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Ultimate First Home Buyer Guide
First Home Buyer Guide Australia: Step by Step from Savings to Settlement
Buying your first home in Australia is one of the biggest financial decisions you will make. Most buyers feel overwhelmed by the process, unsure where to start, how much they can borrow, or what government help is available. This guide covers every stage in plain language. Laxmi Home Loans is here to help you at every single step, from your first savings question through to settlement day.
What This Guide Covers
- The 7-Step Home Buying Process in Australia
- Additional Costs You Need to Budget For
- Deposit Planning and Genuine Savings
- How Banks Calculate Your Borrowing Power
- Government Grants and Schemes
- Choosing the Right Loan Structure
- Risks Every First Home Buyer Must Understand
- Planning for What Comes Next
- Further Reading and Resources
- Frequently Asked Questions
The 7-Step Home Buying Process in Australia
The process of buying a home in Australia can vary slightly depending on the state or territory you are in. These are the seven steps every first home buyer moves through. Laxmi Home Loans supports you at every one of them.
Pre-Approval
Pre-approval tells you exactly how much you can borrow before you start searching. It makes you a stronger buyer in the eyes of agents and sellers. Laxmi Home Loans provides pre-approval assistance as a completely free service.
- We assess your income, expenses, and credit position
- We identify which lenders suit your profile from 50+ on our panel
- We lodge your pre-approval application and manage the process
- No cost to you at any stage
Property Search
Once you have pre-approval and a confirmed budget, the property search begins. Use sites like realestate.com.au and domain.com.au to find properties that match your criteria.
Key factors to consider when evaluating a property:
- Budget: stay within your pre-approved limit and account for additional costs
- Location: proximity to work, schools, transport, and amenities
- Size and layout: does it suit your current and future needs?
- Condition: visible maintenance issues and likely repair costs
- Zoning and restrictions: confirm permitted uses and any easements
- Future development: check council plans for the surrounding area
Make an Offer
Once you find the right property, you submit a written offer to the seller. This is the start of the formal purchase process. Do not sign anything before completing these steps.
- Request the draft contract and have your solicitor or conveyancer review it
- Organise a building and pest inspection before committing
- Negotiate on price or conditions if inspections reveal issues
- Sign the contract and pay an initial deposit once you are satisfied
Never waive a subject to finance clause when purchasing under private sale. This clause protects you if your formal loan approval is not granted. Losing a deposit on a failed settlement is avoidable with the right protections in place.
Negotiate Terms
You and the seller negotiate the purchase price and contract conditions until you reach a formal agreement. Key terms to negotiate include the final price, the settlement period, and any inclusions such as appliances or fixtures.
Your solicitor or conveyancer handles the legal side of the negotiation. Laxmi Home Loans can assist you in understanding how the financing side affects your negotiating position, including how quickly formal approval can be achieved.
Secure Financing
This is where Laxmi Home Loans does the heavy lifting on your behalf. We convert your pre-approval into formal loan approval by managing the full application process with the lender.
- We arrange the property valuation through the lender
- We collect and verify all required documents and reports
- We coordinate the deposit payment timeline
- We liaise directly with the lender until formal approval is issued
- You sign the contract of sale at this stage
Finalise the Purchase
Once formal approval is received, loan documents are prepared by the lender. Laxmi Home Loans guides you through signing the loan documents to make sure you understand every commitment you are making.
- Your conveyancer or solicitor manages the legal settlement process
- Ensure all settlement funds are in your nominated bank account at least one week before settlement date
- Final pre-settlement inspection of the property is recommended
- Laxmi Home Loans remains available for any queries right up to settlement
Settlement Day
Settlement day is when the legal transfer of ownership is completed. The lender releases the loan funds, the balance of the purchase price is paid, and the title transfers to your name.
- Keys are handed over by the seller or their agent after settlement
- Begin moving in on the agreed date
- Notify your utility providers of your new address
- Update your address with government agencies, your employer, and financial institutions
- Arrange home and contents insurance if not already done
Laxmi Home Loans continues to support you after settlement. We conduct regular loan health reviews to make sure your loan remains competitive as your circumstances evolve.
Additional Costs You Need to Budget For
The purchase price is not your only cost. First home buyers regularly underestimate the additional expenses involved. Budget for all of these before you start searching.
| Cost Type | Typical Amount | Notes |
|---|---|---|
| Stamp Duty | 4 to 5% of purchase price | Varies by state and buyer status. First home buyers may receive concessions or exemptions. See our stamp duty guide |
| Lenders Mortgage Insurance (LMI) | Varies, can be $5,000 to $30,000+ | Required when deposit is below 20%. Some exemptions apply for eligible professions and government scheme participants. |
| Legal and Conveyancing Fees | $1,000 to $2,000 | Covers contract review, settlement management, and legal transfer of title. |
| Building and Pest Inspection | $400 to $700 | Varies by property size and state. Always obtain one before exchanging contracts. |
| Moving Costs | Varies | Removalists, packing materials, storage if needed. Get quotes early. |
| Ongoing Costs | Varies | Council rates, water rates, utilities, strata fees (if applicable), home insurance, and loan repayments. |
What are the total additional costs when buying a home in Australia?
On top of your deposit, most first home buyers spend between $15,000 and $50,000 in additional costs depending on the state, purchase price, and whether LMI applies. The biggest variable is stamp duty. In New South Wales, stamp duty on a $700,000 property is approximately $26,000 for a standard buyer, though first home buyers may be eligible for a full exemption or significant concession depending on the purchase price and property type.
Use our free calculators to estimate your full cost position before you commit to a budget: Laxmi Home Loans Free Calculator Suite.
Ready to Discuss?
Not sure what your total buying costs will be? Our team will walk through every cost with you for free.
Book Your Free AppointmentDeposit Planning and Genuine Savings
Your deposit is the first thing a lender looks at. It is not just about the amount. It is about how you saved it.
How much deposit do you need?
The minimum deposit for most home loans is 5 percent of the purchase price under the First Home Guarantee. Without a government scheme, most lenders require 10 to 20 percent. A 20 percent deposit removes the need to pay LMI.
| Purchase Price | 5% Deposit | 10% Deposit | 20% Deposit (LMI-free) |
|---|---|---|---|
| $600,000 | $30,000 | $60,000 | $120,000 |
| $800,000 | $40,000 | $80,000 | $160,000 |
| $1,000,000 | $50,000 | $100,000 | $200,000 |
For a city-by-city breakdown, read our deposit guide by city. And if you want to know whether you actually need 20 percent, read Do you really need a 20 percent deposit?
What counts as genuine savings for a home loan in Australia?
Genuine savings are funds accumulated in your own name over time, typically held for at least three consecutive months. They demonstrate consistent financial discipline to a lender. Gifts, tax refunds, and lump sum inheritances are generally not accepted as genuine savings unless held for a qualifying period under the specific lender’s policy. Read the full breakdown in our genuine savings guide.
How Banks Calculate Your Borrowing Power
Understanding your borrowing capacity before you start inspecting properties is essential. Looking at homes outside your budget wastes time and creates disappointment.
How do banks calculate borrowing power in Australia?
Banks take your gross income, subtract your living expenses and existing debt repayments, then calculate what repayment you could afford at the assessment rate (your actual rate plus approximately 3 percent buffer). Each lender uses slightly different expense benchmarks, which is why borrowing capacity varies between banks. Read the detailed breakdown at how banks calculate borrowing power.
Key factors that reduce borrowing capacity include credit card limits (lenders count the full limit, not what you owe), buy now pay later accounts, car and personal loan repayments, and short employment history. Read our guide on what income you need to borrow $800,000 for a practical example.
Use our free borrowing capacity calculator to get an estimate before you speak with a broker: Laxmi Home Loans Calculator Suite.
Government Grants and Schemes for First Home Buyers
Several Australian Government programs reduce the cost of buying your first home. Most buyers do not access all the help available to them simply because they do not know what exists.
| Scheme | What It Does | Key Eligibility |
|---|---|---|
| First Home Guarantee | Buy with 5% deposit and no LMI | Australian citizen or PR, income caps apply |
| Regional First Home Buyer Guarantee | Buy in a regional area with 5% deposit and no LMI | Must purchase in an eligible regional location |
| Family Home Guarantee | Single parent buys with 2% deposit and no LMI | Single parent or guardian with at least one dependent |
| First Home Owner Grant | Cash grant for eligible new property purchases | Varies by state, generally applies to new builds |
| Stamp Duty Concessions | Reduced or waived stamp duty | Varies by state, price caps apply |
Full details are in our complete government schemes guide. Scheme rules and income caps change regularly. Always confirm eligibility with your broker before making property decisions based on scheme access.
Choosing the Right Loan Structure
Fixed, variable, or split?
| Type | How It Works | Best For |
|---|---|---|
| Fixed Rate | Rate locked for a set term (usually 1 to 5 years) | Buyers who want certainty in repayments |
| Variable Rate | Rate moves with the market | Buyers who want flexibility and extra repayment options |
| Split Loan | Part fixed, part variable | Buyers who want both certainty and flexibility |
Full comparison: fixed, variable, and split rate home loans explained.
What is the difference between an offset account and a redraw facility?
An offset account is a transaction account linked to your loan. Every dollar in it reduces the balance on which interest is charged daily. A redraw facility lets you access extra repayments you have already made. Offset accounts are generally more flexible for buyers who hold consistent savings. Read the full guide: offset account vs redraw facility.
Small changes to how you manage repayments can save years off your loan. Strategies like fortnightly repayments and directing savings into an offset account from settlement day are explained fully in our guides on extra repayment strategies and paying off your mortgage faster through LVR optimisation.
Ready to Discuss?
We compare loan structures across 50+ lenders and recommend the right fit for your goals. Free consultation, no obligation.
Book Your Free AppointmentRisks Every First Home Buyer Must Understand
Mortgage stress
Mortgage stress occurs when home loan repayments exceed 30 percent of your gross household income. Rising interest rates, reduced income, or large unexpected expenses can trigger stress even when a loan seemed manageable at approval. Read our guide on mortgage stress in Australia: warning signs and how to fix it.
Home loan fraud and scams
Property buyers are increasingly targeted by scammers. Common tactics include fraudulent conveyancing emails redirecting settlement funds to criminal bank accounts, fake broker websites, and identity theft during the application process. Always verify payment details by phone directly with your solicitor before transferring any funds. Read our scam awareness guide for home loan clients.
Insurance after settlement
Three types of insurance are essential for first home buyers to understand.
- Home and contents insurance covers damage to the property and your belongings
- Life insurance ensures your loan can be paid if you pass away
- Income protection insurance covers your repayments if you cannot work due to illness or injury
Your lender will require home insurance as a condition of settlement. Income protection and life insurance are strongly recommended for borrowers with large loans and limited savings buffers. Read LMI vs loan protection insurance for a full comparison.
Planning for What Comes Next
Once you have settled on your first home and started repayments, your focus shifts toward building equity and planning your next financial move.
Broker or bank?
A mortgage broker accesses 50 or more lenders, identifies the right structure, manages the full application, and continues to review your loan as circumstances change. A bank only offers its own products and limited guidance. Read our comparison: broker vs bank for a home loan in Australia.
Investment property and wealth building
Many first home buyers use their first property as a stepping stone toward a property portfolio. Understanding negative gearing and capital gains tax implications from the start helps you plan correctly. For current information and proposed changes, read our guide on negative gearing and CGT changes in Australia.
Further Reading and Resources
Deposit and Savings
- Genuine Savings Home Loan: How Banks Assess It in Australia
- Do You Really Need a 20 Percent Deposit to Buy Your First Home?
- How Much Deposit Do First Home Buyers Need in Sydney, Melbourne, and Brisbane
Borrowing Power and Income
- How Banks Calculate Your Borrowing Power
- How Much Income Do You Need to Borrow $800,000?
- Why Your Annualised Income Looks Different Between Banks
- How Long Must You Be Employed to Get a Home Loan?
Loan Structure and Features
- Fixed, Variable, or Split Rate Home Loans Explained
- Offset Account vs Redraw Facility
- What Is LVR and Why Does It Matter?
- Pay Off Your Home Loan Sooner: Extra Repayment Strategies
- Pay Off Your Mortgage Faster Through LVR Optimisation
Government Schemes and Costs
- Government Schemes for First Home Buyers in Australia
- Stamp Duty Explained for First Home Buyers
- LMI vs Loan Protection Insurance
- LMI Waiver for Eligible Professionals
Pre-Approval and Applications
- Pre-Approval vs Final Approval
- Why Banks Reject Home Loan Applications
- Broker vs Bank: Which Is Better for a Home Loan?
Property Search and Settlement
- How to Buy at Auction in Australia
- First Home Buyer Mistakes and How to Avoid Them
- Key Lessons Every First Home Buyer Should Know
- Mortgage Stress in Australia: Warning Signs and How to Fix It
- Scam Awareness for Home Loan Clients
Frequently Asked Questions
Ready to Discuss?
Call our team on 0433 589 626 or book a free appointment online. We will assess your full situation, compare options across 50+ lenders, and guide you from your first question through to settlement day.
Book Your Free AppointmentAbout Kishor Acharya and LHL Team
Kishor Acharya is the Principal Broker at Laxmi Home Loans, a mortgage broking business serving clients across Australia since 2015. Kishor holds full MFAA membership and is accredited with over 50 banks and lenders. He is a CBA Platinum Broker and St George Flame broker, recognised as a National Top 20 Customer Service Broker by RateMyAgent in both 2025 and 2026. Kishor and his team speak English, Nepali, and Hindi, supporting clients from all backgrounds across Australia. The team has helped over 1,000 families achieve their home ownership goals and holds 400+ five-star reviews.
This information is general in nature and does not take into account your personal financial circumstances, objectives, or needs. It does not constitute financial or credit advice. Before acting on any information in this guide, you should consider whether it is appropriate for your situation and seek independent financial, legal, and tax advice. Loan approval is subject to lender assessment criteria, eligibility, and property valuation. Government scheme eligibility and thresholds change regularly. Always confirm current scheme rules with your broker or the relevant government authority before making property decisions.
Laxmi Home Loans is a trading name of Mero Chino Groups Pty Ltd ABN 76 169 013 012. Credit Representative 476974 is authorised under Australian Credit Licence 383640.
