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 deposits, borrowing power, government schemes, pre-approval, contracts and settlement.
This guide explains every stage in plain language. Laxmi Home Loans can help you from your first savings question through to settlement day.
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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 how much you can borrow before you start searching. It makes you a stronger buyer in the eyes of agents and sellers.
- 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.
- Stay within your pre-approved limit and allow for additional costs.
- Review location, transport, schools and local amenities.
- Check property size, layout, condition and repair risk.
- Review zoning, easements and future development in the area.
Make an Offer
Once you find the right property, you submit a written offer to the seller. Do not sign anything before your solicitor or conveyancer has reviewed the contract.
- Request the draft contract and have it reviewed.
- Organise a building and pest inspection before committing.
- Negotiate price or conditions if inspections reveal issues.
- Sign and pay an initial deposit only when you are satisfied.
Never waive a subject to finance clause when purchasing under private sale. This clause protects you if formal loan approval is not granted.
Negotiate Terms
You and the seller negotiate price and contract conditions until a formal agreement is reached. Your solicitor or conveyancer handles the legal side. Laxmi Home Loans helps you understand how the financing side affects your negotiation position.
Secure Financing
This is where Laxmi Home Loans does the heavy lifting. We convert your pre-approval into formal loan approval by managing the application with the lender.
- We arrange the property valuation through the lender.
- We verify all required documents and reports.
- We coordinate the deposit payment timeline.
- We liaise with the lender until formal approval is issued.
Finalise the Purchase
Once formal approval is received, loan documents are prepared. Laxmi Home Loans guides you through the loan documents so you understand every commitment.
- Your conveyancer or solicitor manages legal settlement.
- Settlement funds should be ready at least one week before settlement.
- A final pre-settlement inspection is recommended.
Settlement Day
Settlement day is when the legal transfer of ownership is completed. The lender releases funds, the seller is paid and the title transfers to your name.
- Keys are handed over after settlement.
- Update your address with utilities, employer and financial institutions.
- Arrange home and contents insurance if not already done.
- Laxmi Home Loans continues to support you after settlement.
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 | $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 | Always obtain one before exchanging contracts. | ||||||||||||||||||||||||||||||||||||||||||||||
| Moving Costs | Varies | Removalists, packing materials, storage and utility setup. | ||||||||||||||||||||||||||||||||||||||||||||||
| Ongoing Costs | Varies | Council rates, water rates, utilities, strata fees, insurance and loan repayments. |
| Purchase Price | 5% Deposit | 10% Deposit | 20% Deposit |
|---|---|---|---|
| $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. If you want to know whether you actually need 20%, read Do you really need a 20% deposit?
What counts as genuine savings?
Genuine savings are funds accumulated in your own name over time, usually held for at least three consecutive months. They show financial discipline to a lender. 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?
Banks take your gross income, subtract living expenses and existing debt repayments, then calculate what repayment you could afford at an assessment rate. Each lender uses slightly different benchmarks, which is why borrowing capacity varies between banks. Read how banks calculate borrowing power.
Key factors that reduce borrowing capacity include credit card limits, buy now pay later accounts, car loans, personal loans and short employment history. For a practical example, read what income you need to borrow $800,000.
Use our free calculator suite to get an initial estimate before speaking with a broker.
Government Grants and Schemes for First Home Buyers
Several Australian Government programs may reduce the cost of buying your first home. Many buyers do not access all the help available 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 and 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, so always confirm eligibility before making property decisions.
Choosing the Right Loan Structure
Fixed, variable or split?
| Type | How It Works | Best For |
|---|---|---|
| Fixed Rate | Rate locked for a set term | Buyers who want repayment certainty |
| Variable Rate | Rate moves with the market | Buyers who want repayment flexibility |
| Split Loan | Part fixed, part variable | Buyers who want a balance of certainty and flexibility |
Full comparison: fixed, variable and split rate home loans explained.
Offset account vs 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. A redraw facility lets you access extra repayments already made. Read the full guide: offset account vs redraw facility.
Small changes to repayment habits can save years off your loan. Learn more in our guides on extra repayment strategies and paying off your mortgage faster through LVR optimisation.
Need Help Choosing a Loan Structure?
We compare loan structures across 50+ lenders and recommend the right fit for your goals.
Risks Every First Home Buyer Must Understand
Mortgage stress
Mortgage stress can happen when repayments become difficult to manage due to rate rises, reduced income or unexpected expenses. Read our guide on mortgage stress in Australia.
Home loan fraud and scams
Property buyers are increasingly targeted by scammers. Always verify payment details by phone directly with your solicitor before transferring funds. Read our scam awareness guide for home loan clients.
Insurance after settlement
Your lender will usually require home insurance as a condition of settlement. Income protection and life insurance may also be important 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 settle on your first home and start repayments, your focus shifts toward building equity and planning your next financial move.
Broker or bank?
A mortgage broker accesses multiple lenders, identifies a suitable structure, manages the application and continues to review your loan as your circumstances change. 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. For current information, read our guide on negative gearing and CGT changes in Australia.
Further Reading and Resources
Frequently Asked Questions
How much deposit do I need to buy my first home in Australia?
You may need a minimum of 5% of the purchase price under government guarantee schemes. Without a scheme, many lenders require at least 10% to 20%. A 20% deposit avoids Lenders Mortgage Insurance.
What is genuine savings and why do banks care?
Genuine savings are funds you have saved over time in your own name, usually held for at least three months. Banks use genuine savings to assess financial discipline.
How much can I borrow as a first home buyer?
Borrowing capacity depends on income, living expenses, debts and lender assessment rates. A broker can compare borrowing capacity across multiple lenders.
What government grants and schemes are available?
Common options include the First Home Guarantee, Family Home Guarantee, First Home Owner Grant and stamp duty concessions. Eligibility varies by state and buyer circumstances.
Do I need pre-approval before searching for a property?
Pre-approval gives you a clear budget and makes you a stronger buyer. Most agents and vendors expect serious buyers to understand borrowing capacity before making offers.
Should I choose fixed, variable or split?
Fixed rates provide repayment certainty, variable rates provide flexibility and split loans provide a mix of both. The right option depends on income, savings habits and risk comfort.
Is it better to use a mortgage broker or go directly to a bank?
A mortgage broker compares multiple lenders and helps identify a suitable structure. A bank can only offer its own products. For first home buyers, broker support can be especially valuable.
Ready to Discuss Your First Home?
Call our team 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.
About 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. Kishor and the team speak English, Nepali and Hindi, supporting clients from all backgrounds across Australia.
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.
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.
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