying your first home, you’ll also get significant help from the government, so you should use it. That’s because they can subsequently reduce the total amount needed for the home loan deposit. So, here are some government grants and schemes that first-home buyers can take advantage of while buying their first home.
First Home Owner Grant (FHOG)
It’s a one-time, tax-free payment by the government to help first-home buyers get into the housing market. Usually, the grant is $10,000, but it varies from state to state. For example, in Queensland, it is $30,000.
However, your home must be your primary residence within 12 months of purchase. Also, you must live therein continuously for at least 6 months to receive this grant.
First Home Buyer Guarantee (FHBG)
This is another scheme where you can buy your first home with as little as a 5% deposit. Additionally, you don’t have to pay LMI (Lender Mortgage Insurance). It’s also known by another name, called the Housing Guarantee Scheme (HGS).
But here’s still one condition that you should have a steady income with at least a 5% deposit saved.
Help to Buy Scheme
Under this scheme, the government contributes up to 40% of the purchase price for new homes and 30% for existing homes. Also, you only need a 2% deposit without any LMI. The scheme is also known as the Shared Equity Scheme.
The Help to Buy initiative is mainly aimed at helping those who work hard and struggle to manage their finances to save. In the meantime, the scheme has undergone an update, incorporating new income caps to assist more people in purchasing their first home.
First Home Super Saver Scheme
If you are purchasing a home using your superannuation, the First Home Super Saver Scheme is beneficial for you. Under this, you can save for your home deposit through your super fund, using voluntary contributions.
You can access up to $50,000 individually and $100,000 with your partner. This is beneficial because it allows you to pay lower taxes on your super contributions, which improves your savings.
Stamp Duty Concessions or Waivers
It’s a government initiative that helps first-home buyers by covering stamp duty, their biggest upfront cost, to ease entry into homeownership. It varies from state to state. For example, in Victoria, if you have purchased a home worth $600,000, there’s no stamp duty.
On the other hand, in Queensland, you will get a stamp duty exemption on a home purchase up to $700,000. In addition to these initiatives, the government has also set “an ambitious national target.” According to this, the government has committed to building 1.2 million new homes over the next five years. This target also included the construction of 55,000 social and affordable homes.
Home Owner Assistance
This is the regional scheme where the Northern Territory Government is offering a $50,000 grant to first-home buyers. The main purpose behind this is to encourage more and more buyers to either build or buy their first home earlier.
But unlike other schemes, it has a different set of eligibility criteria. For instance, you must have signed the contract to buy or build between 1 October 2024 and 30 September 2026.
Pre-Approval
After setting your budget and checking the available government assistance, the next step is to obtain pre-approval. This step is often overlooked, but it’s very important. This is important because obtaining pre-approval from your lender will help you determine your actual borrowing capacity.
In the meantime, it will further give you confidence while looking for better properties for yourself. It will confirm your higher chances of getting a home loan without any worries. In auctions, too, you can bid, but only if your loan is pre-approved.
But what are the specifications for getting pre-approved?
Specifications to Get Home Loan Pre-Approval
To receive pre-approval from your lender, you must have the following documents:
- Proof of identification
- Evidence of income and employment
- Evidence of assets
- Credit report
Also, this is the process you need to follow for pre-approval:
- First, find a suitable lender by comparing various options. You can also take help from a mortgage broker to simplify your search.
- Secondly, gather all your necessary documents and submit your application.
- Wait for the pre-approval letter, which will typically take 60-90 days.
- Then, start searching for your home.
Considerations for Your Mortgage Application
But before you start, you must know what lenders look for in first-home buyers during the mortgage application process. This is because lenders don’t just look at your deposit size, but more than that. So, consider the following things before you go further:
Credit Score
Your credit report reflects how reliably you’ve paid past debts. A higher credit score increases your chances of approval and may give you better interest rates.
Genuine Savings
Lenders prefer applicants who have saved their deposit gradually over time (usually 3 months or more) rather than receiving it as a lump sum gift.
Debt-to-Income Ratio (DTI)
This measures your total monthly debt payments against your gross income. A lower DTI shows that you can manage mortgage repayments more comfortably.
Stable Employment
Being in a full-time job for at least 6–12 months is preferred. Casual employment or frequent job changes may raise concerns for your final approval from the lender.
Living Expenses
Lenders will review your spending habits, including rent, subscriptions, transport, and lifestyle expenses. Keeping these in check will eventually strengthen your profile.
Loan Type and Structure
Whether you choose a fixed or variable rate, a principal-and-interest loan, or an interest-only loan, all these types impact your eligibility. Therefore, make sure you select the right loan type and structure for further proceedings.
How the Home Buying Process Works
Homebuying doesn’t happen in one go. You should follow the steps outlined below for it.
Property Search
Start looking for the properties that fall within your budget. In the meantime, also remember to consult a reliable mortgage broker, who will guide you through each step.
Consider location, transport access, and local amenities with future growth potential, not just short-term rental yields.
Inspection and Due Diligence
Inspection is equally as important as buying your first home. That’s because it can save you from future environmental and financial risks.
Attend open homes, organise building and pest inspections, and check zoning or development restrictions in the area. Remember, this step is crucial, so you should not skip it.
Making an Offer or Bidding at Auction
Then, afterwards, if the property is sold via private treaty, you can negotiate and submit an offer. However, if it’s at auction, you must bid within your limit, and if you win, sign the contract immediately.
But make sure your emotions don’t overtake your decisions, since auctions run fast without giving much time to think.
Formal Loan Approval
Once your lender accepts your offer, submit all property details for formal loan approval. At this stage, the lender will assess your application based on the specific property details. And finally, it confirms they’re happy to fund the home purchase.
Settlement
Sign the contract and pay for your deposit. On settlement day, a conveyancer or solicitor will handle the legal paperwork and officially transfer ownership to you.
But you must remember that the entire home-buying process can take 6-12 weeks, depending on market conditions and lender timelines. So, you must be patient during this time.
Buying Your First Home at Auctions
It’s another big question of first-home buyers about how auctions work and how they can buy a home therein. Essentially, auctions function as a public sale, offering a property for sale to the highest bidder, who then secures ownership.
However, these move fast and can be challenging when deciding to buy a property. This is because once you win the property, you cannot retract your bid. Thus, it’s essential to know more about them in depth.
No Cooling-Off Period
Unlike private sales, there is no cooling-off period at an auction. If you’re the winning bidder, the sale is final on the day, and you’ll need to pay the deposit immediately. And the deposit is typically 10% of the purchase price.
Finalise Your Finance
Always have pre-approval before bidding. If you win without it and your loan fails, you may lose your deposit and face legal action. Auctions are legally binding, and once you place your bid, you cannot withdraw.
Therefore, it’s essential to understand your borrowing limit and obtain confirmation from your lender before proceeding.
Do Your Research
Inspect the property thoroughly beforehand. Also, review the vendor’s contract with your solicitor or conveyancer so you know what you’re signing.
This will prevent you from any hidden facts in the ownership deed and from overpaying for any property beyond its limit.
Set a Clear Limit
Determine your absolute highest bid and stick to it. Auctions can get emotional, and overbidding can leave you with financial stress.
Thus, if you set a clear budget, it won’t affect your finances at that time.
Register Beforehand
You’ll need to register with the auctioneer on the day of the auction to place a bid. Along with this, make sure to bring identification proofs and other details to act on time.
Registration ensures that only serious, eligible buyers participate and helps the auctioneer keep track of all bidders. So, don’t leave this step to the last minute, arrive early and do your registration.
Post-Auction Sales
In any case, if the property doesn’t meet the reserve price and is “passed in,” you can negotiate directly with the seller. That’s because, sometimes, negotiating after the auction can even land you a better deal.
Hence, buying at auction requires strong preparation and discipline, but it can also lead to a quick and secure purchase if done right.
Conclusion
Thus, buying your first home in Australia can feel big, but with the right planning, budgeting, exploring grants, and getting pre-approval, you’ll make confident choices. From knowing your borrowing power to finalising settlement, every part of the process matters. Take the time to plan, research, and seek help when needed.
For more information, book an appointment with Nfinity Financials at 1300 GET LOAN or 0456 456 267.
Frequently Asked Questions
Find the answers to the most commonly asked questions below:
1. Who is the First Home Buyer Guide for?
The guide is for Australians buying their first home, helping them understand the process, costs, grants, and key steps involved.
2. What is the process of buying a house in Australia?
It includes setting a budget, getting pre-approval, searching for property, making an offer or bidding, loan approval, and settlement.
3. How much deposit do you need for a first home buyer in Australia?
Most lenders require a minimum 5% deposit, but 20% is ideal to avoid Lenders Mortgage Insurance and get better rates.
4. How much is stamp duty in Australia?
Stamp duty varies by state, property price, and buyer type, ranging from a few thousand to tens of thousands of dollars.
