The Complete First Home Buyer Guide for Australians (2024)

Buying your first home is one of the biggest financial moves you'll ever make. It should feel exciting. Instead, most first home buyers I talk to are stressed, confused, and worried they're going to get it wrong. This guide will change that. By the end, you'll know exactly what to expect, what you qualify for, and what steps to take first.

The standard answer is 20%. That's where you avoid Lenders Mortgage Insurance (LMI). But the reality is that most first home buyers don't have 20%, and you don't necessarily need it.

Here's how the deposit tiers actually work:

5% deposit: Available through the First Home Guarantee (FHBG), which lets eligible buyers purchase with just a 5% deposit and no LMI. The government guarantees the remaining 15%. There are income and property price caps, but most first home buyers in regional areas will qualify.

10% deposit: You'll pay LMI, which gets added to your loan. For a $600k purchase, that's roughly $12,000 to $15,000 in LMI. It's not ideal, but it gets you into the market faster.

20% deposit: No LMI, access to the widest range of lenders and products. Worth targeting if you can get there without missing the market.

The right deposit amount depends on your market, your timeline, and your income growth. It's not one-size-fits-all.

Australia has several schemes specifically for first home buyers. Here's what's currently available:

First Home Guarantee (FHBG): Buy with 5% deposit, no LMI. 35,000 places per year. Income cap is $125k for singles, $200k for couples. Property price caps vary by state.

Family Home Guarantee: For single parents (including non-first home buyers) to purchase with just 2% deposit. 5,000 places per year.

First Home Owner Grant (FHOG): A cash grant from your state government for buying or building a new home. Ranges from $10,000 to $30,000 depending on your state. Not available for established homes in most states.

Stamp Duty Concessions: Most states offer stamp duty exemptions or concessions for first home buyers. This can be worth tens of thousands of dollars. Check your state's thresholds because they differ significantly.

The combination of FHBG plus stamp duty concessions is often more valuable than people realise. I've had clients save over $40,000 by structuring their purchase correctly.

Pre-approval (also called conditional approval or approval in principle) is a lender's indication that they'd be willing to lend you up to a certain amount, subject to finding a suitable property.

You want pre-approval before you start attending open homes for a few reasons:

First, you know your actual budget. Not the number you hope for but the number a lender will actually back.

Second, you can move quickly when you find the right property. In competitive markets, sellers often prefer buyers with finance sorted.

Third, you spot any issues before they become problems. If there's something in your credit history or income documentation that needs fixing, better to know now than when you're under contract.

Pre-approval typically takes 3 to 5 business days once I have your documents. It's usually valid for 90 days, then you renew it if needed.

The list sounds long but most people have everything already:

For PAYG employees: two recent payslips, last two years of tax returns (or ATO income statements), three months of bank statements, photo ID, and details of any existing debts.

For self-employed: last two years of personal and business tax returns, ATO notices of assessment, business financial statements, and bank statements.

The cleaner your documentation, the faster the approval. Lenders want to see steady income, genuine savings history, and no unexplained large deposits or withdrawals.

Settlement is the day you officially become the owner. Your lawyer or conveyancer handles the paperwork. The lender transfers the funds to the seller's account. You get the keys.

In the lead-up to settlement, your broker and solicitor will work together to make sure everything is coordinated. The main things on your side: ensure your building and contents insurance is in place from the date of settlement (most lenders require this), and have your identification ready.

Settlement day is usually anticlimactic. You often don't need to be there in person. You just get a call or text saying it's done, and then you go pick up the keys.

Most first home buyers overcomplicate it. The process is straightforward when you have the right people in your corner. A good broker costs you nothing, saves you hours of research, and makes sure you end up with the right loan rather than whatever your bank happens to offer that day.

If you're thinking about buying in the next six to twelve months, the best first step is a conversation. We'll work out your borrowing capacity, look at what schemes you qualify for, and map out a realistic path to your front door.

Book a free chat and let's get you moving.