COMPLETE AUSTRALIAN FIRST HOME BUYER GUIDE
Buying your first home in Australia: the complete guide from deposit plan to settlement.
Your first purchase has to work through deposit, costs, government support, income policy, serviceability, credit, property, valuation, contract conditions and settlement. This guide explains the decisions in the order they arise, shows why lender answers can differ and helps you prepare before an offer or auction makes the plan difficult to change.
deposit and genuine savingscurrent schemes and dutyfirst-home lender policycontract-to-settlement process
General information only. This guide does not confirm scheme eligibility, calculate borrowing capacity, recommend a lender, predict approval or replace credit, financial, tax, conveyancing or legal advice. Government and lender rules must be confirmed for the actual buyer, property and contract. Last substantive review: 10 August 2026.
A first-home approval is a purchase plan that survives every gate—not simply a deposit percentage.
What does a first-home buyer need to prove?
You need to show that the total transaction is funded, the source of every dollar is acceptable, the proposed debt passes current servicing, your credit and account conduct are acceptable, and the selected property fits the lender and any government program. The contract then has to leave enough time and protection for valuation, formal approval, inspections, legal review and settlement.
That is why a buyer with a larger deposit can still be declined, while a buyer using a smaller-deposit pathway can succeed with a clean, well-documented file. The deposit is one gate. Income recognition, liabilities, expenses, property and execution are separate decisions.
Fund the whole transaction
Plan the deposit, duty, registration, conveyancing, reports, insurance, moving costs, adjustments and a post-settlement buffer. The contract deposit is not the same as the lender contribution or total funds to complete.
Choose the pathway for the real file
A 5% scheme application, standard insured loan, guarantor loan and 20% deposit purchase can use different genuine-savings, property and servicing rules.
Keep the security inside the approval
The valuation, title, size, postcode, condition, strata and marketability can change LVR or make a property unacceptable after the buyer is otherwise approved.
Guide boundary
This page owns the end-to-end first-home purchase journey. The Home Loan Guide explains general loan products and features; the Construction Guide owns detailed land-and-build finance; and the service page owns personalised lender review.
First-home buyers are a material part of new housing credit—but market totals do not tell one buyer what is affordable.
March quarter 2026 — number
March quarter 2026 — value
Seasonally adjusted, March quarter 2026. Figures are rounded from Australian Bureau of Statistics Lending Indicators. They describe approved commitments, not buyer affordability, settlement success or future prices.
First-home demand is substantial
About 30,000 first-home buyer commitments were recorded in the quarter. That scale supports dedicated products and government pathways, but availability and turnaround can vary by lender.
Average loans are not your budget
A national commitment value combines different states, property types, deposits and incomes. It should never be converted into a target purchase price for one household.
Use data after the household budget
Start with available cash, comfortable repayment, lender-assessed income and realistic property costs; use market statistics only as context.
A first-home purchase can pass the calculator and still fail at deposit evidence, property, contract or settlement.
Purpose and buyer pathway
Confirm owner-occupation, first-home status for the relevant scheme or concession, applicant structure and whether the purchase is established, new, off-the-plan, land-and-build or another property type.
Deposit and funds to complete
The lender separates the contract deposit, borrower contribution, genuine savings, government support, transaction costs and retained cash.
Income recognition
Base salary, casual hours, overtime, commission, parental-leave income and self-employed profit are recognised under different evidence and history rules.
Serviceability
Recognised income is tested against the proposed mortgage at a higher assessment rate, living expenses, dependants, HELP, cards, BNPL and other liabilities.
Credit and account conduct
Credit enquiries, repayment history, arrears, hardship, overdrafts and unexplained account behaviour can affect approval or the appropriate pathway.
Property and valuation
The lender must accept the value, title, size, location, condition, building, strata and intended use. Scheme price caps are a separate test.
Program, insurer and product rules
A government-supported or insured loan can add price caps, participating-lender rules, genuine-savings tests, property restrictions and ongoing occupancy obligations.
Contract and conditions
Finance, valuation, inspections, legal review, auction rules, settlement date and deposit timing must be coordinated before the contract becomes unconditional.
Documents and settlement execution
Approval can still stall when evidence expires, loan documents are incorrect, insurance is missing, grant forms are late or final funds do not reconcile.
Passing eight gates is not enough
A scheme reservation does not override lender credit policy. A strong pre-approval does not make every property acceptable. A satisfactory valuation does not solve missing funds or an expired contract condition.
The question is not “How much deposit do I have?” It is “How much cash remains after every cost and the first months of ownership?”
| Budget layer | What to include | Why buyers miscalculate it | Control |
|---|---|---|---|
| Contract deposit | Amount payable to the agent or stakeholder under the contract. | It can be negotiated separately from the lender-required contribution and does not represent all funds needed at settlement. | Confirm amount, due date and source before signing. |
| Borrower contribution | Cash/equity the lender requires toward price and approved costs. | A government guarantee can reduce the deposit needed but does not pay the buyer’s costs. | Separate price contribution from grants and costs. |
| Property duty and government fees | Transfer duty, transfer/registration and mortgage registration fees. | First-home relief varies by jurisdiction, value, property type, contract date and occupancy. | Use the current revenue authority or governed duty calculation. |
| Advice and due diligence | Conveyancing/legal review, building and pest, strata, valuation or specialist reports. | Buyers often omit reports until after the contract is signed. | Keep a pre-contract and post-contract cost allowance. |
| Settlement adjustments | Rates, water, owners-corporation or other apportioned outgoings. | The exact figure is known close to settlement, not when saving begins. | Hold an adjustment allowance outside the deposit. |
| Move and first-home setup | Insurance, movers, connections, urgent repairs, basic furnishings and maintenance. | It is easy to treat these as future spending even when they fall due immediately. | Prioritise essential costs and delay optional spending. |
| Post-settlement buffer | Cash retained for emergencies, rate changes and property surprises. | Using every dollar can produce a technically approved but fragile purchase. | Set a minimum retained-cash target before choosing price. |
A lower deposit does not automatically mean lower cash safety
A 5% pathway can avoid LMI for an eligible buyer, but the buyer still needs costs, a valuation-shortfall response and enough cash to live safely after settlement. Treat the minimum deposit as an entry condition—not the recommended amount to spend.
A 5%, 10% or 20% deposit changes leverage, pricing, insurance, evidence and resilience—but it does not define the whole approval.
Eligible single parent/legal guardian pathway
The current Australian Government scheme includes a 2% minimum-deposit stream for eligible single parents or legal guardians. Owner-occupation, property caps, participating lender and normal credit rules still apply.
Australian Government 5% Deposit Scheme
Eligible buyers may purchase with at least 5% deposit and no LMI while the guarantee applies. Since October 2025 the first-home stream has no income cap or place limit, but location price caps and lender approval remain.
Standard high-LVR purchase
Outside a guarantee, mortgage insurance or another risk fee can apply. Genuine-savings evidence and insurer rules commonly become more important above about 90% LVR.
Middle deposit path
Can reduce LMI and valuation sensitivity compared with a 5% standard loan while allowing a buyer to enter before reaching 20%. Pricing and insurer treatment remain lender-specific.
Conventional lower-LVR path
Usually avoids LMI and broadens product choice, but waiting has its own rent and market costs. A larger deposit should not eliminate the emergency buffer.
Family-supported path
A limited family guarantee can substitute security support for part of the deposit at selected lenders. It creates legal and family risk and needs a clear release strategy rather than an indefinite guarantee.
Compare time, cost and risk—not only LMI
Paying LMI can sometimes be rational if it allows a well-prepared buyer to purchase earlier without exhausting cash. Waiting can be stronger when income evidence, conduct, price or buffer is not ready. Model both paths rather than treating 20% as a moral target.
Buying with less than 20% is not one pathway—it is a choice between insurance, government support, family security and selected professional policy.
The deposit percentage is only the visible part of a high-LVR transaction. The deeper decision includes who carries the risk, which property types remain acceptable, what genuine-savings test applies, how the valuation is treated and what happens if the buyer needs to sell or change the loan early.
| Pathway | What can reduce the upfront barrier | Policy features that commonly matter | What it does not solve |
|---|---|---|---|
| Australian Government 5% Deposit Scheme | Eligible first-home buyers can purchase with a minimum 5% deposit without paying LMI; eligible single parents or legal guardians can have a 2% minimum-deposit stream. | Owner-occupation, citizenship or permanent residency, price cap, acceptable property, participating lender, principal-and-interest repayment after any permitted construction period, genuine contribution and ongoing scheme obligations. | The lender still applies its credit, serviceability, property and valuation rules. The guarantee is not cash for duty, legal costs or a valuation shortfall. |
| Standard high-LVR loan with LMI | Some mainstream and non-bank pathways can lend above 80% where mortgage insurance or a lender risk fee is approved. | Insurer and lender credit score, genuine savings, employment, property type, postcode, loan amount, debt-to-income position and clean conduct. Maximum settings can reach roughly 90%–95% for strong standard files, but many exceptions pull the available LVR lower. | LMI protects the lender rather than the buyer, does not transfer automatically to another lender and can increase the balance or upfront cost. |
| Family-security guarantee | A limited guarantee over a family member’s acceptable property can reduce the buyer’s cash contribution or avoid LMI. | Acceptable relationship, guarantor equity, first- or second-mortgage position, legal advice, guarantee limit, existing debts and guarantees over the support property, and a workable release strategy. | The buyer must usually service the whole debt in their own right. The arrangement places the guarantor’s property at risk and can restrict the guarantor’s future borrowing. |
| Professional LMI waiver | Selected medical, legal, accounting and other professional categories can receive an LMI waiver at higher LVRs under particular policies. | Recognised occupation, registration or membership, minimum income, maximum loan, acceptable property and credit profile. Some pathways sit around 85%–90%; selected professions and products can extend higher. | It is not universal, is not automatically the cheapest loan, and may not combine with a government guarantee or family guarantee. |
| Shared-equity program | Help to Buy can reduce the buyer’s loan by contributing up to 30% of an existing-home price or 40% of a new-home price, with a 2% minimum deposit. | Citizenship, indexed income limits, property cap, participating lender, owner-occupation and the ongoing rights and obligations attached to the Commonwealth equity share. | The government retains an equity interest. The buyer must understand sale, improvement, buy-back and ongoing reporting rules as well as the lender approval. |
Genuine savings and high LVR
Across the reviewed policy material, a genuine contribution of around 5% was common where the base LVR exceeded 90%, and three months of savings history appeared frequently. Some pathways accepted six months of clean rental history as an alternative demonstration of payment discipline. Gifts, grants, sale proceeds and FHSS releases can be valid funds to complete without automatically satisfying every genuine-savings rule.
Valuation risk is amplified at a small deposit
Where a buyer contributes only 5%, even a modest valuation below the contract price can consume the entire buffer. Government scheme rules use the lender’s value, not merely the agreed price. The buyer should therefore understand in advance whether the lender will reduce the loan, whether the scheme cap also uses value, and what extra cash would be needed.
High LVR is not automatically high risk—but it leaves less room for error. A carefully chosen 5% pathway with stable income, a standard property and retained savings can be stronger than a 10% purchase that uses every dollar and relies on uncertain income. Compare the complete file rather than ranking pathways only by deposit size.
Lenders can accept the same money as funds to complete but disagree on whether it proves genuine savings.
| Source | How it can be treated | Typical evidence | Where policy differs |
|---|---|---|---|
| Cash saved over time | The clearest genuine-savings source. | Around three months of statements is common at higher LVRs, with the account in the buyer’s name and transactions visible. | Document-age limits, acceptable account types and the LVR trigger vary. |
| Term deposits or listed investments | Can be accepted as savings where ownership and value are clear. | Current statement, holding evidence and sale/settlement evidence if converted to cash. | Some policies require the asset to have been held for a minimum period. |
| Gift | Can form part of funds to complete but may not count as genuine savings. | Gift letter or statutory declaration, donor relationship and bank trail; any repayment obligation must be disclosed. | Some first-home/high-LVR paths accept rent history or another test when the cash itself is gifted. |
| Rental history | Can demonstrate payment discipline and substitute for a holding-period test under selected first-home policies. | Commonly three months of agent ledger or clearly identified rent payments. | It does not create the cash contribution; it only supports the savings-history assessment. |
| FHSS release | Eligible released voluntary super contributions can be accepted toward the purchase. | ATO determination/release evidence and settlement timing. | The amount and timing must reconcile before formal approval and settlement. |
| Grant or duty saving | Reduces cash required or provides settlement funds under the applicable rules. | Authority/approved-agent evidence and contract/property eligibility. | A grant may be funds to complete but not genuine savings under a particular lender/insurer test. |
| Sale of an asset or inheritance | Can be accepted with a clear ownership and transaction trail. | Sale documents, prior ownership, bank credit or estate documentation. | Some high-LVR policies require the funds to be held for a period before being treated as genuine savings. |
| Borrowed deposit | Adds a liability rather than genuine equity. | Loan contract, repayment and purpose disclosure. | Often unacceptable as genuine savings and can reduce serviceability materially. |
The file must tell one consistent money story
The application, bank statements, contract deposit, scheme forms and settlement statement should reconcile. Large unexplained transfers, money briefly parked in the account or a “gift” that is actually repayable can delay or undermine the application.
Government support changes the deposit or ownership structure; it does not replace lender approval.
Government guarantee to the lender
The first-home stream supports eligible owner-occupiers with at least 5% deposit, property at or below the location cap, and a participating-lender principal-and-interest loan. The buyer generally must be a first-home buyer or not have owned Australian property/land in the previous 10 years.
Single parent or legal guardian
An eligible single parent or legal guardian may have a 2% minimum-deposit path. The household still needs full transaction costs and must meet property, occupancy and lender credit rules.
Save through voluntary super contributions
The First Home Super Saver scheme allows eligible voluntary contributions to be released, subject to an annual eligible contribution limit of $15,000 and a total eligible contribution limit of $50,000, plus associated earnings under the tax rules.
Shared equity rather than a guarantee
Eligible applicants can contribute at least 2% while the Government may contribute up to 30% for an existing home or 40% for a new home. For 2026–27, the taxable-income limits are $103,000 for a single applicant and $165,000 for joint applicants or a single parent/legal guardian, with property caps and ongoing owner-occupation/equity obligations.
Participation and credit remain separate
A buyer can appear to meet the public scheme rules yet be outside a participating lender’s serviceability, property, credit or document requirements.
Reservations, releases and contracts must align
Scheme place/reservation, FHSS release, contract date, land/build timing and settlement deadlines can interact. Confirm the sequence before making an unconditional offer.
Do not combine public eligibility rules into a personal conclusion
Citizenship/residency, prior ownership, property caps, occupancy, applicant structure and participating-lender rules must be checked against the current official program and the actual contract. Use the scheme calculator as a planning tool, then obtain authority/lender confirmation.
The national deposit pathway and state transaction costs are separate systems.
Transfer duty, first-home concessions and first-home owner grants are administered by each state or territory. The relevant value can be the dutiable value rather than simply the advertised price, and contract date, occupancy, property type, prior ownership and purchaser details can change the result. A concession can reduce the cash needed without changing the lender’s serviceability assessment.
First-home duty relief example
For an eligible Victorian first-home purchase, the current settings include a full exemption up to $600,000 and a concession from $600,001 to $750,000, subject to purchaser and principal-residence conditions.
Victorian First Home Owner Grant example
The Victorian grant is currently $10,000 for an eligible new home up to $750,000, with principal-residence and other statutory conditions. It is not a general grant for established homes.
Other concessions can interact
Victoria also has a principal-place-of-residence concession up to its current value threshold and other concessions. Where more than one benefit could apply, the legal choice and interaction should be confirmed.
Contract-date and construction rules matter
Off-the-plan concessions can depend on the contract date, construction stage and vendor calculation. A marketing estimate should not replace conveyancer or revenue-authority confirmation.
Every jurisdiction differs
Do not use a Victorian threshold for a purchase in another state. Use the current state/territory revenue authority and the actual transaction structure.
Use the governed duty calculation
Rate Challenge’s property-duty engine is maintained against current jurisdiction rules and official revenue-authority sources. Treat its result as an estimate and confirm with the revenue authority or conveyancer before exchange.
Duty must be in the purchase budget before an offer
A buyer can be under a scheme price cap and still owe duty. A buyer can receive duty relief but still fail the lender’s genuine-savings or serviceability test. Keep these calculations separate and then reconcile them into the final funds-to-complete position.
The lender tests a larger repayment than the one shown in the product advertisement.
What is the serviceability buffer?
APRA-regulated banks assess new mortgage borrowing with at least a three-percentage-point buffer above the loan rate or a policy floor. The buffer is an approval test, not the borrower’s actual repayment. A first-home buyer should also run a personal comfort test that includes rates, insurance, maintenance, strata and the loss of rental flexibility.
| Input | Broad treatment that can appear | First-home effect |
|---|---|---|
| Credit cards and lines of credit | Often loaded at about 1.5%–5% of the approved limit each month, with roughly 3%–3.8% common. | An unused $10,000 limit can matter even when the balance is zero. Closing/reducing limits can improve the result after evidence updates. |
| BNPL and short-term credit | Can be treated as an actual repayment, living expense, personal-loan commitment or card-style loading. | Several small facilities can reduce the surplus and create conduct questions. |
| HELP/HECS | Most lenders model the statutory repayment from income; treatment can differ when the debt is demonstrably close to full repayment. | The payslip deduction is not always the exact commitment used in the lender calculator. |
| Living expenses | Generally the higher of declared/verified spending and a household benchmark, with bank-statement review commonly covering one to three months. | Understating spending can create more questions rather than more capacity. |
| Dependants and future costs | Dependants influence benchmarks; known childcare, schooling or other changes can need explanation. | A plan that works before the move can become tight after ownership costs begin. |
| Loan term | Thirty years is the mainstream centre; a longer term can lower the assessed repayment but increases interest and can trigger age/exit questions. | Use the longest term only deliberately and set a repayment plan after settlement. |
| High DTI | From 1 February 2026, APRA allows each ADI to fund up to 20% of new owner-occupied lending at DTI of six times or more. New-dwelling purchase/construction loans are excluded from APRA’s limit, while lender credit policy still applies. | This is a system-level portfolio limit, not a personal borrowing entitlement or universal decline point. High leverage can still narrow the lender set. |
Approval capacity and comfortable capacity are different
The lender’s model determines whether the credit proposal fits policy. The household still decides whether repayments and ownership costs are comfortable after allowing for realistic life changes and a retained cash buffer.
A first-home application can be affordable and still fail because the recent money behaviour does not support the story.
Lenders can use the credit report, comprehensive repayment-history data, account statements and open-banking data. They are looking for both the formal credit events and the day-to-day pattern that shows whether the declared budget is believable.
The unused limit can matter more than the balance
Credit cards and lines of credit are commonly loaded from the approved limit, often somewhere around 1.5%–5% per month and frequently near 3%–3.8%. A $15,000 limit can therefore reduce servicing even when the latest statement is paid in full.
Small facilities can change both expenses and credit assessment
Buy-now-pay-later, wage advances and short-term facilities can be treated as a repayment, a living expense or a card-style commitment. Repeated use close to application can suggest that the monthly budget is tighter than declared.
One late payment is not the same as a pattern
Mortgage, personal-loan and card conduct can be reviewed over roughly three to 12 months. Some policies require entirely clean conduct; others can consider a limited late event where the cause is clear, resolved and not part of continuing stress.
Returned payments and repeated overdraws need explanation
Occasional timing errors may be explainable, but recurring dishonours, unpaid fees, persistent negative balances or regular transfers from credit to cover living costs can undermine the declared spending position.
Several applications can create avoidable friction
Each formal application can add a credit enquiry. A cluster of recent enquiries, new cards or personal loans can trigger questions about undisclosed commitments or financial pressure. Shortlist the policy before lodging.
Recovery evidence matters more than hiding the event
After hardship, lenders commonly want the current contractual repayment, completion evidence and a clean recovery period. Depending on severity and pathway, the stable period can sit broadly around six to 24 months.
What a cleaner first-home file looks like
- Every credit facility is declared, including facilities with a zero balance.
- Unused limits are reduced or closed only where that suits the buyer’s broader needs.
- Salary, rent and savings transfers are easy to identify in the statements.
- Large deposits and withdrawals have a documented source and purpose.
- Overdraws, returned payments or one-off credit events have a short factual explanation.
- No new car finance, card or BNPL limit is taken after pre-approval without review.
- The declared living expenses reconcile with actual account activity.
- The deposit and settlement buffer remain untouched and traceable.
Gambling transactions require context, not assumptions
The presence of gambling activity is not a universal automatic decline. The amount, frequency, impact on savings and whether the spending is funded from credit or causes account stress are what usually make it relevant. A buyer should disclose the real pattern and reduce discretionary risk before application rather than trying to conceal it.
The amount on the latest payslip is not automatically the amount used in the first-home assessment.
| Income type | What lenders usually investigate | Policy range and preparation |
|---|---|---|
| Permanent PAYG | Status, time in role, base pay, year-to-date consistency and salary credits. | Current-employer requirements can run from no minimum to about six months. If the role is new, 12–24 months of same-field continuity can strengthen the explanation. |
| Probation / recent job change | Remaining probation, permanent status, occupation and prior continuous history. | Some policies accept immediately; others want probation completed, particularly without roughly 12–36 months in the same field. Keep the contract and prior employment evidence. |
| Casual | Current tenure, average hours, year-to-date income and seasonal pattern. | Around three to 12 months in the current role is common; stricter files can need 12–24 months of wider industry continuity. Provide enough payslips to show the full pattern. |
| Fixed-term contract | Expiry, remaining term, renewals and occupation continuity. | Current-role evidence often sits around three to 12 months, with 12–24 months of contracting history useful where the contract is short. |
| Overtime | History, consistency, essential-services status and trend. | Recognition can range from about 50% to 100%, with 80% common, using roughly three to 24 months of evidence. |
| Bonus / commission | Frequency, discretion, prior-year average and current year-to-date. | Recognition can range from about 50% to 100%, with 80% common and 12–24 months often expected. Strong growth may be capped near 120% of the prior year. |
| Parental leave | Return date, hours, return income, paid/unpaid period, dependants and resources during the gap. | Return windows commonly sit around three to 12 months; roughly 50%–100% of confirmed return income can be considered depending on evidence and savings. |
| Foreign income | Currency, country, tax, conversion, bank credits and employment evidence. | Accepted proportions can range about 50%–100%, with 70%–90% common; restricted paths can cap LVR around 70%–80%. |
Build the price range on repeatable income
The safest first-home budget should not depend on the best recent pay cycle. Test the purchase if variable income is recognised at 80%, averaged over a longer period or reduced to the lower year.
Income can be regular and real without being used in full—or used at all—by every lender.
First-home buyers often rely on a combination of salary, family payments, child support, second jobs, allowances or salary packaging. These income streams can be important, but lenders differ on evidence, continuation and the maximum share of total servicing income they will allow.
| Income source | General policy range or evidence pattern | What commonly changes the answer | Preparation |
|---|---|---|---|
| Family Tax Benefit | Some lenders use 100% of verified ongoing payments; others cap government benefits to roughly 20%–50% of total servicing income or do not accept a particular component. Three to six months of credits and continuation for about five years are common tests. | Age of the youngest child, whether the amount is current and stable, future eligibility, and how much of the application depends on the payment. | Current Centrelink statement showing the payment and future/ongoing entitlement, plus transaction history where requested. |
| Parenting Payment | Policy ranges from unacceptable through to full use where regular, evidenced and expected to continue. Some lenders apply a percentage or total-income cap. | Partnered or single status, youngest-child age, return-to-work plan, payment history and other household income. | Current government statement, three to six months of credits and a conservative budget for the point at which the payment reduces or ends. |
| Child maintenance | Selected policies can use up to 100% where payments are registered, regular and likely to continue; other policies apply a cap or exclude informal payments. Three to six months of receipt and three to five years of continuation commonly matter. | Registered agreement or court order, payment consistency, child age, arrears and dependence on the income. | Agreement/order, current statement and clear transaction history in the borrower’s account. |
| Second job | Can be accepted where the work is sustainable, commonly after about three to 12 months. A longer history can be requested when hours are irregular or the combined workload appears difficult to maintain. | Time in role, same occupation, roster stability, tax evidence and whether the second job began only to qualify for the loan. | Separate payslips, year-to-date income, salary credits and a realistic explanation of ongoing hours. |
| Allowances and penalties | Fixed, recurring allowances can be used more favourably than reimbursements. Variable penalties and shift loadings can be recognised from roughly 50% to 100%, with about 80% common where history is stable. | Purpose of the allowance, whether a matching expense exists, consistency and evidence period. | Employment contract or employer letter, payslip history and separation of base salary from variable components. |
| Salary sacrifice / packaging | Voluntary components may be added back where the borrower can stop them, while compulsory commitments and novated leases remain expenses or liabilities. | Whether the arrangement is cancelable, tax treatment, vehicle or benefit commitment, and net cash flow. | Packaging statement and employer confirmation showing each component and cancellation rights. |
Use the income only where the purchase remains resilient
A lender may accept an income source that is due to reduce in several years. The household should still understand what the repayment looks like after that reduction. First-home ownership introduces rates, insurance, maintenance and possible childcare changes that can arrive before the loan balance has fallen materially.
Evidence freshness can hold up settlement
Government statements, employer letters and payslips commonly need to be recent—often within roughly 30–60 days. A long property search can therefore require updated evidence even when the underlying income has not changed.
A strong business can produce several different usable-income answers.
Trading period and evidence path
Full-document assessment commonly uses one or two completed financial years and often works best after roughly 18–24 months of trading. Selected alternative paths can start around six months but normally use more equity and stronger credit.
Latest year, average or lower year
One lender may use a supported latest year, another a two-year average, and another the lower year. Growth can be capped where sustainability is unclear.
Non-cash and one-off expenses
Depreciation, interest on debt changing at settlement, director wages and genuine one-off costs can be considered differently and must not be counted twice.
Business commitments remain relevant
Vehicle finance, tax debts, working-capital facilities, leases and guarantees can offset the benefit of accounting add-backs.
BAS and business statements
Selected paths can use about three to six months of business bank statements or six to 12 months of BAS, with broad LVR settings around 65%–90% and 75%–80% more common.
Reconcile the story before applying
Current financials, tax position, entity chart, business-debt schedule and bank conduct should support the same sustainable income conclusion.
A grant or 5% scheme does not remove income evidence
Government support can reduce the deposit barrier, but the participating lender still applies its current self-employed income, serviceability and credit rules.
A family guarantee can reduce the cash deposit or LMI requirement, but it adds another household and property to the risk.
Family guarantee policy is not universal. Many lenders do not offer it. Where available, the guarantor is commonly restricted to close family, the guarantee is limited to an agreed amount rather than the whole loan, and both properties are valued. The borrower must usually service the debt in their own right, while the guarantor needs independent legal advice and must understand how the guarantee affects future borrowing and security.
| Decision | What to confirm | Why it matters |
|---|---|---|
| Relationship | Which family members are accepted and whether all owners of the support property must guarantee. | A willing relative may still sit outside policy. |
| Guarantee limit | The amount needed to bring the effective supported portion within the required LVR. | A limited guarantee reduces exposure compared with guaranteeing the whole debt. |
| Security equity | Accepted value, mortgage balance and available equity in the guarantor property. | The guarantor property may already secure debts or have insufficient free equity. |
| Borrower servicing | Whether the buyer can meet repayments without relying on the guarantor’s income. | Security support does not usually solve an unaffordable loan. |
| Release plan | Target LVR, repayment/equity milestone, valuation cost and release process. | The guarantee can remain longer than expected if values fall or the loan does not reduce. |
| Family and legal risk | Independent legal advice, default consequences, relationship changes and estate planning. | A loan problem can place the guarantor’s property and family relationship at risk. |
The release plan should exist before settlement
“We will remove the guarantee later” is not a plan. Model the loan balance and property value needed, decide who pays valuation/restructure costs and set a review date.
Putting two people on the application can strengthen the income and complicate the ownership at the same time.
Partners, siblings, friends and family members can buy together, but the lender, government program, title and private agreement all need to describe the same arrangement. Joint borrowing also creates joint responsibility for the full debt—not just each person’s preferred share.
Both borrowers are normally assessed across the whole household
Income can be combined, but so can debts, dependants, living expenses and credit history. A high-income co-buyer with large commitments may contribute less borrowing strength than expected.
Title and loan names cannot be chosen casually
Some structures allow a non-borrowing owner or spouse only under tightly controlled policy and legal arrangements; others require all adult owners to be borrowers or guarantors. Tax, relationship-property and succession advice may be needed.
Private shares do not limit the lender’s rights
Two co-buyers can agree to different deposit and ownership shares, but each borrower can remain liable for the whole loan. A co-ownership agreement should address contributions, repairs, occupation, sale, default and exit.
The household can still affect servicing
Where one partner does not borrow, lenders may still consider shared dependants, household expenses, common debts and any support the applicant provides. Government schemes can also apply their own partner or joint-applicant rules.
Scheme eligibility and lender residency policy are separate
The 5% Deposit Scheme is available to Australian citizens and permanent residents who meet its other criteria. Help to Buy requires Australian citizenship. A lender can still apply its own identification, income and residency rules.
Standard lending may exist outside a government scheme
Temporary visa policy varies widely by visa class, primary income earner, remaining term, co-borrower status and foreign-purchaser rules. Maximum LVR can be lower and foreign purchaser duty or approval requirements may apply.
Resolve the ownership agreement before the contract
A broker can explain lender structure, but cannot decide legal ownership, beneficial shares or what happens after separation, death or a forced sale. Those questions should be settled with a conveyancer or lawyer before names and shares are fixed in the contract.
Government support is applicant-specific. Under the 5% Deposit Scheme, a first-home buyer can generally apply alone or jointly with one other eligible person; both joint applicants need to meet the criteria. The single-parent/legal-guardian stream is an individual application. Confirm the exact current rules before an offer.
A useful pre-approval is a tested buying range with written conditions—not permission to buy any property.
Documents and credit assessed
A stronger pre-approval uses current income evidence, liabilities, expenses, deposit source and credit checks rather than a self-declared web form.
Read what remains outstanding
Valuation, acceptable security, updated documents, scheme reservation, insurer approval and contract review can remain conditions.
Track the approval date
Pre-approvals commonly expire and can need updated payslips, statements, rates and policy. Untitled land or a long search can move the result.
Keep finances stable
Job changes, new credit, higher card limits, BNPL, large transfers, missed payments or depleted savings should be disclosed before an offer.
Separate maximum from comfort
Ask for the lender-tested maximum, the scheme/property cap if relevant and a lower household comfort ceiling. Shop to the most conservative applicable number.
Pre-check unusual security
Small apartments, high-density projects, company title, serviced apartments, unapproved works and rural property should be checked before auction or unconditional offer.
A pre-approval is strongest when the next property is predictable
The broader and cleaner the target—standard title, accepted location, realistic value and no unusual defects—the closer the pre-approval is to the eventual application. It is never a guarantee of formal approval.
The lender approves the buyer and the security separately.
| Property issue | Broad policy difference | Buyer action |
|---|---|---|
| Contract price versus valuation | The loan is based on the lender’s accepted value. Paying above it can increase LVR and create a cash shortfall. | Model a lower valuation before the offer and keep cash outside the minimum deposit. |
| Small apartments | Minimum internal areas can range from about 25 m² to 50 m², with 40–50 m² common. Units around 25–40 m² can be limited to roughly 60%–70% LVR. | Obtain floor plan/internal area and check the building before auction. |
| High-density or specialised units | Concentration, postcode, serviced/student/short-stay use and marketability can reduce LVR or lender choice. | Identify the exact building, tenancy restrictions and strata before selecting lender. |
| Land and acreage | Standard residential settings often centre around 1,500 m² to two hectares; selected rural-residential paths extend to 10–50 hectares, often at 60%–70% LVR. | Check zoning, services, access, use and build timing before signing. |
| Title and tenure | Company title, leasehold, stratum, community title, multiple titles and short leases can need specialised assessment. | Provide title/lease information to the broker and conveyancer early. |
| Condition and approvals | Major defects, cladding, contamination, incomplete or unapproved works can reduce value, create retention or make security unacceptable. | Use legal/building due diligence and do not rely on future renovations to solve current security. |
| Strata position | Special levies, litigation, defects, insurance and high ongoing levies affect household affordability and marketability. | Read the current owners-corporation records and budget the levies in full. |
Scheme price cap and lender value are separate tests
A contract can be under the government price cap but still produce a valuation shortfall. Conversely, a valuation cannot make an over-cap contract eligible. Confirm both the program rule and lender security position.
The property type can change the lender shortlist long after the buyer has passed income and deposit checks.
First-home buyers often target apartments and new developments because of price, location or government support. These properties can be completely suitable, but they have valuation, timing and security-policy issues that do not appear in a generic pre-approval.
| Property path | Policy and valuation checks | Contract or timing risk | What to do before commitment |
|---|---|---|---|
| Established apartment | Internal area, balcony/parking treatment, high-density exposure, strata condition, cladding, short-stay or serviced use and postcode concentration. Minimum internal-area settings across reviewed policies ranged from roughly 25 m² to 50 m², with 40–50 m² common. | A property can be acceptable at 70% LVR and unacceptable or mortgage-insurer dependent at 90%–95%. | Provide the listing, floor plan, strata information and full address before auction; confirm how the lender measures internal area. |
| Off-the-plan purchase | Valuation is normally refreshed close to completion. The lender assesses the finished property, current market and borrower circumstances—not the market when the contract was signed. | Long sunset periods, deposit tied up, design changes, construction delays, scheme reservation expiry and valuation below contract price. | Have the contract legally reviewed; retain cash for a shortfall; diarise finance, scheme and valuation refresh dates. |
| Newly completed development | High concentration of identical units, developer incentives and unsettled comparable sales can affect valuation and maximum exposure. | Rebates and inclusions may not be valued dollar for dollar, and settlement can occur before all common-property issues are resolved. | Disclose incentives and obtain strata/building due diligence rather than relying only on the developer disclosure. |
| House-and-land package | The price cap and lender assessment can apply to total land plus construction. Land settlement and construction may be separate facilities with different LVR and document timing. | Untitled land, builder-price expiry, site costs, construction commencement deadlines and funds needed before first draw. | Use the Construction Guide; test the total cost, not the advertised package price; confirm scheme construction conditions. |
| Vacant land plus separate build | Land-only security can attract lower LVR and location/size controls until the build is approved. | The buyer can own land but fail to finance the proposed home later if cost, value, servicing or builder policy changes. | Have the whole land-and-build plan assessed before unconditional land purchase where possible. |
| Renovation-required home | Condition, habitability, insurance, unapproved works and immediate repair cost can affect valuation and security acceptance. | The deposit and duty can leave no cash to make the home safe or complete essential work. | Use building inspection and realistic repair quotes; keep the purchase loan separate from any renovation funding decision. |
Pre-approval never approves a postcode or building
Some lenders produce fully assessed pre-approvals, some issue system-generated indications and some do not offer pre-approval at all. Every pathway remains subject to the actual security. A buyer should obtain a property-specific policy check before an auction or unconditional offer.
Government caps can use both price and value
For the 5% Deposit Scheme, both the purchase price and the lender-assessed value must stay within the location cap. For a separate land-and-build transaction, total land price plus build costs must fit. A low valuation can therefore create both a lender-funding issue and a scheme issue.
The safer loan is the one supported by a contract that leaves enough time to finish the checks.
| Purchase method | What usually helps | Main risk | Before committing |
|---|---|---|---|
| Private treaty | Negotiable finance, building/pest and other conditions; settlement period can be discussed. | Pressure to waive conditions or offer a deposit before advice. | Have the contract reviewed and write the conditions precisely. |
| Auction | Clear deadline can focus preparation and property due diligence. | Commonly no cooling-off and no finance condition; deposit is due immediately. | Complete valuation/property checks where possible, legal review, deposit arrangement and lender strategy before bidding. |
| Off the plan | Long lead time can allow saving and potential duty concessions. | Valuation, market, income, policy and scheme rules can change before settlement; contract protections matter. | Review sunset clauses, variations, defects, finance timing and final valuation risk. |
| New build / house-and-land | Can access new-home grant or guarantee pathways where eligible. | Land and build may settle separately; caps can apply to combined value/cost and documents can expire. | Use the Construction Guide and test site costs, valuation and start timing. |
| Strata purchase | Lower maintenance burden can suit some buyers. | Defects, cladding, litigation, insurance and special levies can overwhelm a tight budget. | Obtain current strata/owners-corporation report and insurer/lender checks. |
Do not waive finance because pre-approval exists
Formal approval can still depend on the property, valuation, insurer or scheme, updated documents and contract details. Obtain legal advice on the actual clause and auction position.
The fastest first-home application is the one where the money, income and contract all tell the same story.
| File area | Common evidence | Timing and purpose |
|---|---|---|
| Identity and applicant | Current ID, residency/citizenship evidence where a scheme requires it, address and relationship details. | Names must match the contract, scheme forms and loan documents. |
| PAYG income | Recent payslips, salary credits, employment contract/letter and longer history for variable income. | Payslips and letters commonly need to be no more than about 30–60 days old. |
| Self-employed income | Tax returns, notices, financials, BAS, interim accounts, business statements and entity information. | The correct evidence path should be chosen before applying. |
| Savings and funds | Bank/term-deposit statements, gift evidence, FHSS release, grant information, asset sale or guarantor position. | Higher-LVR genuine-savings evidence commonly covers around three months. |
| Liabilities and expenses | Credit report, loan/card/BNPL statements, limits, repayments and transaction accounts. | Close or reduce facilities early enough for the updated position to appear. |
| Property and contract | Contract, vendor statement/disclosure, floor plan, strata, building/pest and property details. | Provide immediately after offer so valuation and formal approval can start. |
| Scheme / grant / duty | Declarations, prior-ownership information, price-cap evidence, occupancy forms and authority/approved-agent documents. | Reservation, release and application deadlines must match settlement. |
| Settlement | Loan documents, insurance, final funds, conveyancer statement and direct-debit/offset instructions. | Check names, amounts, accounts and conditions before the settlement booking. |
Design the purchase backward from a funded, inspected and legally reviewed settlement.
Define the household ceiling
Set a comfortable repayment, retained-cash target, locations, property types and timeframe before discussing maximum price.
Choose the deposit pathway
Compare 2%/5% government support, standard high-LVR, 20% and family-guarantee paths using total costs and risk.
Map scheme, grant and duty rules
Check the current jurisdiction, applicant, prior-ownership, occupancy, property and price-cap requirements without treating them as lender approval.
Prepare the evidence
Reconcile income, liabilities, expenses, savings, gifts, FHSS, grant and any guarantor information.
Obtain a useful pre-approval
Select the lender for the actual policy issues and read every remaining condition and expiry.
Create a property due-diligence checklist
Contract, title, strata, building/pest, insurance, lender acceptability and valuation risk should be mapped before emotional commitment.
Make the offer or bid with controls
Use appropriate legal/finance conditions for private treaty, or finish all checks before auction.
Move from contract to formal approval
Provide the contract immediately, arrange valuation and satisfy scheme/insurer/lender conditions before deadlines.
Prepare settlement funds and operations
Reconcile the conveyancer statement, duty, grants, insurance, offset, salary credits, direct debits and first repayment.
Review after settlement
Keep the buffer in the right account, confirm repayments, update the budget and review rate/structure once the loan has a stable history.
The purchase is not complete when the keys arrive—the first year tests whether the plan was genuinely affordable.
The strongest first-home plan leaves enough room to establish the property, absorb normal surprises and start reducing financial risk rather than immediately relying on credit again.
Keep cash outside the minimum settlement requirement
Rates adjustments, strata levies, repairs, insurance excesses, moving and utility setup can arrive together. A buyer who settles with no cash can turn a minor problem into expensive personal debt.
Continue meeting owner-occupancy obligations
Government-backed and shared-equity pathways carry ongoing rules. Renting the home, moving out, refinancing, improving or selling can require notice, approval or a change to the guarantee/equity position.
Use the product feature deliberately
An offset only saves interest when money remains in it. Salary, bill timing and separate spending accounts can make the feature work without losing day-to-day control.
Budget for ownership costs that rent previously hid
Building maintenance, appliance replacement, strata special levies and insurance are not included in the mortgage repayment. A simple annual property reserve reduces the pressure to borrow again.
Build flexibility before chasing speed
Extra repayments can reduce interest, but an empty emergency fund can force later redraw or unsecured debt. Establish the right buffer, then choose a repeatable repayment amount.
Do not refinance automatically after a small rate movement
Compare repricing, switching costs, remaining term, LVR, scheme restrictions and product features. The best first review may be a rate negotiation rather than another full application.
A practical first-year rule
Do not measure success only by whether the lender approved the maximum purchase price. Measure it by whether the household can pay the mortgage, preserve a buffer, maintain the home and still fund ordinary life without rebuilding credit-card or BNPL debt.
Strong approval but no cash buffer
Use the scenarios to identify questions and evidence—not to infer eligibility, borrowing capacity or lender approval.
01
5% scheme on an established home
Stable PAYG income, 5% saved deposit and property below the location cap.
Position
Stable PAYG income, 5% saved deposit and property below the location cap.
Why the outcome can differ
The public scheme position is only one layer. Participating-lender valuation, genuine savings, serviceability and property rules can still differ.
What to prepare or change
Keep costs and buffer outside the 5%, obtain a current cap check and choose the participating lender for the complete file.
02
Gifted deposit with strong rental history
Parents provide most of the deposit; the buyer has paid rent consistently for years.
Position
Parents provide most of the deposit; the buyer has paid rent consistently for years.
Why the outcome can differ
Some lenders treat the gift as funds to complete but not genuine savings; selected first-home paths can use rent history to waive the holding-period test.
What to prepare or change
Document the gift as non-repayable, provide bank trail and at least three months of clean rent evidence.
03
Buyer on probation after a same-industry move
Permanent role, higher salary and long occupational history, but four months remain on probation.
Position
Permanent role, higher salary and long occupational history, but four months remain on probation.
Why the outcome can differ
One policy may accept now; another wants probation finished. Automated scoring and manual continuity treatment can diverge.
What to prepare or change
Provide the contract and prior employment, compare applying now with waiting, and avoid assuming the higher salary is used everywhere.
04
Casual employee with reliable shifts
Twelve months in the role with seasonal peaks and clean savings.
Position
Twelve months in the role with seasonal peaks and clean savings.
Why the outcome can differ
Tenure, average period and annualisation differ. Peak recent payslips may be reduced.
What to prepare or change
Provide enough payslips and income statements to show the full cycle and price the purchase on a conservative average.
05
HELP debt close to repayment
The buyer has strong income and a relatively small remaining HELP balance.
Position
The buyer has strong income and a relatively small remaining HELP balance.
Why the outcome can differ
Most lenders model the statutory repayment; selected treatment may differ when full repayment is clearly close and evidenced.
What to prepare or change
Obtain current balance and compare the cost/benefit of repaying it before application rather than assuming it is ignored.
06
Family guarantee with limited cash savings
The buyer services the loan but has limited cash; parents have substantial home equity.
Position
The buyer services the loan but has limited cash; parents have substantial home equity.
Why the outcome can differ
Many lenders do not offer family guarantees. Accepted relationships, guarantee limit and property rules vary.
What to prepare or change
Obtain guarantor legal advice, use a limited guarantee and set a measurable release plan.
07
Apartment below a lender size threshold
The buyer is approved but targets a 34 m² studio in a dense inner-city building.
Position
The buyer is approved but targets a 34 m² studio in a dense inner-city building.
Why the outcome can differ
Minimum size, concentration, postcode and LVR policies can narrow the lender set or require 30%–40% deposit.
What to prepare or change
Pre-check the exact building and internal area before auction; do not rely on a generic pre-approval.
08
Off-the-plan purchase settling next year
The buyer signs within current income and scheme settings, but completion is distant.
Position
The buyer signs within current income and scheme settings, but completion is distant.
Why the outcome can differ
Valuation, employment, rates, scheme caps and lender participation can change before settlement.
What to prepare or change
Use legal review and a cash buffer; refresh approval well before settlement and plan for a lower final valuation.
09
Self-employed buyer with one strong year
Business recovery is supported by current BAS but prior year was weak.
Position
Business recovery is supported by current BAS but prior year was weak.
Why the outcome can differ
Latest-year, average and lower-year methods produce different usable income.
What to prepare or change
Prepare the business explanation, current evidence, tax position and a purchase price that survives a conservative method.
10
Victorian new home around a relief threshold
Buyer expects duty relief and a new-home grant.
Position
Buyer expects duty relief and a new-home grant.
Why the outcome can differ
Dutiable value, contract date, property definition, occupancy and purchaser rules determine the actual benefit; lender genuine-savings treatment is separate.
What to prepare or change
Obtain conveyancer/SRO confirmation and budget as though the benefit is not available until confirmed.
11
Auction with a 5% contract deposit
Buyer has a 5% loan pathway but auction terms call for 10% immediately.
Position
Buyer has a 5% loan pathway but auction terms call for 10% immediately.
Why the outcome can differ
The contract deposit and lender deposit pathway are different. The vendor does not have to accept 5% without prior agreement.
What to prepare or change
Negotiate deposit terms in writing before auction and keep enough liquid funds available on the day.
12
Strong approval but no cash buffer
Buyer can meet lender servicing and contributes every dollar at settlement.
Position
Buyer can meet lender servicing and contributes every dollar at settlement.
Why the outcome can differ
The credit model can pass while the household is exposed to repairs, rates, strata, moving and income disruption.
What to prepare or change
Lower the price, retain cash or delay non-essential spending so the first year is resilient.
13
Permanent resident buying with a temporary-visa partner
Government scheme and standard lender rules do not line up automatically.
Position
One applicant is an Australian permanent resident with the stronger income; the other is on a temporary visa and will be on title.
Why the outcome can differ
The 5% Scheme requires both joint applicants to satisfy its eligibility rules, while standard lending may consider selected visa classes at a lower LVR or with the citizen/PR borrower as primary income earner. Foreign-purchaser rules may also be relevant.
What to prepare or change
Confirm visa status, scheme eligibility, title structure, foreign-purchaser duty/approval and standard-loan alternatives before the contract names are fixed.
14
Single parent relying on child support and Family Tax Benefit
The income is real but policy-sensitive.
Position
Base PAYG income covers most expenses, while registered child support and family payments are needed for the target loan.
Why the outcome can differ
One lender may use verified ongoing payments in full; another caps benefits to a share of total income or requires longer continuation. The 2% single-parent scheme also has its own applicant and property criteria.
What to prepare or change
Provide current entitlement statements, agreement/order, three to six months of receipts, child ages and a repayment plan that remains workable as payments change.
15
High-LVR purchase of a 35 m² apartment
Buyer passes servicing but the security narrows the lender set.
Position
The apartment is well located, but its internal area is below the common 40–50 m² policy centre and the buyer needs a 95% loan.
Why the outcome can differ
Selected lenders accept smaller units at lower LVRs; mortgage insurance and government scheme property rules can be stricter. Balcony and car space may not count toward internal area.
What to prepare or change
Obtain the floor plan and exact internal area, confirm building/postcode exposure, consider a larger deposit or a different property, and do not bid on pre-approval alone.
16
Off-the-plan completion with a valuation shortfall
The buyer qualified when signing 18 months earlier.
Position
The contract price is $720,000, but the completion valuation is $680,000 and the buyer’s employment and debts have also changed.
Why the outcome can differ
The lender assesses current value and current serviceability. A government cap does not force the lender to fund the contract price, and the original pre-approval may have expired.
What to prepare or change
Keep a shortfall buffer, refresh servicing well before settlement, review the contract rights with the conveyancer and avoid spending the deposit during the construction period.
Waiting can be an active purchase strategy when one gate is about to become materially stronger.
Costs or buffer are missing
The deposit target has been reached but duty, reports, adjustments, moving costs or emergency cash are not funded.
Evidence is between stronger dates
Probation, contract renewal, parental-leave return or completed business financials will soon improve clarity.
Recent account behaviour needs recovery
Missed payments, overdraws, BNPL use or multiple enquiries need a clean period and explanation.
Eligibility or price cap is not confirmed
The contract, postcode, property type or applicant status is being assumed rather than checked.
Due diligence is incomplete
The buyer is considering auction or unconditional exchange without legal, strata/building or lender-security review.
The plan cannot survive a valuation shortfall
Every dollar is needed at the contract price, leaving no response if the lender value is lower.
Only the lender maximum works
The household budget becomes tight after rates, maintenance, strata, insurance or future family costs.
The contract deadline is unrealistic
Documents, FHSS release, scheme reservation, valuation or formal approval cannot reliably be completed in time.
Ownership or family support is unclear
Guarantor, co-buyer, relationship, trust or tax questions need legal/financial advice before names appear on the contract.
Set the milestone and review date
Do not wait vaguely. Identify the exact condition—three months of savings, probation end, updated financials, reduced card limit, extra buffer or a clearer property target—and schedule the next review.
Forty first-home buyer questions from deposit planning to settlement.
Every answer is general. Personal scheme, duty and lender conclusions require current information and the actual contract.
How much deposit does a first-home buyer need?
The minimum depends on the pathway. Current government support includes 5% for eligible first-home buyers and 2% for eligible single parents/legal guardians. Standard loans can use similar or larger deposits with LMI, while 20% commonly avoids LMI. Costs and a retained buffer are additional.
Does a 5% deposit guarantee scheme approval?
No. The public scheme rules, participating lender, property cap, deposit, occupancy and credit approval all need to fit. The lender still assesses income, debts, expenses, credit and security.
Does the Government lend the missing 15% under the 5% scheme?
No. The Government provides a guarantee to the participating lender for part of the risk. The buyer still borrows the approved loan and remains responsible for repayments.
What is genuine savings?
It generally means a demonstrated contribution or savings pattern from acceptable sources. At higher LVRs, a 5% genuine contribution and around three months of history are common, but accepted sources and alternatives such as rent history vary.
Can a gifted deposit be used?
Potentially. The lender commonly needs a gift declaration and bank trail and must know whether it is repayable. A gift can be funds to complete without automatically satisfying genuine-savings rules.
Can rental history count as genuine savings?
Selected first-home policies allow clean rent history—commonly around three months—to demonstrate payment discipline or waive a savings holding period. It does not provide the cash itself.
Can FHSS money be used as the deposit?
Eligible released FHSS funds can contribute to the purchase, subject to ATO determination/release and contract timing. The lender needs evidence of the amount and source before settlement.
Can a grant count toward the deposit?
A grant can reduce funds required or contribute at settlement where the program and lender permit it. Some policies do not treat a grant as genuine savings, so the two tests must be separated.
Do first-home buyers pay stamp duty?
It depends on the jurisdiction, value, property type, contract date, purchaser and occupancy. Some receive a full exemption or concession; others pay full duty. Confirm with the revenue authority or conveyancer before exchange.
What is Help to Buy?
It is a shared-equity program, not a guarantee. Eligible applicants contribute at least 2% and the Government can hold up to 30% of an existing home or 40% of a new home, subject to current thresholds and ongoing obligations.
What does pre-approval mean?
It is a conditional lender decision based on information available at the time. Property, valuation, updated evidence, scheme/insurer approval and other conditions can remain. It is not a guarantee.
How long does pre-approval last?
There is no universal period. Lender approvals and supporting documents expire and can require renewal. Track the specific date and refresh well before an auction, land settlement or off-the-plan completion.
Does HELP/HECS reduce first-home borrowing power?
Usually it affects serviceability because lenders model the statutory repayment. Treatment can differ when repayment is clearly close, but it should not be assumed away.
Do credit-card limits matter if the balance is zero?
Yes. Lenders commonly load a monthly commitment based on about 1.5%–5% of the approved limit. Reducing or closing unused limits can improve the assessment after evidence updates.
Can I buy while on probation?
Potentially. Policies differ on probation, permanent status and same-industry continuity. A long occupational history can help, but some lenders still require probation to finish.
Can casual income be used?
Potentially, with sufficient tenure and evidence. Around three to 12 months in the current role is common, with stricter settings looking for longer industry continuity and a conservative average.
How are overtime, bonuses and commission treated?
They can be averaged, shaded or capped. Recognition commonly ranges from 50% to 100%, with 80% common, and the evidence period can run from several months to two years.
Can I buy while on parental leave?
Potentially. Confirmed return date, hours and income, leave payments, dependants, childcare and resources during the gap are important. Policies differ on how much return income can be used.
Can self-employed first-home buyers use one year of financials?
Selected policies can use a latest-year or simplified path; others use two years or a conservative average. Trading history, trend, BAS, debts, LVR and tax position remain relevant.
What is LMI?
Lenders mortgage insurance generally protects the lender when higher-LVR lending is approved. The buyer usually pays the premium. Eligible government-guarantee loans can avoid LMI while the guarantee applies.
What happens if the valuation is lower than the contract price?
The lender calculates LVR from its accepted value, which can increase the required cash, LMI or change approval. The buyer may need extra funds, a lower price or another property.
Can I use a family guarantor?
Potentially at selected lenders. Accepted family relationships, property equity, guarantee limit, legal advice and release conditions vary. The borrower still normally needs to service the loan.
Can I buy a small apartment with a 5% deposit?
Possibly, but small internal area, high density, postcode and scheme/property rules can reduce LVR or lender choice. Pre-check the exact building and floor area.
Should I buy at auction with pre-approval?
Only after legal review, property/security checks, deposit arrangement and a clear response to valuation risk. Auctions commonly have no finance condition or cooling-off.
Can I use the 5% scheme for vacant land and construction?
The current scheme can support vacant land with a building contract and house-and-land, subject to combined price/cost caps, timeframes, property and participating-lender rules. Construction policy still applies.
Can I buy an investment property under a first-home scheme?
The main first-home guarantee and shared-equity pathways require owner-occupation and impose ongoing occupancy rules. Use the Investment Property Loans Guide for ordinary investment lending.
What should I avoid after pre-approval?
Avoid undisclosed new credit, higher limits, job changes, missed payments, unexplained large transfers and spending the deposit/buffer. Tell the broker/lender promptly when circumstances change.
What insurance is needed before settlement?
Requirements depend on the property and state. Building insurance is commonly required before settlement for houses, while strata insurance is held by the owners corporation. Confirm with the lender, insurer and conveyancer.
How long does settlement take?
The contract sets the date. Loan approval, documents, scheme/grant forms, conveyancing, inspections and lender booking all need to fit that period. Auction and short settlements require more preparation.
What should happen after settlement?
Confirm the loan balance, repayment, offset linkage, salary and direct debits; retain the buffer; update the household budget; keep property records and schedule a future rate/structure review.
Can Family Tax Benefit be used for a first-home loan?
Some lenders accept verified ongoing Family Tax Benefit, while others cap it, use only selected components or exclude it. A three-to-six-month payment history and evidence the benefit is expected to continue for around five years are common. It should not be assumed to be used in full.
Can child support be used as income?
Potentially. Registered or court-ordered payments with a consistent history are stronger than informal transfers. Lenders can ask for three to six months of receipts and sufficient continuation, often around three to five years, and may cap the amount used.
Does using BNPL stop me getting a home loan?
Not automatically. The lender considers the limit, repayment, frequency, account conduct and whether the spending indicates ongoing budget pressure. Facilities must be declared and can reduce serviceability.
Can a professional LMI waiver be used instead of a government scheme?
Selected professions and products may receive an LMI waiver at higher LVRs. Eligibility, maximum LVR, income, registration, property and credit rules vary. Compare rate, fees, flexibility and future obligations rather than assuming the waiver is always stronger.
Can I buy my first home with a sibling or friend?
Yes, subject to lender and any scheme rules. Both borrowers are usually jointly liable for the full debt. Obtain legal advice and a co-ownership agreement covering deposits, shares, occupation, repairs, default, sale and exit.
Can a temporary visa holder get a first-home loan?
Selected standard lenders may consider particular visas, often with lower LVRs or a citizen/permanent-resident co-borrower. Government schemes, foreign-investment approval and foreign-purchaser duty have separate rules. Confirm all of them before signing.
Is a small apartment acceptable under a 5% deposit pathway?
It depends on the lender, mortgage insurer or scheme, internal floor area, postcode, building density, title and use. Minimum internal-area policy can range from roughly 25 m² to 50 m², with smaller units often limited to lower LVRs.
What happens if an off-the-plan property values below the contract price?
The lender normally funds against its accepted value and current policy. The buyer may need extra cash, a reduced price or another solution. A past pre-approval and government price cap do not remove valuation risk.
How much cash should be left after settlement?
There is no universal amount. The buffer should reflect property condition, strata/rates, insurance, moving, income stability and likely repairs. Government scheme policy can also expect the buyer to use available deposit while retaining only a reasonable post-settlement amount.
When should I review my first home loan after settlement?
Check the setup immediately, rebuild the budget in the first month and review rate, features and future plans at least annually or before a major life change. A review does not automatically mean refinancing; repricing or a product adjustment can be enough.
First-home finance terms in plain English.
Assessment rate
The higher interest rate used by the lender to test serviceability, usually above the actual product rate.
Borrower contribution
Cash or equity the buyer provides toward price and costs.
Contract deposit
Money paid under the purchase contract, often to an agent or stakeholder; it is not the full funds-to-complete amount.
Cooling-off
A statutory or contractual period in which a buyer may withdraw under specified conditions; auction rules differ.
DTI
Debt-to-income ratio: total debt compared with gross annual income.
Equity
Property value less secured debt, subject to the lender’s accepted value.
FHSS
First Home Super Saver scheme for eligible voluntary super contributions and associated earnings.
Formal approval
The lender’s approval after required assessment and conditions, still subject to correct documents and settlement.
Funds to complete
All verified cash required to settle, including contribution and transaction costs.
Genuine savings
A lender/insurer test of the source and/or history of part of the buyer contribution.
Government guarantee
Government support provided to the lender for an eligible loan; it is not cash paid to the buyer.
Help to Buy
A shared-equity program in which the Government acquires an equity share in an eligible home.
LMI
Lenders mortgage insurance, generally protecting the lender in higher-LVR lending.
LVR
Loan amount divided by the lender’s accepted property value.
Pre-approval
A conditional lender decision before a specific property is fully approved.
Price cap
The maximum property price under a government program for a location and property type.
Principal and interest
Repayments that cover interest and reduce the loan principal.
Settlement adjustments
Apportionments of rates, water, strata and other property outgoings at settlement.
Shared equity
An arrangement where another party owns a percentage interest in the home.
Valuation shortfall
The extra cash or loan change needed when accepted value is below the contract price or assumed value.
Use the guide to prepare the right questions—not to convert a policy range into a personal approval.
How the lender-policy material was used
Rate Challenge reviewed around 50 lender policy sets across deposit sources, genuine savings, family guarantees, government guarantees, income, liabilities, serviceability and security. Recurring settings were translated into rounded, lender-neutral ranges. The flexible and conservative ends can come from different products; no lender necessarily offers every setting shown.
How schemes and duty were used
The guide uses current government-scheme rules and Rate Challenge’s Australian property-duty engine, which is maintained against official source material. Static examples are labelled by jurisdiction and review date. Personal eligibility, dutiable value and final duty still require authority, conveyancer and participating-lender confirmation.
Primary public sources
- Official Australian Bureau of Statistics — Lending Indicators.
- Official Australian Government 5% Deposit Scheme — first-home buyers.
- Official Australian Taxation Office — First Home Super Saver scheme.
- Official Australian Government Help to Buy.
- Official APRA — mortgage serviceability settings.
- Official Moneysmart — buying a house.
- Official example State Revenue Office Victoria — first-home buyer duty.
Important limits: schemes, price caps, duty, lender policy, rates and law can change. This guide does not calculate borrowing capacity or tell a buyer that they qualify. Confirm the current position before making an offer or signing a contract.
Service
First Home Buyer Broker
Run a personalised deposit, policy and purchase-plan review.
Explore →CalculatorFirst-Home Buyer Scheme Calculator
Explore current federal and state support pathways and location caps.
Explore →GuideHome Loan Guide
Understand rates, products, serviceability and loan features.
Explore →GuideConstruction Guide
Plan land, house-and-land and new-build finance.
Explore →
AUTHOR & REVIEWER
David Warburton — Mortgage & Finance Broker
David combines commercial-banking experience, mortgage broking and detailed lender-policy comparison to explain how a first-home purchase moves from deposit and policy to a safe contract and settlement. The purpose is to make the policy, evidence, cost and structural trade-offs understandable before an application or contract commitment—not to turn a general guide into an approval prediction.
FROM GUIDE TO PURCHASE PLAN
Put the deposit, scheme, property and lender assumptions into one first-home plan before you sign.
The service page can review the purchase budget, deposit source, likely policy issues and next evidence. The scheme calculator can separately test current government pathways and location caps.