Buying your first home is exciting, but there is more to consider than finding the right property. Your deposit, borrowing capacity, government support and loan structure all influence what you can comfortably afford.
If you’re planning to buy within the next 6-18 months, getting prepared now can make the process feel much more manageable. You don’t need to have everything worked out before asking for help.
Here are 10 things every first home buyer in Australia should understand before entering the property market in 2026.
1. Your borrowing capacity may be different from your budget
Your borrowing capacity is the amount a lender may be willing to lend you. Your budget is what you can comfortably repay while managing everyday life.
Those two figures aren’t always the same.
Think about groceries, transport, childcare and the activities you want to keep enjoying. Consider future changes too, such as parental leave, a career move or starting a family.
Before setting your price range, check how repayments would change if interest rates increased. Moneysmart’s mortgage calculator can help you explore different loan amounts and rates.
A comfortable budget should leave room for savings and unexpected expenses.
2. You may not need a 20% deposit
“How much deposit do I need?” is often the first question buyers ask.
A 20% deposit can generally help you avoid Lenders Mortgage Insurance, or LMI. This insurance protects the lender if you cannot repay your loan; it does not protect you.
However, some lending options and government initiatives allow eligible buyers to purchase with less.
The Australian Government 5% Deposit Scheme currently allows eligible first-home buyers to purchase with a minimum 5% deposit, without LMI. It has no income caps and unlimited places, although eligibility requirements, property price caps and participating-lender lending criteria still apply.
The government provides a guarantee to the lender, rather than paying part of your deposit. You remain responsible for repaying your loan.
For example, 5% of a $700,000 property is $35,000. You would also need to allow for purchasing costs, and both you and the property would need to qualify.
A smaller deposit usually means a larger loan, so consider the repayments as well as the upfront savings.
3. A deposit is not the only upfront cost
Saving your deposit is a major milestone, but it is only one part of your purchasing budget.
Depending on the property, location and loan, additional costs may include:
- Stamp duty, also called transfer duty.
- Conveyancing and legal fees.
- Building and pest inspections.
- Loan application and valuation fees.
- Mortgage and transfer registration charges.
- Moving expenses.
- Initial insurance premiums and utility connection costs.
Some first-home buyers qualify for grants or stamp duty concessions, but the rules vary between states and territories. Your purchase price and whether the home is new or established can affect what is available.
The First Home Owner Grant website directs you to the relevant state or territory authority. Confirm your eligibility before including assistance in your budget.
4. Government support schemes are worth investigating
First home buyer government schemes can help in different ways. Some reduce deposit requirements, while others support saving or contribute towards a purchase.
Options to investigate include:
Australian Government 5% Deposit Scheme: Helps eligible buyers purchase with a smaller deposit and avoid LMI, as outlined above.
Help to Buy: The Australian Government Help to Buy Scheme allows eligible applicants to purchase with a minimum 2% deposit. The government can contribute up to 30% of the price of an existing home or 40% of a new home.
Help to Buy is a shared-equity arrangement. The government’s contribution must eventually be repaid, with repayment generally linked to the property’s value at that time. Income limits, property price caps, participating-lender requirements and other conditions apply. Check availability in your state or territory.
First Home Super Saver Scheme: Allows eligible buyers to access certain voluntary super contributions, plus associated earnings calculated under the scheme, towards their first home. Contribution limits, tax rules and release requirements apply. Review the ATO’s First Home Super Saver guidance before making contributions for this purpose.
State-based grants and stamp duty concessions: May reduce eligible buyers’ upfront costs, depending on local rules.
Don’t assume you qualify for every scheme or can combine them all. Check how each option applies to your circumstances.
5. Pre-approval should come before serious property hunting
First home loan pre-approval can give you a clearer purchasing range before you start making offers.
A lender reviews your financial position and provides a conditional indication of how much it may lend. This can help you focus your search and avoid becoming attached to properties outside your budget.
However, pre-approval is not final loan approval. It can expire, and the lender will still need to assess the property and confirm that its conditions are satisfied. Changes to your income, debts or circumstances can affect the outcome.
Moneysmart’s home-buying guide explains where pre-approval fits into the process.
If buying is still several months away, start with a broker conversation and arrange pre-approval closer to when you’re ready to act.
6. Your financial habits matter before you apply
Lenders look beyond your salary. They assess your income, living expenses, existing debts and repayment history to understand whether you can manage a home loan.
Credit cards and Buy Now Pay Later commitments can also form part of that assessment.
In the months before applying, aim to:
- Build a consistent savings habit.
- Pay bills and debt repayments on time.
- Review subscriptions and regular spending.
- Avoid taking on unnecessary new debt.
- Keep payslips, bank statements and other financial records organised.
You don’t need to cut out every coffee or social occasion. The goal is to understand your spending and establish a budget you can maintain.
Loan Gallery’s first home buyer mortgage brokers can help you understand your position and identify what to work on before applying.
7. The lowest interest rate is not always the best loan
The interest rate matters, but it is only one part of the loan.
When comparing options, consider:
- Comparison rate: Includes interest and most fees, based on a standard loan amount and term. Your actual costs may differ.
- Application and ongoing fees: Consider their cost over time.
- Offset account: A linked account whose balance can reduce the loan amount charged interest.
- Redraw: Access to extra repayments, subject to lender conditions.
- Fixed versus variable rates: Weigh repayment certainty against flexibility and potential rate changes.
- Repayment flexibility: Check whether extra repayments are allowed and whether limits apply.
- Cashback conditions: Review eligibility and any repayment obligations.
- Loan restrictions: Understand break costs and limits on switching or accessing features.
Compare loans using the same loan amount and term, and consider whether the features justify any extra cost. Moneysmart’s guide to choosing a home loan explains these trade-offs.
8. Property inspections and contract reviews are essential
A property can look great during an inspection while hiding issues that are expensive to fix.
Arrange appropriate building and pest inspections before committing. For an apartment or strata property, have relevant records reviewed for issues such as planned works, building defects, disputes and potential special levies.
A solicitor or conveyancer should also review the contract and explain your obligations, deadlines and any conditions you need.
Consumer Affairs Victoria’s property inspection guidance explains why professional checks matter. Purchase rules differ across Australia, so seek advice relevant to your location.
If you plan to bid at auction, organise legal and finance guidance beforehand. Don’t assume you can add conditions or withdraw afterwards.
9. Think beyond the purchase price
Your mortgage repayment is only part of the cost of owning a home.
Your ongoing budget should also allow for council rates, water charges, insurance, utilities, maintenance and repairs. If applicable, include strata or owners corporation fees and potential special levies.
Ask about these costs before making an offer so you can assess the property’s affordability more realistically.
Try to retain an emergency buffer after settlement. Putting every dollar into your deposit may leave you stretched if an appliance breaks or an unexpected bill arrives.
Before buying, practise setting aside your estimated mortgage repayment and ownership costs, allowing for the rent you already pay. This can help you test your budget while building savings.
10. A mortgage broker can guide you through the process
You don’t need to understand every lending term before speaking with a mortgage broker.
A broker can help you assess your borrowing position, compare suitable loans from the lenders they work with, explore relevant government schemes and prepare your application. They can also assist with pre-approval and coordinate the lending process through to settlement.
Ask which lenders they can access, how they are paid and why a recommended loan suits your needs. Moneysmart’s mortgage broker guide includes useful questions to bring to your first conversation.
At Loan Gallery Finance, our first home buyer support can help you understand your options and plan your next steps, even while you’re still saving.
Start with a plan before you start your property search
Buying your first home involves plenty of decisions, but you don’t need to make them all at once.
Understanding your budget, checking available support and preparing your finances can make the journey clearer and less stressful.
Whether you’re hoping to buy in six months or still building your deposit, speak with a Loan Gallery Finance mortgage broker before beginning your property search. We can help you understand where you stand and what to prepare next.
