First Home Buyers Guide
If you’re a first home buyer, navigating deposits, loans, and the property market can feel overwhelming, but the right guidance makes all the difference.
Buying your first home is an exciting milestone, but as a first home buyer, it’s natural to feel overwhelmed by everything from saving for a deposit to comparing first home loans and navigating the property market.
The great news is you don’t have to do it alone.
With the right knowledge and expert support, you can make confident decisions and step into home ownership sooner.
In this guide for First Home Buyers, we’ll cover the essentials: how to save for a home loan deposit, what loan options are available, how the First Home Guarantee can help you buy with as little as 5% deposit and why working with a mortgage broker can make the process simpler and far less stressful.
Why You Should Consider a Mortgage Broker
More than half of Australian borrowers use a mortgage broker, and for good reason.
A broker gives you access to a wide range of lenders, compares deals on your behalf, and helps negotiate better outcomes. They also save you time and stress by managing paperwork and working around your schedule.
In short, a broker takes care of the legwork so you can focus on finding your dream home.
Saving For Your Deposit
For most first home buyers, the deposit is the biggest hurdle. Traditionally, lenders expect 10–20% of the property’s value upfront. The more you can save, the less you’ll need to borrow, and the stronger your application looks.
Tips to build your deposit faster:
- Budget honestly: Track expenses and cut back where you can.
- Automate savings: Set up direct transfers to a dedicated account.
- Change lifestyle choices: Consider cheaper rent, or even moving back home temporarily, to increase savings.
But what if 20% feels out of reach? That’s where the Home Guarantee Scheme can help.
The First Home Guarantee (Part of the Home Guarantee Scheme)
The First Home Guarantee is an Australian Government initiative designed to help eligible buyers purchase a home sooner.
Here's how it works:
If you’ve saved at least a 5% deposit, Housing Australia provides a guarantee of up to 15% of the property’s value to the participating lender. This allows you to borrow up to 95% of the property’s value without paying Lenders Mortgage Insurance (LMI).
Are you eligible?
You may qualify if you meet these criteria:
- Citizenship or residency: You’re an Australian citizen or permanent resident.
- Income: Your taxable income is below $125,000 (single) or $200,000 (couple, combined), as shown on your latest Notice of Assessment.
- Deposit: You’ve saved at least 5% of the property’s value.
- Ownership history: You’re a first home buyer, or you haven’t owned a property in Australia for at least 10 years.
- Owner-occupier: You must live in the property (investment properties are not eligible).
- Age: You must be at least 18 years old.
What types of property are eligible?
You can buy a new or existing residential property below the price cap for your area, including:
- Existing house, townhouse, or apartment
- House and land package
- Vacant land with a separate building contract
- Off-the-plan apartment or townhouse
This scheme has already helped thousands of Australians get into their first home sooner, and it might be the boost you need too.
Lenders Mortgage Insurance
If you aren’t eligible for the First Home Guarantee and can’t provide a 20% deposit, lenders will usually require Lenders’ Mortgage Insurance (LMI). This one-off cost protects the lender if you can’t make repayments.
While avoiding LMI is ideal, many first home buyers accept it as the price of entering the market sooner. What matters most is whether your income can comfortably support the repayments.
Additional Costs To Factor In
Your deposit isn't the only upfront cost.
First home buyers also need to budget for:
- Stamp Duty (unless you're eligible for concessions)
- Legal and conveyancing fees
- Inspection and valuation costs
Knowing about these expenses early can help avoid nasty surprises later.
How Much Can You Borrow?
Before you start house-hunting, it’s important to know your borrowing capacity.
Factors like income, lifestyle, and existing debts all play a role. While online calculators give rough figures, a broker can give you a far more accurate picture, and even secure pre-approval so you’re ready to make an offer when you find the right property.
Choosing Your First Home
Your budget will shape what type of home you can buy and where you can live.
First home buyers often face compromises such as:
- Apartments vs. Houses
- Locations vs. size
- Inner-city convenience vs. out-of-town space
Think about your priorities for the next five years, commuting, lifestyle, family plans, and community preferences, before deciding.
Loan Options
There’s more to a mortgage than just the interest rate. Here are the main types of loans:
Variable Rate Loans
Repayments rise or fall with interest rates
Fixed Rate Loans
Repayments stay the same for a set period
Split Loans
A combination of fixed and variable
Interest-only Loans
Lower repayments early on, but debt doesn't reduce
Line of Credit
Flexible access to funds, but often higher rates
Introductory "HoneyMoon" Loans
Lower rates for 6-12 months
Low Doc Loans
Designed for self-employed borrowers
Each option has pros and cons, which is why getting expert advice matters.
Borrowing With Family Support
With housing affordability challenges, many first home buyers turn to the “Bank of Mum and Dad” for help.
Family contributions can boost deposits and borrowing power, but it’s vital to set up clear legal agreements and seek financial advice to avoid future conflict.
"Rentvesting"
Not every first home buyer chooses to live in their first property.
Rentvesting: Renting where you want to live while purchasing an investment property in a more affordable location, is becoming increasingly popular.
The key is to choose a property based on financial returns rather than emotions.
Professional advice is essential to understand the tax and financial implications of this strategy.
Final Thoughts
Stepping into the property market for the first time is exciting, but it comes with challenges: deposits, loan options, extra costs, and lifestyle trade-offs.
The First Home Guarantee can be a game-changer, allowing you the buy with as little as 5% deposit and avoid LMI (if your eligible).
The most important thing you can do is get the right advice early. A mortgage broker can explain your borrowing capacity, compare hundreds of loan products, and guide you from application to settlement.
As a first home buyer, preparation is everything.
Save smart, understand your options, and get expert support, so you can make your first property purchase a confident success.
Contact us today for a personalised, stress-free experience.