Top tips to prepare for your first home loan

Buying your first home in Australia means accessing some of the strongest financial support available anywhere in the country right now.

The decision you're making is whether to start the application process now or wait until you feel more prepared. What matters most is understanding what you're actually eligible for and how to structure your deposit and loan to avoid paying more than you need to.

What makes you eligible as a first home buyer

You're considered a first home buyer if you have never owned property in Australia before, either alone or with someone else. This includes investment properties.

Some first home buyer programs also require you to move into the property within a certain timeframe, usually 12 months, and live there for a minimum period. If you're applying with a partner, both of you must meet the eligibility criteria. If one of you has owned property before, you won't qualify for most state grants or the First Home Guarantee.

Consider a buyer who has lived with her parents while saving and plans to purchase a unit. She has never owned property, so she meets the basic test. Her partner, however, co-owned an investment unit five years ago. Because of that prior ownership, they won't be eligible for the federal guarantee or most state-based support, even though she individually qualifies. The application is assessed on both applicants.

How the First Home Guarantee changed in late 2025

The First Home Guarantee lets you buy with a deposit as low as 5% without paying Lenders Mortgage Insurance.

From 1 October 2025, the program was expanded with no income caps and no place limits. Before that date, there were income thresholds and restrictions on where you could buy. Those limits no longer apply, which means eligibility is now much broader and the scheme is accessible to more buyers across all states and territories.

Lenders Mortgage Insurance is typically charged when your deposit is below 20% of the property value. It can add thousands of dollars to your upfront costs or be capitalised into the loan. Under the guarantee, the government underwrites part of the loan, so the lender waives the LMI. You still need to meet the lender's credit and income requirements, but the entry cost is lower.

The guarantee applies to both new and established properties. You can use it to purchase a house, unit, or townhouse, provided the property meets the lender's valuation and security criteria. Not all lenders participate in the scheme, so it's worth confirming which ones do before you lodge an application.

State-based grants and stamp duty concessions you can stack

Most Australian states and territories offer a cash grant, a stamp duty concession, or both. These can be combined with the federal guarantee to reduce your entry costs even further.

In New South Wales, eligible buyers receive a $10,000 grant for new homes valued up to $600,000, or house and land packages up to $750,000. You may also qualify for a full stamp duty exemption on properties under $800,000 or vacant land under $350,000.

Victoria provides a $10,000 grant for new homes up to $750,000, and you'll pay no stamp duty up to $600,000, with a reduced rate up to $750,000.

Queensland currently offers up to $30,000 for buying or building a new home valued under $750,000, and this grant runs until 30 June 2026. On established homes, there's a concession for properties under $800,000, with no duty payable up to $700,000.

South Australia abolished stamp duty for first home buyers purchasing new homes in mid-2024, regardless of value. There's also a $15,000 grant for new homes up to $650,000.

Western Australia increased the grant cap to $800,000 and introduced concessional stamp duty for vacant land up to $550,000 and pre-construction dwellings up to $800,000.

Tasmania offers no stamp duty on established homes up to $750,000, a concession that runs until 30 June 2026, and a $10,000 grant for new homes.

The Northern Territory offers the largest cash grant in the country at $50,000 for new homes, with no property price cap, running until 30 September 2026. A $10,000 grant also applies to established homes.

The ACT focuses on stamp duty concessions rather than grants, and thresholds are updated regularly.

Most grants apply to new builds only, but stamp duty concessions often cover both new and established properties. Eligibility rules vary by state, and some concessions have expiry dates, so confirm current details with your state revenue office or a broker before you commit.

Working out your deposit and borrowing capacity

Your deposit is the amount you contribute upfront, and it determines how much you need to borrow and whether you'll pay LMI.

Under the First Home Guarantee, you can apply with a 5% deposit. If you're buying outside the guarantee or prefer a larger deposit to reduce your loan size, a 10% deposit is another common threshold.

Lenders assess your borrowing capacity based on your income, expenses, existing debts, and the loan's serviceability at a buffer rate above the actual interest rate. That buffer is usually around 3%, meaning the lender tests whether you can still afford repayments if rates rise.

In a scenario where a buyer earns $85,000 per year, has no dependents, a car loan with $8,000 remaining, and typical living expenses, her borrowing capacity might sit around $450,000 to $500,000 depending on the lender. If she has saved a 5% deposit and is applying under the guarantee, she could look at properties in that range without paying LMI. If she saved a 10% deposit instead, she'd have more flexibility to negotiate on price or choose a property slightly above the guarantee caps if her state has any.

Your deposit can include genuine savings, funds gifted by a family member, or amounts you've withdrawn under the First Home Super Saver Scheme. Lenders usually require at least part of the deposit to be genuine savings held in your account for three months. Gifted deposits are accepted by most lenders, but you may need a statutory declaration from the person providing the funds.

Choosing between variable and fixed interest rates

A variable interest rate moves up or down with the market, while a fixed rate locks in your repayment amount for a set period, usually one to five years.

Variable loans usually come with features like an offset account or redraw facility, which let you reduce interest by parking extra funds against the loan or access any additional repayments you've made. Fixed loans often restrict these features or remove them entirely during the fixed term.

If you value certainty and want to know exactly what your repayments will be while you settle into homeownership, a fixed rate gives you that stability. If you prefer flexibility and want to make extra repayments or offset your savings against the loan, a variable rate is worth considering. Some buyers split their home loan between fixed and variable to get a bit of both.

There's no universal answer, and your choice should reflect how you manage money and what matters most to you during the first few years of owning a home.

Pre-approval and what it actually gives you

Pre-approval is a conditional agreement from a lender that they'll lend you a certain amount, subject to a property valuation and final checks.

It tells you what you can afford, gives you confidence when making an offer, and speeds up the settlement process once you've found a property. Most pre-approvals are valid for three to six months.

Lenders will ask for proof of income, bank statements, identification, and details of your savings and any debts. They'll assess your credit file and serviceability, then issue a letter confirming the amount they're willing to lend.

Pre-approval is not a guarantee. If your circumstances change, if the property doesn't meet the lender's valuation, or if something appears in final checks that wasn't disclosed earlier, the lender can withdraw or reduce the approval. It's still a valuable step because it clarifies your budget and shows sellers you're a serious buyer.

The First Home Super Saver Scheme and how it fits in

The First Home Super Saver Scheme lets you contribute to your superannuation fund specifically to save for a deposit, then withdraw those contributions plus earnings when you're ready to buy.

You can contribute up to $15,000 per financial year, with a total withdrawal cap of $50,000. Contributions are taxed at 15% inside super, which is lower than most marginal tax rates, so you keep more of what you save.

You can make voluntary concessional contributions through salary sacrifice or personal deductible contributions, and non-concessional after-tax contributions. When you withdraw, the concessional component is taxed at your marginal rate minus a 30% offset, and the non-concessional component comes out tax-free.

This scheme works well if you're still saving and want to accelerate your deposit in a tax-effective structure. You can combine it with other savings, gifted funds, and the First Home Guarantee to build your deposit faster without relying solely on a standard savings account.

What to expect during the application process

Once you've found a property and had your offer accepted, your formal home loan application begins.

You'll provide a signed contract of sale, and the lender will order a valuation to confirm the property is worth what you're paying. They'll also complete final credit checks, verify your employment, and review any changes to your financial position since pre-approval.

If you're using the First Home Guarantee, the lender will submit your application to the National Housing Finance and Investment Corporation to secure a place under the scheme. Allocations are processed on a first-come basis, so timing matters.

Settlement usually occurs four to eight weeks after the contract is signed, depending on what's negotiated. During that time, your lender will prepare the loan documents, your solicitor or conveyancer will handle the legal side, and you'll arrange insurance and final inspections.

Staying responsive during this period keeps everything moving. Lenders may request updated payslips, bank statements, or explanations for transactions they flag. Respond quickly, keep records organised, and confirm any requirements upfront to avoid delays.

Call one of our team or book an appointment at a time that works for you. We'll walk through your eligibility, structure your deposit to access the schemes that suit your situation, and help you submit an application that reflects your actual financial position.

Frequently Asked Questions