Top tips for first home buyers in Australia

You can access grants, incentives and discounts and save tens of thousands of dollars when buying your first home. Tips from these experts will show you how to get into your own home sooner.

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Buying your first property is an exciting time: the prospect of painting the walls, hanging pictures and creating your own sanctuary away from the world is exhilarating. With interest rates at historic lows, we've compiled these top tips for first home buyers to help you get into your own home sooner. Learn how to save a deposit, see how much you can afford to borrow or compare home loan options in the table below.

How to buy your first home

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Check that you're eligible for a home loan

Couple moving in to a new house.Before you get too excited about buying your first home, do some checks that you'll actually qualify for a home loan. Contact several lenders to get an idea of how much money you can borrow based on your current debts and financial position.

This will give you a realistic understanding of what (and where) you can actually buy. Try out Finder's home loan eligibility calculator to get a better idea of where you stand, and look for opportunities to boost your borrowing power; for instance, did you know that having a high credit card limit can impact your borrowing power?

It may be worthwhile consolidating your credit cards to one new low-rate credit card so you can lower your limits and improve your overall financial position.

Research your finance options

The home loan market is complex and competitive, which is why it's a good idea to compare home loans, to make sure you're getting the right rate and features. There are a number of options – from variable to fixed rate loans, to interest-only and investment loans – and there are many different types of mortgages to suit different situations.

If you're self-employed, for instance, you might find that some banks rate you as being too "high risk", while others are more than willing to lend money. It's a matter of finding the right lender and right loan product for you and your situation.

Sort out your debt to boost your borrowing power

If you already have some personal debts, you might find it harder to get a home loan approved, or you may not be able to borrow quite as much as you wanted. Focus on paying off any large and/or unsecured debts you may have before you apply for a home loan, especially high-interest debts. Earlier we suggested consolidating your credit cards; if you have a number of personal loans or car finance, you might want to consider combining those debts into one as well.

Note that some debts, such as university HECS debt, are far less troubling to a lender than unsecured debts such as credit cards, so create a plan to pay off the highest interest debts first.

Buy with just a 5% deposit

The bigger your home loan deposit, the more you may be able to borrow, as many banks and lenders will lend you 80% of the loan, provided you can save the initial 20%. While it's possible to take out a loan with a 5% or 10% deposit, historically, you would have been required to pay lenders mortgage insurance in instances where you have less than a 20% deposit.

However, this has changed since the introduction of the First Home Loan Deposit Scheme (FHLDS), which allows eligible first home buyers to buy a home with just a 5% deposit – without paying lenders mortgage insurance.

Here's how much you would need to save up in order to buy your first home with a standard 20% deposit, versus saving just a 5% deposit – as you can see, the FHLDS has the potential to help you buy a home far sooner than may be possible if you had to save the full 10-20% deposit:

Deposit size$400,000 home$500,000 home$600,000 home$700,000 home
5%$20,000$25,000$30,000$35,000
10%$40,000$50,000$60,000$70,000
15%$60,000$75,000$90,000$105,000
20%$80,000$100,000$120,000$140,000

The ultimate home loan deposit savings guide

Calculate your stamp duty concessions

All property buyers have to pay stamp duty in Australia – but if you're a first home buyer, you may be eligible for a concession or even a complete exemption, depending on your state or territory and the type of property you buy. These can amount to savings of up to tens of thousands of dollars.

Factor in the First Home Owner Grant

You should also see if you're eligible for the First Home Owner Grant. Again, if you're eligible, you'll potentially benefit from a grant worth thousands of dollars, though the exact amount depends on where you live and the type of property you buy. The FHOG is only ever available once, on your very first property purchase; as soon as you become a home owner, even if it's an investment property and you don't use the grant, you're not eligible for this concession again.

Consider buying new

Australia has long battled with a new housing shortage, which is why a number of grants and incentives have been introduced by the government to encourage people to build new houses or apartments. The most recent announcement, HomeBuilder, gives any home buyer (first home buyer or owner occupier, not investors) the opportunity to access a $25,000 grant towards the property purchase. This could be quite the incentive to consider buying a new home.

Crunch all of your other costs

Even after factoring in these generous grants and incentives, home buying can incur many surprise expenses and you don't want to be caught short. Be sure to budget for removalists' costs, home loan application and registration fees, legal expenses and pest inspection reports. Combined, these can amount to several thousand dollars.

Position yourself for success

If you've fallen in love with a particular property, other buyers probably may have taken a liking to it, too. To give yourself the best chance of being the successful buyer, it's a good idea to gather all your paperwork and deposit together, plus pre-approval, before you begin shopping for property. This puts you in a much better position to negotiate, sign a contract and snap up your dream home when you find it, because you'll be ready to take immediate action.

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Caveat emptor (home buyers, beware!)

Imagine buying a car without checking the mileage or the brakes, and then having it break down as soon as you buy it. A home is likely the largest purchase you'll ever make, and ultimately you as the buyer are responsible for making sure you're getting a quality property for the price you're paying.

Get building and pest inspections so you're not stuck with a collapsing, termite-infested disaster, and be sure to take out insurance. Examine the quality of the property's fittings and construction as best you can and if there are obvious repairs needed (and you're okay with taking them on board), make sure you get a quote for repairs and factor that into your budget.

Get expert help

There are professionals who can help you with every step of the home buying process. Buyers agents can help you with the whole property search process, from locating the ideal home to negotiating on the price, while a mortgage broker may be able to help you navigate the loan market. You also want to make sure you engage a licensed conveyancer to look over your contract thoroughly.

Create a home buying strategy

If you want the ease of moving into a home that is already established, landscaped and liveable, you may be favouring buying an established home. Buying a home that has already been built has the advantage of being in an established area with leafy streets, footpaths, nearby parks and, importantly, shops and transport. You may even be planning to buy an older home and carry out some improvements.

When buying a second-hand home, there are a few ploys to watch out for:

  • Hosing down old concrete to make it look new
  • Covering dead gardens with chip bark
  • Nailing brush screens to crappy fences
  • Photoshopping powerlines out and blue skies in

If you would prefer to put your own stamp on your home from the beginning then you might want to build your first home from the ground up. It involves choosing the block and the neighbourhood, the street and the orientation, choosing the plan and the builder, then choosing everything from the doorknobs to the paint colours, the pavers to the curtains and everything in between.

If you are building your own home, you may need to apply for a construction loan to draw down on funds.

Compare home loans for first home buyers

$
years
Name Product Interest Rate (p.a.) Comp. Rate (p.a.) Fees Monthly Payment

HSBC Home Value Loan P&IHome≥ 30% Deposit

HSBC Home Value Loan
2.19%
2.20%
  • App: $0
  • Ongoing: $0 p.a.
$570
$3,288 refinance cashback offer
This competitive variable rate loan is available for borrowers with 30% deposits. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.

St.George Fixed Rate Advantage Package P&IHome 2Y Fixed≥ 20% Deposit

St.George Fixed Rate Advantage Package
1.84%
3.38%
  • App: $0
  • Ongoing: $395 p.a.
$544
$3,000 refinance cashback
Borrowers with 20% deposits or equity can get this competitive fixed rate loan. Refinancers borrowing $250,000 or more can get a $3,000 cashback (Apply by 30 September 2021. Terms and conditions apply). Refinancers Only.

Westpac Fixed Option Home Loan Premier Advantage Package P&IHome 2Y Fixed≥ 5% Deposit

Westpac Fixed Option Home Loan Premier Advantage Package
1.99%
3.48%
  • App: $0
  • Ongoing: $395 p.a.
$555
$3,000 refinance cashback
Lock in a low fixed rate for 2 years that allows you to make up to $30,000 in extra repayments and buy your home with a 5% deposit. $3,000 cashback for eligible refinancers. Apply by 30 September 2021. Terms and conditions apply.

loans.com.au Smart Booster Discount Variable Home Loan P&IHome≥ 20% Deposit

loans.com.au Smart Booster Discount Variable Home Loan
1.99%
2.47%
  • App: $0
  • Ongoing: $0 p.a.
$555
Home buyers can get a very low discounted variable rate for the first year. Requires a 20% deposit. Add an offset account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.

UBank UHomeLoan Variable Rate P&IHome≥ 20% Deposit

UBank UHomeLoan Variable Rate
2.34%
2.34%
  • App: $0
  • Ongoing: $0 p.a.
$582
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.

Suncorp Back to Basics Home Loan P&IHome≥ 20% Deposit

Suncorp Back to Basics Home Loan
2.44%
2.45%
  • App: $0
  • Ongoing: $0 p.a.
$590
A competitive variable interest rate loan with low fees. The establishment fee is waived if you borrow $150,000 or more.

homeloans.com.au Low Rate Home Loan with Offset P&IHome≥ 10% Deposit

homeloans.com.au Low Rate Home Loan with Offset
2.59%
2.61%
  • App: $0
  • Ongoing: $0 p.a.
$601
Save on interest with a free 100% offset account and buy your property with just a 10% deposit. This loan is not available for construction.

loans.com.au Green Home Loan P&IHome≥ 10% Deposit

loans.com.au Green Home Loan
2.08%
2.36%
  • App: $0
  • Ongoing: $0 p.a.
$562
Buying an energy-efficient home to live in? Get a discounted rate and borrow up to 90%.

Westpac Flexi First Option Home Loan P&IHome≥ 5% Deposit

Westpac Flexi First Option Home Loan
2.09%
2.52%
  • App: $0
  • Ongoing: $0 per month
$563
A flexible and competitive variable rate loan from Westpac. This loan is available with a low deposit.

IMB Budget Home Loan P&IHome≥ 5% Deposit

IMB Budget Home Loan
2.68%
2.74%
  • App: $449
  • Ongoing: $0 p.a.
$608
NSW and ACT customers only. You can get an interest rate discount for a limited time with this competitive variable mortgage.

Newcastle Permanent Building Society Premium Plus Package Fixed Rate P&IHome 1Y Fixed≥ 5% Deposit

Newcastle Permanent Building Society  Premium Plus Package Fixed Rate
2.19%
3.83%
  • App: $0
  • Ongoing: $395 p.a.
$570
$2,000 refinance cashback
Enjoy a competitive rate with no application fee for this package loan. $2,000 cashback for eligible refinancers borrowing $250,000 or more.

loans.com.au Smart Booster Discount Investor Variable Home Loan P&IInvestment≥ 20% Deposit

loans.com.au Smart Booster Discount Investor Variable Home Loan
1.99%
2.71%
  • App: $0
  • Ongoing: $0 p.a.
$555
If you have an owner occupier loan with loans.com.au you can also get this very low rate variable mortgage for your investment property. Principal and interest repayments. Add an offset account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.

UBank UHomeLoan Fixed P&IInvestment 3Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
2.09%
2.46%
  • App: $0
  • Ongoing: $0 p.a.
$563
Pay no ongoing fees on this competitive investment loan and fix your rate for 3 years.

Well Home Loans Balanced Variable P&IHome≥ 20% Deposit

Well Home Loans Balanced Variable
1.99%
2.02%
  • App: $250
  • Ongoing: $0 p.a.
$555
A very low interest rate for home buyers with 20% deposits saved. Add an offset account for a small fee.

ME Flexible Home Loan Fixed with Members Package P&IHome 2Y Fixed≥ 20% Deposit

ME Flexible Home Loan Fixed with Members Package
1.89%
3.17%
  • App: $0
  • Ongoing: $395 p.a.
$548
$3,000 cashback when refinancing a loan of $250,000 or more. Other conditions apply. Lock in a competitive rate for owner occupiers for two years. Comes with a 100% offset account.

IMB Fixed Rate Home Loan P&IHome 2Y Fixed≥ 5% Deposit

IMB Fixed Rate Home Loan
1.97%
2.88%
  • App: $449
  • Ongoing: $6 per month
$554
NSW and ACT customers only. Lock in a low fixed rate for two years. Available with a 5% deposit.

Bank of Melbourne Basic Home Loan P&IHome≥ 20% Deposit

Bank of Melbourne Basic Home Loan
2.29%
2.31%
  • App: $0
  • Ongoing: $0 p.a.
$578
A low fee, low rate variable rate loan for home buyers. Requires at least a 20% deposit.

HSBC Fixed Rate Home Loan Package P&IHome 2Y Fixed≥ 20% Deposit

HSBC Fixed Rate Home Loan Package
1.88%
2.86%
  • App: $0
  • Ongoing: $390 p.a.
$547
Lock in a low fixed rate for 2 years and buy your home with a 20% deposit. This loan also lets you make extra repayments.

Well Home Loans Balanced Fixed Home Loan P&IHome 3Y Fixed≥ 10% Deposit

Well Home Loans Balanced Fixed Home Loan
2.14%
2.06%
  • App: $250
  • Ongoing: $0 p.a.
$567
A low 3 year fixed rate for home buyers. Add a 100% offset account with a $10 monthly fee. Not available for construction purposes.

IMB Fixed Rate Home Loan P&IInvestment 3Y Fixed≥ 10% Deposit

IMB Fixed Rate Home Loan
2.35%
3.33%
  • App: $449
  • Ongoing: $6 per month
$583
NSW and ACT customers only. A 3 years fixed rate investor which allows extra repayments to be made.

UBank UHomeLoan Fixed IOInvestment 3Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
2.24%
2.50%
  • App: $0
  • Ongoing: $0 p.a.
$574
Pay no ongoing fees on this investment loan fixed for 3 years.

Newcastle Permanent Building Society Premium Plus Package Fixed Rate P&IHome 3Y Fixed≥ 5% Deposit

Newcastle Permanent Building Society  Premium Plus Package Fixed Rate
2.39%
3.66%
  • App: $0
  • Ongoing: $395 p.a.
$586
$2,000 refinance cashback
A two year fixed rate home loan with no application fees. $2,000 cashback for eligible refinancers borrowing $250,000 or more.

Suncorp Home Package Plus Fixed P&IInvestment 3Y Fixed≥ 20% Deposit

Suncorp Home Package Plus Fixed
2.28%
3.15%
  • App: $0
  • Ongoing: $0 p.a.
$577
$3,000 refinance cash bonus
Borrowers with 20% deposits can lock in a low fixed rate loan for three years. Eligible new borrowers can get the annual package fee reimbursed for the life of the loan. $3,000 refinance cash bonus for eligible borrowers. Other terms, conditions and eligibility criteria apply.

Bank of Melbourne Advantage Package Fixed Home Loan P&IInvestment 2Y Fixed≥ 20% Deposit

Bank of Melbourne Advantage Package Fixed Home Loan
2.24%
3.91%
  • App: $0
  • Ongoing: $395 p.a.
$574
$3,000 refinance cashback.
Lock in a low rate for two years with this competitive investment package loan. Refinancers borrowing $250,000 or more can get a $3,000 cashback (Apply by 30 September 2021. Terms and conditions apply). Refinancers Only.

St.George Basic Home Loan P&IHome≥ 20% Deposit

St.George Basic Home Loan
2.29%
2.31%
  • App: $0
  • Ongoing: $0 p.a.
$578
Competitive, flexible variable rate loan from St.George. Low fees and available with a 10% deposit.

homeloans.com.au Low Rate Home Loan with Offset P&IInvestment≥ 10% Deposit

homeloans.com.au Low Rate Home Loan with Offset
2.74%
2.76%
  • App: $0
  • Ongoing: $0 p.a.
$613
Access a fee-free offset account and a special interest rate for investors. This loan is not available for construction.

Well Home Loans Balanced Variable P&IHome≥ 10% Deposit

Well Home Loans Balanced Variable
2.52%
2.55%
  • App: $250
  • Ongoing: $0 p.a.
$596
A very low variable interest rate for borrowers with a 10% deposit. Add a 100% offset account for $10 a month. Not available for construction purposes.

Newcastle Permanent Building Society Fixed Rate Home Loan P&IHome 1Y Fixed≥ 5% Deposit

Newcastle Permanent Building Society Fixed Rate Home Loan
2.29%
4.11%
  • App: $0
  • Ongoing: $0 p.a.
$578
$2,000 refinance cashback
Competitive fixed rate for home buyers.Available with a 10% deposit.$2,000 cashback for eligible refinancers borrowing $250,000 or more.

UBank UHomeLoan Fixed P&IHome 1Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
1.79%
2.32%
  • App: $0
  • Ongoing: $0 p.a.
$540
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees.

Newcastle Permanent Building Society Premium Plus Package Home Loan P&IHome≥ 20% Deposit

Newcastle Permanent Building Society Premium Plus Package Home Loan
2.69%
3.10%
  • App: $0
  • Ongoing: $395 p.a.
$609
$2,000 refinance cashback
New borrowers or refinancers can get a discounted rate with this package loan. $2,000 cashback for eligible refinancers borrowing $250,000 or more.

HSBC Home Value Loan P&IHome≥ 10% Deposit

HSBC Home Value Loan
2.54%
2.55%
  • App: $0
  • Ongoing: $0 p.a.
$597
$3,288 refinance cashback offer
A competitive value home loan with no ongoing fee. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.

IMB Fixed Rate Home Loan P&IHome 3Y Fixed≥ 5% Deposit

IMB Fixed Rate Home Loan
1.97%
2.81%
  • App: $449
  • Ongoing: $6 per month
$554
NSW and ACT customers only. 3 years fixed interest terms and free access to redraw facility online. Available with a 10% deposit.

Suncorp Back to Basics Home Loan P&IHome≥ 10% Deposit

Suncorp Back to Basics Home Loan
2.59%
2.60%
  • App: $0
  • Ongoing: $0 p.a.
$601
A competitive variable interest rate loan with low fees. The establishment fee is waived if you borrow $150,000 or more.

Newcastle Permanent Building Society Real Deal Home Loan P&IHome≥ 20% Deposit

Newcastle Permanent Building Society Real Deal Home Loan
2.49%
2.53%
  • App: $595
  • Ongoing: $0 p.a.
$594
$2,000 refinance cashback
$2,000 cashback for eligible refinancers borrowing $250,000 or more.

IMB Fixed Rate Home Loan P&IHome 1Y Fixed≥ 5% Deposit

IMB Fixed Rate Home Loan
2.19%
2.98%
  • App: $449
  • Ongoing: $6 per month
$570
Lock in a rate for one year and get the ability to make additional repayments for 12 months without penalty. Face-to-face consultations available for NSW and ACT customers. Available with a 5% deposit.
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6 Responses

    Default Gravatar
    PeachMay 29, 2014

    the First Home Savings Account here is ancient, not updated since 2010. All the dollar limits have since been changed AND the whole scheme has subsequently been scrapped.

      Avatarfinder Customer Care
      ShirleyMay 29, 2014Staff

      Hi Peach,

      Thank you for your feedback, we’ve now updated the page so it’s relevant for our users.

      Cheers,
      Shirley

    Default Gravatar
    JimMay 19, 2014

    Dear sir/madam

    I am buying an established property from a seller
    for $216,000 in fifteen months time to be paid in
    cash from my own savings. The seller is still paying for the mortgage. Could you please tell me
    how and to whom and in what manner should this money be paid?
    Should the payment be made before or after the documentation has been completed?

    Could you please give me an estimate of all other cost including the GST.

      Avatarfinder Customer Care
      ElizabethMay 20, 2014Staff

      Hi Jim,

      Thanks for your question.

      Usually, payment is made when the seller and the buyer exchange signed copies of the contract of sale. If you are using a solicitor to draw up the documents then they may be able to advise you how the money should be paid, as the payment terms may be specified in the contract.

      As for GST, the ATO has a GST Property Tool that can calculate the GST that will be payable in the sale.

      I hope this has helped.

      Thanks,

      Elizabeth

    Default Gravatar
    phillipFebruary 2, 2014

    is the first home owner grant only for new homes

      Avatarfinder Customer Care
      ShirleyFebruary 3, 2014Staff

      Hi Philip,

      Thanks for your comment.

      Yes the FHOG is only for new homes.

      Cheers,
      Shirley

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