How to Buy Your First Home in Australia
Buying a home is one of the biggest financial decisions you'll ever make. Here's a step-by-step guide to make the process less daunting.
Step 1: Save Your Deposit
Most lenders require a minimum 5–10% deposit, though 20% avoids Lenders Mortgage Insurance (LMI). For a $700,000 home:
- 5% deposit = $35,000 (LMI applies)
- 10% deposit = $70,000 (LMI may apply)
- 20% deposit = $140,000 (no LMI)
Tips to save faster:
- Use a high-interest savings account
- Consider the First Home Super Saver Scheme (FHSSS) to save through super
- Cut discretionary spending and set automatic transfers
Step 2: Check Your Eligibility for Government Grants
As a first home buyer, you may be eligible for:
- First Home Guarantee — buy with 5% deposit, no LMI
- First Home Owner Grant (FHOG) — cash grants in most states for new builds
- Stamp duty concessions — significant savings in most states
Step 3: Get Pre-Approved
Before house hunting, get a conditional pre-approval from a lender. This tells you exactly how much you can borrow, making offers more credible to sellers. A mortgage broker can compare 30+ lenders and find the best pre-approval for your situation.
Step 4: Find a Property
With pre-approval in hand, begin your search. Consider:
- Your commute and lifestyle needs
- Property type (house, unit, townhouse)
- Growth potential of the area
- Ongoing costs (strata fees, council rates, water)
Step 5: Make an Offer or Bid at Auction
In Australia, properties are sold via private treaty (negotiation) or auction. Get a building and pest inspection before making an offer, and consider having a solicitor review the contract.
Step 6: Formal Approval and Settlement
Once your offer is accepted:
- Lender conducts a valuation
- Loan formally approved
- Exchange contracts (pay 10% deposit)
- Settlement (usually 30–90 days later) — ownership transfers to you
Step 7: Move In!
After settlement, collect your keys and enjoy your new home. Set up a repayment strategy from day one — making extra repayments can shave years off your loan.