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This page guides you through the basics of choosing a great value first home loan. It shows first home buyers how to work out how much you can borrow, and how to access the many concessions and grants for first home buyers, which could save you thousands.
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With the Suncorp Bank Back to Basics Home Loan - Better Together Special Offer $150k+ LVR ≤ 80% (Owner Occupier, P&I) you can get a variable rate loan with low fees. Available with a 20% deposit.
*The loans in the table above may also be available for non-first home buyers. But first home buyers may find these loans useful because many have low interest rates or max insured LVRs above 80%, meaning you can get them with a smaller deposit.
Before you can get your first home loan or even try to buy a home you need to know how much it will all cost you. Your deposit is usually the biggest cost, and the size of your deposit affects which home loans you can get (we'll cover deposit saving in the next section).
But there are many other costs to consider beyond the deposit:
You can use a borrowing power calculator to get a clear idea of how much a bank will lend you.
You will need to enter your income (and your partner's income if making a joint application), plus the number of dependents and any debts you have. The calculator will then estimate your expenses using a standard cost of living index. The end result will only be an estimate but it gives you a better idea of how much you can borrow.
You can also check out our guide on how to increase your maximum borrowing capacity.
Once you have a good understanding of your property buying costs and how much you can borrow, it's time to think about the deposit.
Loan to value ratio (LVR) is a fancy mortgage term for your deposit size in relation to your property's value. If you bought a $500,000 property with a $100,000 deposit, that would be a 20% deposit, or 80% LVR. Having a 20% deposit means you can avoid paying lenders mortgage insurance.
Max Phelps, founder of Golden Eggs and creator of the FIVE 2 Money Diet, says first home buyers also need to prepare themselves for the financial responsibilities that come with owning a home, which goes much further than just saving the deposit.
"How good are you at managing your expenses and building up savings? If you've gotten into bad spending habits and money feels a little out of control, imagine how much worse it would feel with a giant mortgage hanging over your head," Phelps says.
"People spend an average 30% of their income on a mortgage, but to get ahead, you should plan to still save 20% of your income as well – this will set you apart in the long run."
For those who are considering asking their parents for help with a home loan deposit, Phelps is cautious.
"My advice to parents thinking about putting their property on the line for their kids would be to make sure the kids are good savers first," he says.
"We find that having a few bank accounts spread across at least two banks dramatically increases savings and improves confidence in buying a first home."
If your deposit is smaller than 20% of the property's value (so, your LVR is 81% or higher), your lender will charge you lenders mortgage insurance. This can cost you thousands or tens of thousands on top of all your other expenses (although you can often borrow it alongside your loan amount).
LMI costs vary depending on your loan amount and deposit size. If your LVR is 85% (a 15% deposit) then your LMI will be less than if you have an LVR of 95%.
Here are some examples.
Property price | Deposit | LMI |
---|---|---|
$500,000 | 10% ($50,000) | $8,679 |
$500,000 | 5% ($25,000) | $14,871 |
$700,000 | 10% ($70,000) | $15,498 |
$700,000 | 5% ($35,000) | $27,946 |
$900,000 | 10% ($90,000) | $19,926 |
$900,000 | 5% ($45,000) | $35,931 |
The LMI amounts above are taken from Genworth's LMI premium estimate calculator and are examples only.
Building that deposit for your first home is tough, especially if you're renting. And when house prices rise the amount you need to save only grows. Finding a low deposit home loan can make the task easier. But there are a few other ways to build your deposit:
Read our full guide to building your deposit savings here.
First home buyers in Australia have access to a large and sometimes confusing range of state and federal grants, concessions and other schemes.
Eligibility for these programs depends on factors like your property value and whether it's newly built or already exists. Every state and territory has different rules and policies.
Here is a list of the various first home buyer grants and concessions:
Some first-time buyers are eligible for a cash grant. These grants can run up to $10,000 or even more in some cases. To qualify you often need to be purchasing a new or off-the-plan property, with a limit on the overall value of the property.
These grants differ in every state and territory.
Check your eligibility with our state-by-state first home owner guide
Stamp duty is one of the biggest costs associated with buying a property. Luckily, many first-time buyers can avoid stamp duty completely or get a discount on this tax. In NSW, for example, first home buyers don't have to pay stamp duty on properties valued below $650,000, saving them up to $22,000.
Learn more about the stamp duty exemptions and concessions in each state and territory.
If you only have a 5% deposit saved and you're a first home buyer, you could be eligible for the First Home Loan Deposit Scheme. Under this scheme eligible borrowers can borrow 95% of their property value with a 5% deposit and have the government guarantee the remaining 15% of the deposit, allowing them to avoid LMI costs.
This is a federal government scheme.
Another federal scheme, the First Home Super Saver Scheme allows first home buyers to make extra payments into their superannuation and then withdraw them to use for a home deposit. This ends up saving you in tax while helping you build your deposit.
A federal policy introduced to stimulate the economy after the pandemic hit, HomeBuilder provided grants of up to $25,000 ($15,000 as of 1 January 2021) for Australians building a new home or renovating an existing one. This policy has some very narrow eligibility criteria based on the usage of the grant, your income, the property value or renovation cost.
Keep in mind that first home buyers can often qualify for multiple grants and other schemes at the same time.
Stamp duty discounts
As part of the Victorian state budget update in November 2020, it was announced that all homebuyers, including first timers, now have access to a stamp duty discount of up to 50% of the purchase price of residential property in Victoria.
For those purchasing property in Victoria, a full 50% stamp duty discount will apply to all buyers of newly built homes valued at up to $1 million. For those buying existing homes, a 25% stamp duty discount will apply on properties priced up to $1 million.
This discount on stamp duty in Victoria will be available for those who enter a purchase contract between 25 November 2020 and 30 June 2021. Importantly for first home buyers, this discount applies in addition to any other waivers or concessions that you may be eligible for.
First home buyers, like all other borrowers, need to find a home loan that suits their needs and has a competitive interest rate.
Here's how to find one:
You don't have to find your first home loan all by yourself. Mortgage brokers are experts who have access to home loans from a panel of lenders. They can suggest suitable options for you and help you with the whole application process. Their services are usually free. While most people are perfectly capable of getting their own home loan, a broker can be a useful guide.
The HomeBuilder scheme explained. Learn how Australians who are building or renovating their homes can receive a $25,000 grant.
The First Home Loan Deposit Scheme will let new buyers borrow 95% and avoid paying thousands in lenders mortgage insurance premiums.
Looking to buy your first home? Here's what you can do to maximise your success.
The First Home Super Saver Scheme explained.
If you’re a first home buyer in NSW, find out what government grants and concessions may be available to you if you’re an eligible purchaser.
Hi team,
My fiance and I are looking to go into partnership to buy a property with a family friend. The family friend has good borrowing capacity and will be getting a loan to buy the property, so the title will be in his name, but we are wondering if it is possible to enter into a vendor finance agreement with our family friend to buy a portion of the property while he is still paying off the loan to the bank?
Ideally, we would like to buy a portion of the property and also be on the title without having to subdivide. Is this possible?
We are also wondering if my fiance and I will qualify for the First Home Owners grant and the exception for stamp duty if we go into a vendor finance agreement? We do intend to build our first home.
Thank you!
Hi Bri,
Thanks for reaching out to Finder.
With regard to the option of entering into a vendor finance agreement, it would help you buy a property without having to apply for a bank loan, but there are some major risks involved, including the big risk of losing your home.
The same fees and taxes are payable with vendor finance as they would be with a standard home loan. So the amount of stamp duty payable will vary depending on which state you live in and the value of the property.
To sum it up, if you’re thinking of purchasing a property through vendor finance, you should seek a solicitor to run you through the process and legal considerations so that you may be guided accordingly.
Cheers,
Joanne
Hi, I was wondering if I buy an investment property, whether or not i can claim the fist
home buyers on my second home that I will live in? I live in Victoria.
Hi Joel!
Thanks for the comment.
These are the guidelines for those who wish to claim FHOG on an investment property in Victoria:
Victoria’s State Revenue Office is responsible for offering the $10,000 grant to applicants buying or building their first new home. To be eligible for the grant, you must not have:
– Received a First Home Owner Grant in Australia
– Owned a home in Australia, either jointly or separately, prior to 1 July 2000
– Occupied an Australian home in which either of you acquired a relevant interest on or after 1 July 2000 for at least six continuous months
So if you purchased your investment property on or after 1 July 2000 and you didn’t live in it for a period of six consecutive months, you may be eligible for the FHOG.
You may check the other eligibility criteria for more information.
Alternatively, you may also contact your local state revenue office for clarification.
Hope this helps.
Cheers,
Jonathan
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Hi Kathey,
Thank you for your inquiry.
Unfortunately, we cannot recommend what is best for you. Our company finder.com.au is a financial comparison website and general information service designed to help consumers to make a better decision. Please note we do not represent any company we feature on our pages.
However, at the time of this writing, there are three major search engines on the web today. That would be Google, Yahoo, and Bing. I would recommend you check each of them and see which would best meet your needs and preference.
Regards,
Harold
As a first home buyer, can I buy an investment property, and then when time is right buy a personal living home and qualify for the first buyers home loan on this property?
Hi Glenda,
thanks for the question.
The exact requirements and eligibility will depend on what state you’re buying in. Some states do not allow this, such as NSW and QLD, but others, such as WA, TAS, SA, NT and ACT allow this in some circumstances.
I hope this helps,
Marc.
Hi, I’m on single parenting payment and I was wondering if it was possible to get a home loan of some sort? I’ve read about something about FTB. My daughter is one and I am looking for a job.
Hi Jess,
Thank you for your inquiry.
You may want to see more information on first home owners grants and how this works and a dedicated page for single parent home loans while receiving Centrelink payments.
I recommend getting in touch with a licensed mortgage broker. A broker can help you understand your financial position and they can leverage their panel of networks to find a lender that’s more inclined to review your application.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you.
I hope these pages assist you and show that there are avenues for you to receive a home loan.
Regards
Jodie
we are inquiring for our daughter to see if it is possible for her to get a loan to purchase a home She is on a Carers payment as a single mother with 3 autistic kids. She a part time job with a taxable income of $30 000pa. She is currently paying $720 pm rent, owns her car has a credit card debt of $9 000. Has an excellent credit history. She lives in country Victoria and would be looking at houses in the $120k – 140k range
Hi David,
Thanks for your enquiry.
Generally, lenders will require someone on a carer’s allowance to have an additional source of income to meet their mortgage repayments. Lenders do treat these applications on a case-by-case basis and ultimately they will assess your daughter’s ability to service the loan without incurring undue hardship.
You might be interested to read and compare single income home loans as well as home loans for Centrelink recipients.
I hope you find this useful.
Thanks,
Belinda
Hi there,
My wife and I are considering buying our first home. We have a fairly good deposit, around 40% of the property value.
The problem is we are employed under ABN which means we issue invoice to be paid up by our boss. Just wondering in this case, are we eligible for a home lone? Of course we can get the employment letter from our boss and the bank statement showing all the wage payment.
Thanks for your help.
Hi Peter,
Thanks for the question.
Most lenders will accept this as a form of income, although they may require you to apply for a low doc home loan. I recommend getting in touch with a licensed mortgage broker. A broker can help you understand your financial position and they can leverage their panel of networks to find a lender that’s more inclined to review your application.
I hope this helps,
Marc
hi
My partner has just finished his bankruptcy and would like to buy a home .. He has a small deposit and has not had the first home grant . He has always worded and is on roughly $80k per year .
Is there anyone who would be able to help him?
Hi Melissa,
Thanks for the question.
Your partner may be able to apply for a home loan on a discharged bankruptcy. There are specialist bad credit lenders who can help. You might also want to read our guide on home loans for discharged bankrupts to learn some tips for applying.
Please note that regular lenders will require borrowers to wait up to 7 years for the bankruptcy listing to be removed from their file, while other specialist lenders can grant home loans to those with this listing on their file. I recommend getting in touch with a licensed mortgage broker. A broker can help you understand your financial position and they can leverage their panel of networks to find a lender that is more inclined to review your application.
Cheers,
Marc
Hello,
Do you know how it is possible to get a home loan on an existing relocatable home in a relocatable home village?
So you own the home not the land. Thanks
Hi Blaise,
Thanks for reaching out to Finder.
I’m afraid we do not have a dedicated page specific to your enquiry. I would recommend contacting a mortgage broker for this situation, as they will be able to tell you which banks would consider this kind of home for a residential home loan. Alternatively, they may suggest a personal loan depending on the circumstances.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you.
Cheers,
Marc.
hi my wife and I HAVE $134,000 given to us from a will.
What I wanted to know was we are in a nsw gov house, if we buy a house do we pay stamp duty.
As the house we are looking at is $320,000.
As I Don’t think we could still live in gov house still if we have too much money in bank.
i work 20 hrs a week my wife earns $49.000 before tax.
thanks jeff
Hi Jeff,
Thanks for your question.
Please be advised that there are currently no benefits (grants or exemptions from duty) available to first home buyers who purchase an established property.
If you’re purchasing a new property then you may be eligible for a stamp duty exemption.
Cheers,
Shirley