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Getting your finances in order
Laying the financial foundations
Finance can be one of the most daunting parts of buying your first home. The language is often unfamiliar and the order of which steps to take and when to take them can seem confusing. But when you break it all down, it's actually quite simple. Here's everything you need to know.
Preparing to buy
Set a realistic budget
Browse real estate listings to determine the realistic price range in your preferred locations. Include not only the purchase price, but also extra costs like stamp duty, legal fees, insurance, and inspections.
Track your spending
Create a monthly budget that covers all expenses - rent, groceries, utilities, subscriptions, entertainment. Identify areas to save.
Commit to your goal
Saving for your first home may mean making sacrifices, like moving in with family or cutting back on discretionary spending. Every step brings you closer to your dream.
Understanding deposits
Your deposit is your first major milestone on the path to home ownership.
How much do you need?
Saving 20% of the purchase price of your new home, plus extra margin for fees, stamp duty, insurance and building inspections, will put you in the best position for securing a loan. For example, on a $600,000 home, that’s $120,000.
Can you buy with less?
Some lenders accept deposits as low as 5–10%. If your deposit is under 20%, you’ll likely need to pay Lenders Mortgage Insurance (LMI) - an extra cost to protect the lender.
First Home Guarantee (FHBG) - 5% deposit scheme
As of October 2025, eligible buyers can purchase a home with as little as a 5% deposit and no Lenders Mortgage Insurance (LMI), thanks to the expanded First Home Guarantee scheme. Criteria and price caps apply; check firsthomebuyers.gov.au for details.
Learn more about government incentives available for first home buyers.
Explore grants & schemes
Plan for extra costs
In addition to your deposit and any applicable LMI, there are a few other costs you need to be aware of, including:
reminder
Don’t forget the extras
Beyond your deposit, budget for:
- Stamp duty (sometimes reduced or waived for first home buyers)
- Legal and conveyancing fees
- Building and pest inspections
- Loan application fees
- Transfer fee
- Moving costs
Stamp duty
It’s a government tax on property transactions. Depending on which state you’re in, this fee may sometimes be waived, deferred, or reduced. Check with your local state or territory revenue office for more information.
Legal and conveyancing fees
Paid to your legal representative to cover the preparation of documents and provision of advice.
Building and pest inspections
It's a good idea to organise independent building and pest inspections to avoid any nasty surprises after you've moved in.
Loan application fee
Most lenders will charge a one-off fee to assess your home loan application.
Transfer fee
One-off fee charged by the state government to cover the transfer of the title of your new property into your ownership.
Home loans: finding the right fit
Securing the right home loan is a crucial step in your first home journey. With so many options, it’s important to find a loan that matches your needs and circumstances.
Key considerations:
- Loan types: Most first home buyers choose a standard variable or fixed-rate home loan. Variable loans offer flexibility, while fixed-rate loans provide certainty in repayments.
- Loan features: Look for features like offset accounts, redraw facilities, and the ability to make extra repayments without penalty.
- Comparison rate: This combines the interest rate with most fees and charges, giving you a clearer picture of the true cost of the loan.
- Loan pre-approval: Getting pre-approved can help you know your borrowing limit and show sellers you’re a serious buyer.
How much can you borrow?
Lenders assess your income, expenses, existing debts, and credit score to determine your borrowing capacity. Use a government calculator to estimate your repayments and what you can afford.
Lenders Mortgage Insurance (LMI):
If your deposit is less than 20%, you may need to pay LMI. This is a one-off insurance payment that protects the lender if you can't meet your home loan repayments for any reason. LMI is either paid upfront or added into your home loan, but either way it is a non-refundable fee.
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Tip: Speak to a mortgage broker or financial adviser. They can help you compare loans, explain features, and guide you through the application process. Mortgage brokers are generally free for borrowers as they are paid by lenders.
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Credit scores: why they matter
Your credit score is a key factor in your home loan application. It reflects your history of meeting financial commitments - like paying bills and loans on time.
Knowing your credit score
Your credit score is a numeric representation of how reliably you have met previous financial commitments like loan repayments, rent and other bills. This score will fluctuate based on a range of factors including the number and type of credit enquiries you have made and any defaults on existing loan amounts. Lenders will use this number to calculate the risk of providing you with credit, so it's important to make sure you have a healthy credit score before applying for a home loan. There are a number of online services that can provide you with a free credit score report. Visit moneysmart.gov.au for more information.
What’s a good score?
According to CreditSmart, different credit scoring agencies calculate your credit score differently. In Australia, a score above 661 (out of 1200) is considered 'good'; above 853 is 'excellent'.
How to improve your score:
- Pay bills and loans on time
- Limit credit enquiries
- Reduce existing debts
- Avoid missing payments
A healthy credit score gives lenders confidence and can improve your borrowing power.
Legal representation
Contracts of sale and exchange of property ownership can be full of complex legalese.
One of the best investments you can make is to use a trusted solicitor or conveyancer to help you with the process. Ask friends or family for a referral or do some online research and make sure you read all the reviews.
Practical tips for saving and success
Building your deposit and preparing your finances is a journey - one that’s different for everyone. Here are some proven strategies:
Automate your savings
Set up a direct debit to a dedicated savings account.
Review expenses
Regularly assess your budget and cut back where possible.
Consider government schemes
Take advantage of grants and guarantees to reduce upfront costs.
Stay informed
Reliable resources like MoneySmart and firsthomebuyers.gov.au offer up-to-date guidance.
I also want to know
*All opinions, estimates, forecasts, statistics, links to external websites, conclusions, recommendations, and underlying assumptions contained within this webpage are made and expressed by Frasers Property Australia in good faith, in the reasonable belief that they are correct and not misleading as at the date of publication. This content is of a general nature only and does not take into account your personal objectives, financial or taxation situation, or needs. It does not represent financial, taxation, legal, or other professional advice and should not be regarded as such. Information about grants, schemes, and other costs is provided for general guidance only and may change over time. Frasers Property Australia does not make any express or implied representations or warranties that external links or third-party information are accurate, complete, or current. Before acting on any information provided, you should fully consider its appropriateness for your circumstances and, if necessary, seek independent professional advice.