First Home Buyer Guide — a clear plan from deposit to settlement (2026)
If you want the fastest, safest path to buying your first home, you need three things: caps clarity, cash-needed clarity, and a bank-style borrowing power check before you sign anything. This guide gives you a step-by-step plan (plus a quick calculator) so you can move with confidence.
This page is general information, not personal financial advice. Program settings and lender policies can change. We confirm eligibility and lender fit before you commit.
Page Contents
If you only do 3 things this week
Most first home buyers don’t fail because they “picked the wrong rate”. They fail because the plan is missing one of these three checks — and the deal falls over late (or becomes stressful and expensive).
Before you fall in love with a property, confirm you’re under the price cap (if using a scheme) and you’re applying through a participating lender.
The deposit is only one part. You need legals, inspections, moving costs and a comfort buffer so the first 3–6 months aren’t tight.
Online calculators are often optimistic. A broker can test lender policy around HECS, overtime, casual income, probation, living expenses and credit limits.
Shortcut: Use our Scheme calculator for a fast eligibility/cap check, then use the cash-needed calculator below to sanity-check your savings target.
How first home buying works in Australia (plain English)
A first home purchase has lots of moving parts, but the workflow is repeatable. Think of it as pre-approval → property due diligence → offer/auction → finance approval → settlement. The people who feel “calm” during the process usually did the boring checks early.
Key terms you’ll see everywhere
- Pre-approval: a lender’s “in principle” approval based on your documents (still subject to conditions, valuation and full assessment).
- LVR (loan-to-value ratio): loan amount ÷ property value. Higher LVR usually means stricter rules and sometimes LMI.
- LMI (lenders mortgage insurance): an insurance premium often payable when your deposit is under 20% (some schemes can help eligible buyers avoid it).
- Valuation: the lender’s assessment of property value. This can differ from your contract price and can impact approvals.
- Cooling-off: a period (varies by state and conditions) where you may withdraw from a contract, sometimes with a penalty. Auctions commonly have no cooling-off.
- Unconditional: when contract conditions are satisfied/waived (finance, building/pest, etc). This is the point where mistakes become expensive.
The 30-second process map
| Stage | What you do | What can go wrong (and how to avoid it) |
|---|---|---|
| Plan | Choose a buy box: location, property type, budget, timeline. | Buying a “dream” that doesn’t fit caps/borrowing power → confirm caps and bank-style servicing first. |
| Pre-approval | Submit docs; get an approval strategy that fits your income type and deposit source. | Using the wrong lender policy for HECS/casual/overtime → compare lenders before applying. |
| Search | Inspect properties; get contract/strata reviewed; do building/pest where relevant. | Missing red flags in strata, defects, or zoning → due diligence before you go unconditional. |
| Offer / auction | Negotiate price and conditions; confirm deposit amount and settlement terms. | Auctions remove “escape hatches” → have everything checked before auction day. |
| Formal approval | Lender completes full assessment and valuation; issues loan docs. | Valuation shortfall or new debts → keep finances stable until settlement. |
| Settlement | Conveyancer coordinates funds, lender and title transfer; you receive keys. | Missing cash for adjustments/fees → keep a buffer (not just the deposit). |
Tip: if you want the fastest path, do the “Plan + Pre-approval + Due diligence” steps before you emotionally commit to a property.
Schemes, grants & what to double-check (so you don’t get misled)
First-home buyer advice online gets messy because people mix up government guarantee programs, state/territory stamp duty concessions, and savings or grant programs. You can sometimes stack benefits, but the rules are different — and the detail that matters is usually: property type, timing, price caps, eligibility, and lender participation.
1) Australian Government 5% Deposit Scheme
This program (formerly known as the Home Guarantee Scheme) can help eligible buyers purchase with a smaller deposit — for example 5% for many first home buyers and 2% for eligible single parents — and potentially avoid LMI. Since 1 October 2025, settings include no income caps and unlimited places, with location-based price caps.
Fast check: Scheme calculator • Official caps: First Home Buyers cap table • Program update: Housing Australia announcement
2) Stamp duty concessions
Stamp duty is run by each state/territory revenue office and can materially change your “cash needed” number. Some buyers pay $0 duty below certain thresholds, others receive concessions, and some pay full duty depending on value and property type.
Rule of thumb: check duty before you exchange contracts (especially if you are close to a threshold).
3) FHSS & Help to Buy
The First Home Super Saver (FHSS) scheme helps some buyers build a deposit faster using voluntary super contributions (currently up to $50,000 plus associated earnings, subject to rules). Help to Buy is a shared equity option (minimum 2% deposit) where the Government contributes up to 30% or 40% toward the purchase price in exchange for an equity share (applications opened on 5 December 2025).
Help to Buy has its own caps and state participation rules (and some locations may require enabling legislation) — see official caps: Help to Buy cap table
If your situation is non-standard (HECS, casual income, overtime, probation, land + build, gifted deposit), speaking with a first home buyer broker can save weeks by matching you to the right lender policy before you apply.
Property price caps (5% Deposit Scheme) — the part most buyers get wrong
Why caps matter
If you’re using a low-deposit guarantee pathway, you’re usually limited by property price caps set by location. If your contract price is above the cap for your area, you can’t use that pathway — even if your deposit percentage looks right.
The fastest way to use caps is to shortlist suburbs first, then choose a deposit strategy (5% / 10% / 20%) based on price reality.
Official cap table and postcode tool: First Home Buyers (Australian Government)
Two important “gotchas”
- Valuation matters: the lender’s assessed value can differ from contract price. Both generally need to be at or below the cap.
- Land + build timing: if you buy vacant land and build (separate contracts), caps may apply to the combined land price + build costs.
If you’re building, tell your broker early. The paperwork and timing rules can be stricter than a normal established home purchase.
Stamp duty note
Caps are about the deposit scheme. Stamp duty is separate. Even if you qualify for a low-deposit scheme, stamp duty may still apply depending on your state/territory and purchase price.
That’s why we always plan “cash needed” as deposit + costs + buffer (not just the deposit).
Show the cap table (Australia-wide)
Caps change from time to time. Always verify with the official postcode tool before you sign a contract.
| State | Capital city & regional centres* | Other areas |
|---|---|---|
| New South Wales | $1,500,000 | $800,000 |
| Victoria | $950,000 | $650,000 |
| Queensland | $1,000,000 | $700,000 |
| Western Australia | $850,000 | $600,000 |
| South Australia | $900,000 | $500,000 |
| Tasmania | $700,000 | $550,000 |
| Territory | All areas |
|---|---|
| Australian Capital Territory | $1,000,000 |
| Northern Territory | $600,000 |
| Jervis Bay Territory & Norfolk Island | $550,000 |
| Christmas Island & Cocos (Keeling) Islands | $400,000 |
*Regional centres include (at time of writing) Illawarra / Newcastle & Lake Macquarie (NSW), Geelong (VIC), and Gold Coast / Sunshine Coast (QLD).
Cash you’ll need (deposit + costs + buffer)
Your “deposit target” is only part of the story. The buyers who feel comfortable after settlement plan a full cash stack:
- Deposit: 5% / 10% / 20% (or 2% in eligible single parent cases).
- Upfront costs: conveyancing, building & pest, strata report, valuation fee (if charged), movers, connections, insurance.
- Government costs: stamp duty (if applicable) and transfer/registration fees.
- Buffer: emergency fund + “settlement wobble” money (because unexpected costs happen).
Reality check: if you use every dollar you have as deposit, you can end up “house rich, cash poor”. A smaller deposit with a healthy buffer is often less stressful than a bigger deposit with no safety net.
Use the calculator below for a quick estimate. For an approval-ready view (HECS, casual income, overtime, liabilities), speak with a first home buyer broker.
Cash needed — quick calculator (deposit + costs + stress test)
Planning tool only. It doesn’t include stamp duty or LMI. Use it to set a savings target and sanity-check repayment comfort.
Results
Enter a price to see results.
Stress-test
Need a cap/eligibility check? Use the Scheme calculator.
Deposit pathways that get approved (and why some approvals fall over)
There are multiple “deposit paths” to home ownership. The best path is the one you can actually get approved for and comfortably afford after settlement — not just the one that looks fastest on paper.
Path A: 5% deposit
Best when you’re under the relevant price cap and your income/expenses and credit conduct are clean. Low deposit can work brilliantly, but it gives you less margin for valuation issues.
- Confirm caps by postcode.
- Keep a buffer (moving + first months).
- Avoid new debts while buying.
Path B: 10–15% deposit
Often a “speed vs cost” decision. You may pay LMI (unless using a guarantee) but you can buy sooner than saving 20%.
- Decide early if paying LMI is worth it for your timeline.
- Some lenders price and assess LMI differently.
- Policy choice matters if you’re close to servicing limits.
Path C: 20% deposit
Slower to save, but often gives you the widest lender choice, lower rate options, and less stress on valuation and conditions.
- Usually avoids LMI.
- More flexibility if you plan to refinance later.
- Still plan for costs + buffer.
Gifts, guarantors and “non-standard” deposits
Many buyers use gifted deposits or guarantors. These can work — but lenders are strict about paperwork. If you’re using a gift, expect a signed gift letter and clear bank statements showing where funds came from. If you’re using a guarantor, the guarantor’s income, liabilities and property equity also get assessed.
Genuine savings (what lenders usually mean)
“Genuine savings” generally means you’ve demonstrated a consistent ability to save over time (not just received a last-minute lump sum). Some lenders accept rent history as a strong indicator, others are stricter. If you’re close to an approval line, the right lender policy can matter.
Borrowing power — what actually moves it (and what lenders quietly dislike)
Borrowing power is not just your income. It’s a combination of: income type, expenses, debts, dependants, and each lender’s internal rules. Two lenders can look at the same payslips and produce different results.
Things that commonly reduce borrowing power
- HECS/HELP: often treated as an ongoing expense.
- Credit card limits: lenders assess limits, not balances (a “$10k limit” can hurt even if you owe $0).
- BNPL and personal loans: even small repayments can reduce servicing.
- Overtime/bonuses: may be shaded or averaged depending on history and industry.
- Probation/casual income: some lenders require longer history or industry consistency.
What helps borrowing power (legitimately)
- Reduce or close unused credit card limits.
- Keep bank conduct clean and stable for 3–6 months before applying.
- Document income properly (group certificates, payslips, employment letters where needed).
- Be realistic with living expenses (understating them can backfire).
- Choose a lender whose policy matches your income type (casual, overtime, self-employed).
If you’re close to a servicing limit, policy choice is where a broker can add a lot of value.
Pre-approval (done properly): your buying permit
A strong pre-approval is the difference between “shopping confidently” and “hoping it works out”. Done properly, it’s based on real documents and realistic assumptions — not a quick web form.
What pre-approval is (and what it isn’t)
- It is: a lender’s conditional approval based on your verified income, liabilities and credit checks.
- It isn’t: a guarantee. Valuation, property acceptability, and changes in your situation still matter.
Treat pre-approval like a “buying permit” with conditions: keep your finances stable until settlement.
Documents that make approvals smoother
- Recent payslips + employment letter (if required)
- Bank statements showing savings history and deposit source
- Statements for debts (credit cards, car loans, HELP if relevant)
- ID documents
- Evidence for bonuses/overtime (history matters)
Pro tip: avoid new credit enquiries while house hunting. Even “0% interest” deals can change the outcome.
Choosing the property (due diligence that protects you)
Most first-home buyer stress happens after an accepted offer because buyers discover something late: a strata issue, building defect, valuation shortfall, or contract condition they didn’t understand. You don’t need to be a property expert — you just need a due diligence checklist.
Before you go unconditional
- Contract review: have a conveyancer/solicitor review key clauses and special conditions.
- Building & pest: where appropriate (especially houses, older builds, renovations).
- Strata report: for apartments/townhouses — look for defects, cladding issues, special levies, insurance costs.
- Insurance check: confirm the property is insurable at a reasonable premium.
- Bank acceptability: some properties are harder to lend against (small studios, unusual titles, high-risk postcodes, etc).
Common “first home buyer” traps
- Assuming the lender will accept any property: they won’t. Some have strict rules for high-density buildings and small floor areas.
- Not budgeting for strata: levies can materially change affordability.
- Renovation optimism: banks assess what exists today, not what you plan to do later.
- Valuation surprises: paying above comparable sales can trigger a shortfall you must fund in cash.
If you want, we can pre-check the lender appetite for the type of property you’re targeting.
Auctions vs private treaty — how to avoid expensive mistakes
Private treaty (offers / negotiation)
Private treaty is usually more forgiving for first home buyers because you can negotiate conditions: finance, building & pest, longer settlement, smaller deposit (sometimes), and time for review.
- Ask for contract review time.
- Make conditions clear in writing.
- Don’t waive finance unless you’re truly ready.
Auction
Auctions remove your safety rails. In many cases there’s no cooling-off and you’re expected to pay a deposit immediately. If you’re a first home buyer, you must do the work before auction day.
- Have a broker strategy ready (lender + caps).
- Have the contract reviewed.
- Confirm deposit amount and settlement terms.
Important: If you’re aiming to pay a 5% deposit at auction, that usually needs to be agreed in writing with the vendor/agent before the auction. Never assume.
A simple 4-week game plan (repeatable and low-stress)
This plan is designed for first home buyers who want speed without chaos. You can stretch it to 6–8 weeks if you prefer a slower pace.
Week 1: clarity & caps
- Define your buy box (location, property type, timeframe).
- Confirm your likely price cap (if using a scheme).
- Build your cash stack: deposit + costs + buffer.
Week 2: pre-approval properly
- Gather documents and submit to the right lender policy.
- Confirm deposit source requirements (gifts/guarantor).
- Get a clear “max price” and a comfort repayment number.
Week 3: property due diligence
- Inspect, shortlist and compare like-for-like sales.
- Contract review + building/pest/strata as needed.
- Confirm insurance and lender acceptability where relevant.
Week 4: offer, contract, settlement prep
- Negotiate terms (private treaty) or final checks (auction).
- Keep finances stable: no new debts, no big unexplained transfers.
- Line up conveyancing, insurance, and settlement logistics.
Contract → settlement: the non-negotiables (so you don’t get trapped)
Once you sign a contract, the process becomes time-sensitive. The biggest risk is going unconditional before you’ve ticked the essentials.
Do these before you go unconditional
- Confirm finance strategy (lender, product, deposit source).
- Get contract reviewed (special conditions matter).
- Complete inspections (building/pest/strata as needed).
- Understand settlement costs and adjustments (rates, strata, water).
What to avoid during approval
- New credit applications (cards, car finance, BNPL).
- Job changes without telling your broker/lender.
- Large cash withdrawals or unexplained transfers.
- Letting accounts go into overdraft or missed payments.
If something changes, call early. Most problems are solvable when you act fast.
Repayments, buffers & offsets — the “stay comfortable” setup
The most common “first home buyer regret” is taking a loan that’s technically affordable but feels tight. Comfort comes from structure: a buffer, an offset, and a repayment plan that matches your pay cycle.
Offset account
An offset reduces interest on your loan balance while keeping cash accessible. Many first home buyers use offset as their “buffer home”.
Split loans
Part fixed, part variable can give you certainty plus flexibility. Useful if you want stable repayments but still want an offset.
Stress-test habits
If you can comfortably afford repayments at a higher rate, you’re protected if rates rise. Use the buffer tool in the calculator above.
If you want help choosing structure (offset vs split vs fixed), that’s part of what we map in a first home buyer plan.
Worked scenarios (indicative examples)
Prefer a “real scenario” style example? Read: Tarneit first home buyer case study.
Scenario 1: 5% pathway on $650k
- Price
- $650,000
- Deposit
- $32,500 (5%)
- Loan
- $617,500
- Other costs
- $3,500 (example)
Strong fit when caps and eligibility align and your income/expenses are clean. Keep a buffer for the first 3–6 months.
Scenario 2: 10% deposit on $850k
- Price
- $850,000
- Deposit
- $85,000 (10%)
- Loan
- $765,000
- Note
- LMI may apply (if not using a guarantee)
Works when income is strong but you’re still building savings. Decide early if paying LMI for speed is worth it for you.
Scenario 3: 20% deposit on $550k
- Price
- $550,000
- Deposit
- $110,000 (20%)
- Loan
- $440,000
- Note
- Typically avoids LMI
Slower path, but often lower repayments and more lender choice. Helpful if you want flexibility later (refi, investment plans).
What “good” looks like
A good plan is one where (1) you’re under the relevant cap if using a program, (2) your deposit source is clean and documentable, (3) your buffer repayment is comfortable, and (4) you’ve priced non-deposit costs and kept an emergency buffer.
Tools & next reads (to keep momentum)
Tools
- First Home Buyer Scheme calculator (caps + pathways)
- Mortgage repayment calculator
- Max Borrowing Calculator (savings → max purchase price)
Helpful guides
- First home buyer broker (what we do + what to prepare)
- Best suburbs in Geelong (first home buyers)
- Best suburbs in Ballarat (first home buyers)
If you want help mapping your specific plan, use the form above and we’ll confirm lender fit before you commit to a contract.
First home buyer FAQs
How much deposit do I need to buy my first home in Australia?
Many buyers aim for 20% to avoid LMI. Others buy sooner with 10–15% and pay LMI (unless they’re using a guarantee program). Some eligible buyers can purchase with 5% (or in limited cases 2%) under a guarantee pathway with LMI waived. The right deposit depends on your income, expenses, location caps (if using a program), and affordability at a buffer rate.
Does HECS/HELP reduce borrowing power?
Often yes. Many lenders treat HELP repayments as an ongoing expense that reduces capacity. Policy differs by lender and can change over time. If you have HELP and you’re close to your limit, choosing the right lender policy can materially change your borrowing result.
Do I pay stamp duty as a first home buyer?
It depends on your state or territory and the property value and type. Some first home buyers pay $0 duty below certain thresholds, and some receive concessions. Always check your state revenue office calculator before exchanging contracts.
Can I buy at auction as a first home buyer?
Yes, but auctions remove your safety rails. You generally need your finance strategy ready, your contract reviewed, and your deposit rules confirmed before auction day. If you’re trying to pay a 5% deposit, that usually needs to be agreed in writing with the vendor/agent before the auction.
What’s the best loan structure for a first home buyer?
Many buyers choose variable with offset for flexibility, or a split loan (part fixed, part variable) for certainty plus flexibility. The best structure depends on your risk tolerance, cash flow, and future plans (e.g. renovations, kids, investment).
What should I avoid doing during approval and settlement?
Avoid new credit applications, new car finance, BNPL sign-ups, large unexplained transfers, and job changes without telling your broker. Keep bank conduct clean and stable. If something changes, call early — solutions exist when you act fast.
How do property price caps work under the 5% Deposit Scheme?
Caps are location-based and you generally need to be at or below the cap for your area. In many cases both the contract price and the lender’s assessed value must stay at or below the cap. Use the official postcode tool to confirm the cap for the specific location you’re buying in.
Can I use FHSS or Help to Buy and still get a normal home loan?
Potentially, yes — but rules and eligibility vary. FHSS is a way of building a deposit using super contributions. Help to Buy is a shared equity scheme with its own caps and participation rules. If you’re considering either, confirm the pathway early so your lender choice and timeline match the program requirements.
Last updated: 15 Feb 2026. Program settings, stamp duty rules and lender policies can change — we confirm at application time.
Disclaimer: This guide is general information only. It doesn’t take your personal objectives or financial situation into account. Please obtain independent advice before acting.