I Am Planning to Buy a Home. Where Do I Start? The Complete First Home Buyer Guide Australia

You have started thinking about buying your first home. Maybe the rent has gone up again, a friend just settled on their own place, or you are tired of watching property prices rise while your savings sit in a low-interest account.

Wherever the trigger came from, the real question is the same for every first home buyer. Where do you actually start, and what happens between the first phone call and the day you collect the keys.

This guide walks you through every stage, in plain Australian English, in the same order a good mortgage broker would explain it across the kitchen table. By the end you will know how much deposit you likely need, which government schemes may help you, how borrowing capacity really works, and the mistakes that quietly cost first home buyers thousands of dollars.

By Kishor Acharya and LHL Team

The Home Buying Journey at a Glance

Buying your first home in Australia is a seven step process. The steps are the same in every state, even though price caps, stamp duty rules and grant amounts change slightly by location.

1. Understand your financial position
2. Save your deposit and plan for upfront costs
3. Get home loan pre-approval
4. Search for the right property
5. Make an offer or bid at auction
6. Move from pre-approval to formal loan approval
7. Settle and collect the keys

Each step depends on the one before it. Skipping any of them, or rushing through them, is where most first home buyers get into trouble.

Step 1: Understand Your Financial Position

Before you look at a single property listing, you need to know where you stand today. Lenders will look at four things when they assess you.

• Your income, including salary, overtime, bonuses, allowances, second jobs, government payments and rental income where relevant
• Your regular living expenses, broken down by category
• Your existing debts, such as credit cards, buy now pay later accounts, personal loans, HECS or car loans
• Your savings history, deposit source and general financial habits over the last three to six months

A simple starting exercise is to open three months of bank statements and highlight every recurring payment. Most first home buyers are surprised by how much they spend on food delivery, subscriptions and discretionary items once it is all in one column.

If you have a HECS or HELP debt, a car loan, or high credit card limits, these will reduce your borrowing capacity even if you never use them. Reducing or closing unused credit facilities before applying is one of the fastest ways to lift your borrowing power.

Step 2: Save Your Deposit and Plan for Upfront Costs

Your deposit is only part of what you need. Buyers who plan for the deposit alone often get caught short at settlement.

How much deposit do you actually need

The general benchmarks in Australia are as follows.

• Twenty per cent deposit avoids Lenders Mortgage Insurance in most cases and gives you the strongest pricing options
• Ten per cent deposit is workable, but you will usually pay Lenders Mortgage Insurance unless you qualify for a waiver or a government scheme
• Five per cent deposit is possible through the First Home Guarantee for eligible buyers, and through some professional-specific policies
• Two per cent deposit is possible for eligible single parents through the Family Home Guarantee

A five per cent deposit on a six hundred thousand dollar property is thirty thousand dollars. A twenty per cent deposit on the same property is one hundred and twenty thousand dollars. That gap is why so many buyers use government schemes to enter the market sooner rather than waiting years to save the full twenty per cent.

Genuine savings

Most lenders want to see that at least five per cent of the purchase price has been saved by you, in your name, over at least three months. This is called genuine savings.

Gifted deposits from family, first home buyer government contributions and tax refunds can all count towards your total deposit, but they may not count as genuine savings on their own. If most of your deposit is a family gift, your broker can guide you to lenders who accept this structure with appropriate documentation.

Upfront costs beyond the deposit

Budget for these before you start making offers.

• Stamp duty, unless a concession or exemption applies to you
• Conveyancer or solicitor fees, typically around one thousand to two thousand dollars
• Building and pest inspection reports, usually four hundred to eight hundred dollars combined
• Loan application, settlement and mortgage registration fees where they apply
• Council and water rates adjustments at settlement
• Home and contents insurance, which must be in place before settlement
• Moving costs, utility connection fees and immediate essentials such as window coverings and appliances

A useful rule of thumb is to leave three to five per cent of the purchase price aside for upfront costs on top of your deposit, then hold a small buffer beyond that for the first few months after settlement.

Step 3: Get Home Loan Pre-Approval

Pre-approval, sometimes called conditional approval, is a written indication from a lender of how much they are likely to lend you based on the financial information you have provided. It is not a guarantee, and it is not final approval, but it gives you a realistic budget to shop within.

Without pre-approval you are guessing. You either aim too low and miss properties you could have afforded, or aim too high and risk a finance problem after your offer is accepted.

What pre-approval gives you

• A clear price range to search within
• Credibility with agents and vendors, especially at auction
• Confirmation of any government scheme eligibility before you make an offer
• Time to fix any income, expense or credit issues while you are still looking

Pre-approval is usually valid for ninety days, though many lenders can extend it if your search takes longer. If you want to understand the difference between conditional and unconditional approval in more detail, read our pre-approval versus final approval guide before you make an offer.

Government Assistance for First Home Buyers

Government support has never played a bigger role in helping first home buyers enter the Australian market. The right scheme can save you tens of thousands of dollars, and in some cases can bring your deposit requirement down from twenty per cent to just two or five per cent.

First Home Guarantee

The First Home Guarantee is a Commonwealth scheme that allows eligible first home buyers to purchase with as little as a five per cent deposit, without paying Lenders Mortgage Insurance. The Australian Government effectively guarantees the difference between your deposit and a twenty per cent deposit.

Property price caps apply by region, and participating lender credit policies must still be met. The scheme does not guarantee approval, only the removal of Lenders Mortgage Insurance for eligible applicants.

Family Home Guarantee

The Family Home Guarantee helps eligible single parents and eligible single legal guardians buy a home with a deposit as low as two per cent, without paying Lenders Mortgage Insurance. Buyers do not need to be first home buyers to access this scheme, and previous property owners may still be eligible in some circumstances.

First Home Owner Grant

The First Home Owner Grant is a one-off cash payment from your state or territory government, generally paid when you buy or build a new home. The amount, eligibility rules and property caps vary by state, and the grant usually does not apply to established properties.

Stamp duty concessions and exemptions

Every state and territory offers some form of stamp duty relief for eligible first home buyers, up to specific price thresholds. In several states, first home buyers below a certain price cap pay no stamp duty at all, which can save more than twenty thousand dollars in one transaction.

Professional Lenders Mortgage Insurance waivers

If you work in an eligible profession, you may not need any government scheme at all. Registered Nurses, Midwives, Doctors, Dentists, Accountants, Legal professionals and several allied health roles can access lender-specific policies that waive Lenders Mortgage Insurance up to ninety or ninety-five per cent Loan to Value Ratio, subject to minimum income requirements.

These waivers sit outside government schemes, have no waitlists, and can often be combined with other benefits. A good broker will check both pathways before you commit to one.

Why Borrowing Capacity Differs Between Lenders

Most first home buyers assume every bank will lend them the same amount. This is one of the most expensive myths in Australian home buying.

Two lenders looking at the same applicant, on the same day, with the same payslips, can produce borrowing figures that are more than one hundred and fifty thousand dollars apart. That difference can be the gap between renting for another two years and buying your first home this year.

Where the differences come from

Lenders apply their own policies to the same raw information. The key areas that vary are as follows.

• Overtime, allowances and shift penalties, where some lenders accept the full amount and others discount it by twenty per cent or more
• Bonuses and commissions, which some lenders accept in full after two years and others average over three years
• Casual income, where minimum employment history requirements range from six months to twelve months
• Rental income from an existing investment property, which is usually shaded to around eighty per cent to account for vacancy and costs
• Self-employed income, which some lenders assess on the last one year and others on an average of the last two years
• Living expense benchmarks, where some lenders use higher household benchmarks than others
• Existing credit card limits, HECS debts and buy now pay later accounts, all treated differently across lender policies

This is why one lender might approve you at eight hundred and fifty thousand dollars while another approves you at just over one million dollars on the same file. A mortgage broker running your figures across a large lender panel is often the difference between qualifying now or being asked to wait.

Step 4: Search for the Right Property

With pre-approval in hand, you can now search seriously. Stay disciplined about your budget and remember that the ceiling of your pre-approval is not the same as the price that fits your lifestyle.

Should you buy new or established

Both options have real advantages. The right choice depends on your priorities, your family situation and how quickly you want to move in.

Feature	New home or house and land	Established home
Grants and stamp duty	May qualify for the First Home Owner Grant and larger stamp duty concessions in many states	Grants generally do not apply, though first home buyer stamp duty concessions still may
Deposit and construction	Land settles first, then progress payments during construction	Single settlement, usually within thirty to ninety days
Move-in timing	Often twelve months or more from land settlement	Usually six to eight weeks after signing the contract
Maintenance and warranties	Lower immediate maintenance, builder warranties in place	Higher chance of near-term repairs or upgrades
Location and land size	Newer estates further from established centres, often smaller blocks	Usually larger blocks and closer to established shops, schools and transport

Neither option is better in a general sense. The right answer depends on your work location, family plans, appetite for future renovations and how important short-term move-in versus long-term equity growth is to you.

Step 5: Make an Offer or Bid at Auction

Once you have found the right property, there are three main ways to buy it.

• Private treaty, where you negotiate on the listed price with the vendor through their agent
• Auction, where you bid publicly and the highest bidder wins if the reserve is met
• Expressions of interest, where you submit a written offer by a set date, usually blind to other buyers

Auctions are unconditional. If you win, you exchange contracts on the same day, pay the deposit and cannot rely on a finance clause. This is why full pre-approval, a completed valuation where possible, and a solicitor briefed in advance matter so much at auction.

Private treaty offers are usually subject to finance, building and pest inspection, and cooling off periods that vary by state. If your finance clause is under pressure, our guide on what to do when your finance clause is expiring is worth reading before you sign a contract.

Step 6: Move from Pre-Approval to Formal Loan Approval

Once your offer is accepted, or you win at auction, your file moves from pre-approval to formal or unconditional approval. This is the stage where the lender orders a valuation of the property, verifies your documents in detail and confirms every condition.

The single biggest reason formal approvals fail at this stage is that the buyer changed something after pre-approval. Do not take out new credit, buy a car, change jobs, reduce your hours, or move deposit funds around without your broker knowing.

Once the lender is satisfied, they issue a formal approval letter and prepare loan documents for you to sign. Your solicitor or conveyancer works with the lender to prepare for settlement.

Step 7: Settlement

Settlement is the day the property legally becomes yours. Your lender pays the vendor, your name is registered on title, and you collect the keys.

In the days leading up to settlement, your solicitor or conveyancer will confirm rate adjustments, final figures and building insurance. You should have building insurance in place from the day contracts exchange in most states, not from settlement day.

How Long Does the Home Buying Process Take

A realistic first home buyer timeline in Australia looks like this. Every stage can move faster or slower depending on your preparation, the market and the lender.

Stage	Typical time
Financial review and document gathering	Week one
Pre-approval submission and lender assessment	Week two
Property search and inspections	Weeks three to ten
Offer accepted or auction won	Week eleven
Formal approval, valuation and loan documents	Weeks twelve to fourteen
Settlement	Weeks fifteen to eighteen

Some buyers find the right property in their first weekend and settle within eight weeks. Others search for six months. Both are normal.

Hidden Costs First Home Buyers Forget

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.

• Loan application, valuation and settlement fees where they apply
• Lenders Mortgage Insurance if your deposit is below twenty per cent and no waiver applies
• Stamp duty and mortgage registration fees
• Council and water rates adjustments
• Building and contents insurance from contract exchange or settlement
• Utility connection fees for electricity, gas, water and internet
• Furniture and appliances
• Window coverings, which are often not included
• Landscaping and immediate repairs
• An emergency buffer for the first six months of ownership

A common and painful mistake is spending the entire deposit and cost buffer on the transaction itself. Property ownership brings ongoing costs from day one, including strata levies if you are buying a unit, council rates, water rates, maintenance and home insurance premiums.

Common Mistakes First Home Buyers Make

After more than a decade of helping first home buyers, the same avoidable mistakes come up again and again.

• Applying to one bank without comparing options, and accepting whatever borrowing figure that bank produces
• Making offers without pre-approval and losing the property because finance took too long
• Taking on new buy now pay later accounts, credit cards or car loans in the months before applying
• Underestimating living expenses in the application, which the lender will pick up in bank statements
• Ignoring government schemes because they assume they are not eligible
• Choosing a fixed rate purely because rates are low, without understanding break costs and repayment flexibility
• Skipping building and pest inspections to save a few hundred dollars, then facing major repair bills after settlement
• Using every dollar of savings at settlement with no financial buffer for the months that follow

Every one of these mistakes is preventable with the right advice at the right time.

Loan Features Worth Understanding Before You Sign

Two features often decide how quickly you pay your loan off and how much interest you actually pay over the life of the loan.

• Offset accounts allow you to keep your savings and salary in a linked transaction account, and every dollar in that account reduces the loan balance that interest is calculated on
• Redraw allows you to pull back extra repayments you have made, giving you flexibility without a separate account

These features can save tens of thousands of dollars over a thirty-year loan when used well. Our offset account versus redraw guide explains the practical differences, and why the right choice depends on your income pattern and savings habits.

Your First Home Buyer Checklist

Print this checklist and work through it in order. Every step matters, and skipping any one of them is where most first home buyer problems begin.

• Check your credit report and clean up any errors
• Track three months of income and expenses
• Reduce or close unused credit card limits and buy now pay later accounts
• Confirm your deposit source and start building genuine savings history
• Prepare your documents, including payslips, tax returns, ID and bank statements
• Speak with a mortgage broker to compare more than one lender
• Check eligibility for the First Home Guarantee, First Home Owner Grant and stamp duty concessions
• Obtain written pre-approval and confirm its validity period
• Engage a conveyancer or solicitor before you make an offer
• Attend inspections and record what you see and hear
• Arrange building and pest reports before signing a contract where possible
• Move from pre-approval to formal approval quickly and cleanly
• Arrange home and contents insurance from the correct date
• Prepare for settlement and confirm final figures with your conveyancer
• Collect the keys and start planning for the first six months of ownership

Why Choose Laxmi Home Loans

Laxmi Home Loans has been supporting Australian first home buyers since 2015. Our team has helped more than one thousand families settle across every capital city and many regional areas.

• Access to more than fifty banks and lenders on one panel
• Australia-wide service by phone, video and secure online document collection
• Specialists in first home buyer strategy, government schemes and Lenders Mortgage Insurance waivers
• Support from your first savings question through pre-approval to settlement
• Personalised borrowing strategies rather than a one-size-fits-all recommendation
• Ongoing support after settlement, including annual home loan reviews
• Service available in English, Nepali and Hindi for buyers who prefer their first language
• MFAA Full Member, RateMyAgent National Top 20, and more than four hundred five star reviews

You can also start by reading our first home buyer guide Australia pillar page, which links to every stage of the process in detail.

Frequently Asked Questions

Can I buy a house in Australia with a five per cent deposit

Yes. Eligible first home buyers can access the First Home Guarantee to purchase with a five per cent deposit and no Lenders Mortgage Insurance, subject to property price caps and lender credit policies. Outside the scheme, some lenders accept a five per cent deposit but Lenders Mortgage Insurance will usually apply.

How much deposit do I really need

The practical answer depends on the property price, your income and any scheme or waiver you qualify for. Most first home buyers use a deposit of between five per cent and ten per cent of the property price, then add three to five per cent on top for upfront costs.

How long does pre-approval last

Pre-approval is usually valid for ninety days. Many lenders can extend or refresh it if your property search takes longer, provided your income, expenses and credit position have not changed materially.

Can I use gifted funds as my deposit

Yes. Gifted deposits are widely accepted, though most lenders will still want to see some level of genuine savings history in your name. Your broker can match you to a lender whose policy fits your specific deposit source.

Can I buy a home together with my parents

Yes. There are several structures available, including parents as co-borrowers, family guarantor loans using the equity in the parents’ home, and joint purchases. Each structure has different tax, legal and lender implications that need to be reviewed before you apply.

Can I use overtime and bonus income

Most lenders will accept overtime, shift penalties, allowances and bonuses in some form. The percentage they accept and the employment history they require varies. Nurses, midwives, emergency workers and shift-based professionals often have specific lender policies that treat their income more generously.

Should I fix my interest rate

A fixed rate offers certainty of repayments for a set period, usually one to five years. A variable rate offers more flexibility, including extra repayments, offset accounts and free redraw. Many first home buyers choose a split loan, with part fixed for budgeting certainty and part variable for flexibility.

Can I buy a new home before selling my current one

Yes. Bridging finance, deposit release strategies and family guarantor loans can all be used to bridge the timing gap. Each option needs to be structured carefully to protect you if either the sale or the purchase takes longer than expected.

Do I need a mortgage broker or can I go directly to a bank

Both are options. A bank can only offer its own products, while a mortgage broker compares multiple lenders and structures against your specific goals. Under Australia’s Best Interest Duty, mortgage brokers are legally required to act in your best interests when recommending a home loan.

Ready to Discuss Your First Home Purchase

Every first home buyer file is different. Two applicants with the same salary can end up with very different borrowing figures, government scheme options and loan structures.

The best next step is a short, no-obligation conversation. We will review your income, expenses, deposit and goals, explain the schemes you may qualify for, and give you a clear plan for the weeks ahead.

Call Laxmi Home Loans on 0433 589 626 or 1300 4 LAXMI, email [email protected], or book a free thirty minute consultation online at calendly.com/laxmihomeloans365/30min. We speak English, Nepali and Hindi, and we serve first home buyers across Australia.

This information is general in nature and does not take into account your personal objectives, financial situation or needs. Government scheme eligibility, property price caps and lender policies change over time and vary by location. All loans are subject to lender approval and eligibility criteria.