First Home Buyer Guide Australia: Step by Step (2026)

Step 1. Save Your Deposit

In Australia, the standard deposit for a home loan is 20% of the purchase price. With a 20% deposit, you avoid paying Lenders Mortgage Insurance (LMI), which can add thousands to the cost of buying. However, 20% is a significant sum. On a $600,000 property, that is $120,000 in savings, which takes many Australians years to accumulate.

Fortunately, you can buy with less than 20% in several circumstances. With a 10% deposit and a Lenders Mortgage Insurance premium added to your loan, or via the First Home Guarantee (see Step 2), purchases with as little as 5% are possible. LMI itself is not ideal, but in some markets where property prices are rising faster than you can save, it can make sense to buy earlier with a smaller deposit rather than wait.

The most effective savings strategies for a first home deposit include: opening a dedicated high-interest savings account, automating a transfer on pay day so saving happens before spending, reviewing and cutting discretionary expenses, and taking advantage of the First Home Super Saver Scheme (FHSS), which allows you to save up to $50,000 for a first home deposit inside your superannuation, taking advantage of the concessional tax environment.

Read about the First Home Super Saver Scheme on the ATO website.

Step 2. Understand First Home Buyer Grants and Schemes

Australia offers several grants and schemes specifically for first home buyers. Understanding what you are entitled to can make a significant difference to your upfront costs and borrowing capacity.

First Home Owner Grant (FHOG)

The FHOG is a one-off payment from the state or territory government for eligible first home buyers. The amount varies significantly by state and territory, and generally applies to newly built homes (not established properties in most states). As of 2026, grants range from $10,000 in NSW, VIC and WA to $15,000 in SA, $30,000 in QLD and TAS, and up to $50,000 in the NT (HomeGrown Territory grant for new builds). Check with your state revenue office for the current amount and eligibility in your state.

First Home Guarantee (5% Deposit, No LMI)

The First Home Guarantee (FHG), administered by Housing Australia (previously NHFIC), allows eligible first home buyers to purchase a property with just a 5% deposit without paying Lenders Mortgage Insurance. The government guarantees the remaining 15% of the deposit, eliminating the need for LMI. From 1 October 2025, places are uncapped and income caps have been removed, meaning all eligible first home buyers can access the scheme regardless of income. Property price caps that vary by location still apply. Check the current caps at Housing Australia.

Help to Buy Scheme

The federal government Help to Buy scheme is a shared equity scheme where the government co-purchases a portion of your home (up to 40% for new builds, 30% for existing properties), reducing the amount you need to borrow. You own your home outright (no rent to the government) but the government has an equity stake. When you sell, they receive their proportional share of the proceeds. This scheme is subject to eligibility criteria including income caps.

Stamp Duty Concessions

Most states and territories offer stamp duty exemptions or concessions for first home buyers below certain property price thresholds. Stamp duty can amount to tens of thousands of dollars on a typical property purchase, so these concessions represent real savings. Check with your state revenue office for current thresholds and eligibility criteria.

Step 3. Work Out How Much You Can Borrow

Your borrowing capacity depends on several factors: your income (and your partner income, if applicable), your existing debts and financial commitments, your living expenses, your deposit amount, and the lender assessment rate (which is typically 3% above the actual interest rate, as required by APRA).

As a rough guide, most lenders will lend approximately 5 to 6 times your gross annual income for owner-occupied purchases, though this varies significantly based on your circumstances. A borrower earning $100,000 per year with minimal debts might be able to borrow $500,000 to $600,000, depending on the lender.

Important expenses that reduce your borrowing capacity include: existing personal loan or car finance repayments, credit card limits (lenders typically assess the full limit, not just the outstanding balance), HECS-HELP repayments, and regular financial commitments like private school fees or maintenance payments.

To get an accurate borrowing estimate, use our borrowing capacity tool or speak with a mortgage broker who can assess your full financial picture across multiple lenders.

Step 4. Get Pre-Approval

Mortgage pre-approval (also called conditional approval or approval in principle) is a formal assessment by a lender of how much they are willing to lend you, subject to certain conditions. Getting pre-approved before you start making offers on properties is strongly recommended for first home buyers.

Benefits of pre-approval include: knowing your budget clearly before you start inspecting properties, demonstrating to agents that you are a serious buyer, and being able to move quickly when you find the right property. In competitive markets, sellers often favour offers from buyers with pre-approval over those without.

Pre-approval typically lasts 90 days and is subject to conditions, usually including a satisfactory valuation of the specific property you are buying. If market conditions change, or if your financial situation changes during the pre-approval period, the lender may reassess their position.

Step 5. Find the Right Property

Finding the right property as a first home buyer is both exciting and overwhelming. Here are the key considerations to keep in mind during your search.

Define your non-negotiables. Before you start inspecting, list the things you absolutely must have (number of bedrooms, proximity to work or schools, type of dwelling) versus things you would like but could compromise on (garage, outdoor area, specific suburb). This prevents you from either being too inflexible or making an emotional decision on a property that does not suit you.

Research comparable sales. Before making an offer, research what similar properties in the same suburb have sold for recently. CoreLogic, Domain and realestate.com.au all provide recent sale data. Understanding market values protects you from overpaying and gives you confidence when negotiating.

Arrange a building and pest inspection. Never buy a property without first commissioning a qualified building inspector and pest inspector to assess the property. The cost ( to typically) is trivial compared to the cost of discovering structural defects, rising damp or active termite damage after purchase.

Review the contract of sale carefully. Before signing anything, have your solicitor or conveyancer review the contract of sale. They will identify any unusual terms, check for encumbrances on the title, and advise on any conditions you should include (such as a finance clause and building inspection clause).

Step 6. Engage a Solicitor or Conveyancer

Conveyancing is the legal process of transferring ownership of property from seller to buyer. You will need a solicitor or licensed conveyancer to handle this process. The cost is typically $1,500 to $2,500 for a standard residential purchase.

Your conveyancer will: review the contract of sale before you sign, conduct title searches and ensure the property title is clear, liaise with the seller conveyancer on any contract amendments, coordinate with your lender for settlement, and attend (or coordinate) settlement on your behalf.

Choose a conveyancer with specific experience in your state or territory, as property law and procedures vary significantly between jurisdictions. Your mortgage broker may be able to recommend a conveyancer they have worked with before, which can streamline communication during the process.

Step 7. Finalise Your Finance

Once you have a signed contract of sale, your lender moves from pre-approval to formal (unconditional) approval. This process involves:

• A formal valuation of the property by a valuer appointed by the lender. The lender needs to confirm the property is worth what you are paying (or more) before they will lend you the money.
• Final verification of your income, employment status and financial circumstances. Do not change jobs, take out new loans or make large purchases between pre-approval and formal approval.
• Loan document preparation and signing. Your lender will send you a loan offer and mortgage documents to sign and return.
• Final confirmation of any applicable government grants or stamp duty exemptions, which your conveyancer will coordinate.

The timeline from formal application to unconditional approval is typically 5 to 15 business days, depending on the lender and the complexity of your application. Your broker will keep you informed throughout.

Step 8. Settlement and Moving In

Settlement is the day when legal ownership of the property transfers from the seller to you. In most states, settlement is now handled electronically via the PEXA platform, removing the need for in-person meetings at the land titles office. Your conveyancer and lender will handle the mechanics.

On settlement day, the lender releases your loan funds, the purchase price is paid to the seller, the title is transferred to your name, and you receive the keys. The process typically takes a few hours and is largely invisible to you. Your conveyancer will call or email you when settlement has completed.

In the days before settlement, you are entitled to conduct a final inspection of the property to confirm it is in the same condition as when you signed the contract and that any agreed fixtures remain in place. If you find any issues, notify your conveyancer immediately so they can be resolved before settlement.

Common First Home Buyer Mistakes

• Borrowing the maximum you are offered. Being approved for $600,000 does not mean you should borrow $600,000. Always run your own budget based on what you can comfortably repay, including a buffer for rate increases.
• Skipping building and pest inspections. This is a false economy. A $500 inspection that reveals serious structural issues saves you from a potentially catastrophic financial decision.
• Not accounting for all buying costs. Beyond the deposit, first home buyers need to budget for stamp duty (unless exempt), conveyancing fees, loan application fees, building and pest inspection, insurance, connection fees and moving costs. These add-ons typically total $10,000 to $20,000 or more depending on the purchase price and state.
• Making large purchases before settlement. Buying furniture, a new car or taking out a personal loan between pre-approval and settlement can affect your credit profile and potentially cause your lender to withdraw approval.
• Emotional decision-making. It is easy to fall in love with a property and ignore red flags or overpay at auction. Stick to your budget and your building inspection findings. There will always be another property.