Purchasing your first home

Purchasing your first home in Australia is a defining moment, both emotionally and financially. It’s a step in your journey towards your goals and asset growth, but the path can be challenging to navigate. This guide provides first-time buyers with the key knowledge to move confidently from setting a budget to securing finance and selecting the ideal home.

What purchasing your first home really means

For many, buying a first home is an aspiration that extends beyond financial investment. It's deeply rooted in personal and social motivations, embodying:

• Stability: The desire to establish roots, own a home, and escape the rental cycle.
• Personal space: Create a custom space that reflects individual tastes.
• Wealth creation: Property has always been a solid, long-term investment that can build one’s equity and financial security.

Your journey begins with a major decision — should you invest in an existing home or build a new property? Deciding between the two depends on what you’re looking for when buying your first house. Here’s a comparison of their distinct advantages and considerations:

Steps to purchasing your first home

Homeownership doesn’t have to feel out of reach. Below, we divide the journey into clear phases to help you approach homeownership with confidence:

1. Prepare financially

Before you start looking for properties, it is important to have a good overview of your financial situation. This means taking stock of your income, expenses, and debts to see how much you can borrow. Set a realistic budget and follow a savings plan to cover your deposit and other costs. You may wish to speak to a home loan broker for further advice.

2. Do your research on government support

There are multiple government schemes and grants in place to help first home buyers in Australia. Research whether you qualify for any schemes or grants (including the First Home Owner Grant), and assistance with stamp duty. These government incentives can help ease your upfront financial burden.

3. Finding a home loan

Securing the right home loan is a crucial step in the buying process. Take time to compare different loan types, such as fixed-rate and variable-rate options, and familiarise yourself with key terms like Loan-to-Value Ratio (LVR)* and Lender’s Mortgage Insurance (LMI). It’s also worth considering pre-approval, which can give you a clearer budget and strengthen your position when making an offer.

4. Finding a property

You are now ready to search for a property. Think carefully of things that may make or break it for you beyond how it looks, including location, amenities, and resale potential. You should physically inspect the property before rushing into a decision.

5. Making an offer and a settlement

Once you’ve found a property you like, work with your legal representative to make an offer. If accepted, you’ll proceed to exchange contracts and then settlement, when ownership and payment are finalised.

*This is the percentage of your home loan amount compared to the property's value. It's calculated as (Loan Amount / Property Value) x 100. Lenders use LVR to assess risk; a higher LVR (meaning a smaller deposit) generally indicates higher risk.

Understanding your financial position

Having a good grasp of where you stand financially is fundamental before purchasing your first home. This section aims to help you understand how to calculate your deposit, recognise upfront costs beyond the purchase price, and explore saving strategies to support your financial preparation.

Saving up for your deposit

Your deposit is at the foundation of your house loan application and has an impact on your borrowing capacity, as well as the type of loan you can have. It is typically recommended that you have a 20% deposit to avoid paying Lender's Mortgage Insurance (LMI) and reduce the loan-to-value ratio (LVR), which is considered less risky by lenders and might improve your borrowing power.

Many lenders in Australia do accept deposits as low as 5% of the value of the property, particularly when paired with government assistance. This means if you were to purchase a $600,000 property, you would only need a $30,000 deposit at 5%, as opposed to a $120,000 deposit at 20%.

The larger your deposit, the lower your monthly repayments will be, as well as the total interest paid over the life of the loan.

You can build your deposit by:

• Tracking income and expenses to cut unnecessary spending and increase savings.
• Setting up automated transfers to a separate savings account for consistent saving.
• Using a high-interest savings account to grow your deposit faster through compounding.

Other upfront costs

Aside from the deposit, there are a few other important upfront costs that you will need to include in the budget when you are buying a house. Added up, these costs can quickly add tens of thousands to your overall costs, including:

1. Stamp duty

A state or territory tax paid on property ownership transfer. It’s often the largest upfront cost and varies by location and purchase price. First home buyers may qualify for full or partial exemptions or concessions.

2. Lender’s Mortgage Insurance (LMI)

A one-time fee protecting the lender if you default, typically required if your deposit is under 20%. Some first home buyer schemes may waive this cost.

3. Conveyancing fees

Legal fees paid to a solicitor or conveyancer for handling property ownership transfer, usually between $800 and $2,500. Costs may increase with the complexity of the sale.

4. Building and pest inspection fees

Inspections to identify structural or pest issues before purchase typically range between $200 and $600.

5. Loan application/Establishment fees

Your lender may charge fees to process your mortgage application and set up your home loan account.

6. Valuation fee

The lender will require you to find the market value of the home to ensure that the value you want to borrow matches the actual market value.

7. Mortgage registration fee

You'll need to pay a fee to the appropriate state land titles office for the official registration of your mortgage.

8. Building insurance

In many cases, your lender will require that you have building insurance in place for the property's structure before registering the mortgage. Costs depend on various factors such as property value, location, age of the home, and building materials, and can fluctuate significantly. It's crucial to compare quotes from different providers to find suitable coverage.

9. Moving costs

When moving, you will need to plan for the costs: removalists, packaging, and utility connections. As of 2025, the average cost of moving house in Australia can range from $300 to $3,500, depending on distance and the amount of belongings you have.

Grants and support available to first home buyers

There are several government schemes, depending on your state or territory, that provide support for aspiring homeowners. Key initiatives include various Home Guarantee schemes that allow you to buy a home with a small deposit by having the government guarantee a portion of your loan. Read this blog to find out what assistance you might be eligible for.

Choosing the right home loan

One of the most critical steps to buying a home for the first time is picking the right loan to suit your needs. To help you with that, we break down several common house loans that you can consider:

What to look for when buying your first home

Buying your first home is about finding a property that suits your lifestyle, plans and financial goals. When doing your research, consider the following questions:

• Do you want a new or an existing home?
• Would you prefer to have a new house that requires less maintenance in the short term, or an established property with character that may incur some additional renovation costs?
• How long are you willing to wait before moving in?
• How far is the property from local schools, public transport, shops, health and parks?
• What’s your daily commute going to be like to and from work and other places you go frequently?
• Will there be future development, infrastructure, or zoning changes affecting the area’s value?
• What is the resale value of the property like?

*Disclaimer: All information set out in this article, including but not limited to first home buyer government grants, stamp duty concessions, other government schemes and external links are provided as a general guide only as at the date of this publication and do not constitute advice. Actual figures and grants may vary depending on the customer’s individual circumstances and the eligibility criteria outlined on different state and territory government websites (and as amended from time to time). Purchasers are responsible for seeking independent professional advice or making their own enquiries in relation to eligibility for any grants or schemes. No representations or warranties are made as to the accuracy, currency or completeness of any estimates and their contents. Date of publication: September 2025.