Your first home • A practical guide
First home buyer? Start with a clear plan
Understand your deposit, the costs to allow for and what happens between finding a home and getting the keys.
You do not need to know all the answers before you start. A little preparation can make the decisions ahead feel much more manageable.
01 / Your budget
Start with the repayment you can live with
Before you fall in love with a property, work through three numbers:
- Your available funds: what you have for the purchase, buying costs and a buffer
- Your comfortable repayment: what fits alongside your everyday spending and future plans
- Your possible borrowing capacity: what a lender may consider after assessing your circumstances
Allow for life as a homeowner too. Rates, insurance, maintenance and strata levies where applicable will sit alongside your loan repayments.
Try different repayments and leave room for higher interest rates or a change in income. The maximum a lender offers may be more than you want to commit to.
Calculator results are estimates based on the information entered. They are not a loan offer, pre-approval or confirmation that a property is affordable for you.
02 / Deposits & costs
Deposits: two meanings worth understanding
Your contribution to the purchase
When a lender or broker talks about your deposit, they generally mean the money you contribute towards the purchase price instead of borrowing it.
A 20% contribution may help you avoid lenders mortgage insurance, often called LMI. Smaller-deposit options may be available depending on the lender, property and your eligibility for support. Buying costs still need to be covered.
The deposit in your sale contract
This is an agreed part-payment of the purchase price. Your contract sets out how much is payable, when it is due and who holds it.
It normally counts towards your overall contribution. It is not an extra amount added to the price. The contract deposit and the lender’s deposit requirement do not have to be the same percentage.
Make sure you can access the required money by the contract deadline. Check the payment instructions with your appointed conveyancer, settlement agent or solicitor.
What about LMI?
Lenders mortgage insurance protects the lender if you cannot repay the loan. It does not protect you. It may apply when borrowing more than 80% of the property’s assessed value, although exemptions and eligible government guarantees can change this.
If LMI is added to your loan, you borrow more and pay interest on that amount. Ask for the total cost rather than looking only at the deposit percentage.
Buying costs to include in your budget
Before and at settlement
- Transfer duty, often called stamp duty, unless an exemption or concession applies
- Conveyancing or settlement fees, property searches and government registration charges
- Building and pest inspections or relevant strata checks
- Lender fees, valuation charges and LMI if applicable
- Adjustments for items such as council rates, water charges or strata levies
- Building insurance from the appropriate start date. Check your contract and lender requirements with your settlement representative and insurer before signing. Do not assume cover can wait until you move in.
When you move in
- Moving costs, utility connections and contents insurance
- Essential appliances, furniture and immediate repairs
- A cash buffer for costs you did not expect
If you are building
- Site works, variations and items excluded from the building quote
- Finishing costs such as fencing, landscaping or window coverings
- Rent and loan costs during the build, plus room for delays
Ask for an itemised estimate for your own purchase. Costs depend on the property, location, contract and loan. Check when each amount must be paid, especially if you are relying on a grant that is paid later.
Planning to build? Read the construction loan guideAllow for buying costs and a cash buffer. Check when insurance must start with your settlement representative and insurer before signing.
Grants, schemes and family support
There are different types of help and each has its own rules:
- A grant can contribute money towards an eligible purchase or build
- A duty concession or exemption can reduce the transfer duty you pay
- A government deposit guarantee can help eligible buyers purchase with a smaller deposit without LMI. You still repay the loan
- Shared equity involves sharing ownership with the government and has different ongoing obligations
In WA, the First Home Owner Grant is generally for eligible new homes or builds. An established home may still qualify for first-home transfer duty relief. Check the rules for the state or territory where you are buying.
The guide covers state assistance and national programs, including the Australian Government 5% Deposit Scheme. Eligibility, property caps, timing and lender requirements apply. Confirm support before including it in your budget.
What lenders check
01
Income they can verify
Your employment type, income history and supporting documents matter. Overtime, bonuses, casual income and self-employed earnings may be assessed differently from a regular base salary.
02
Your real living costs
Lenders consider expenses and commitments as well as earnings. Include childcare, transport, insurance and other regular spending. Your future plans matter too, especially if your income or costs are likely to change.
03
Debts and available credit
Credit cards, personal loans, car finance, buy now pay later commitments and HELP debt can affect the assessment. A credit card’s limit can matter even when the balance is low.
04
Your savings and deposit source
Expect questions about where the money came from and how long you have held it. Savings, gifts and grants may require different evidence. Requirements vary by lender and loan.
05
Your repayment and credit history
Lenders can review credit applications, existing accounts and repayment history. Check your credit report early so you have time to query errors.
Understand your credit history06
The property and the loan
The lender also assesses the property offered as security. Its valuation may differ from the purchase price. That can change the amount it will lend or the funds you need to contribute.
Who helps with each part of buying
Real estate agent
The selling agent markets the property, arranges inspections and takes offers to the seller. They act for the seller. A buyer’s agent, if you separately appoint one, represents you under your agreed service arrangement.
Useful question: Who do you represent in this transaction?
Conveyancer or settlement agent
They handle the transfer and settlement process, including relevant searches, documents, adjustments and coordination with the other parties. In WA, a licensed settlement agent performs conveyancing work. The terminology and permitted scope differ between states.
Choose your own representative early and ask what their quote covers.
Useful question: Can you run a contract review and how much does it cost?
Land developer
A developer creates or sells a development, such as a subdivision or new estate. For a vacant block, they are a key contact for land availability, title timing and estate requirements. They may be a different business from the builder.
Useful question: Is the land titled and what conditions affect what I can build?
Builder
The builder delivers the home under the building contract, plans and specifications. Ask about inclusions, exclusions, site costs, variations and progress payments. An advertised package price needs to be checked against the full contract and your chosen block.
Useful question: What will I still need to pay for outside this quote?
Mortgage broker
My role is to help you understand your lending position, explain loan options and guide you through the application process. I can help coordinate the finance side with your other professionals. Lending guidance does not replace legal, tax or building advice.
Useful question: What could change my borrowing position before settlement?
Lender
The lender assesses the application and property, sets the loan conditions and decides whether to approve and advance funds. A selling agent, developer or builder cannot guarantee the lender’s decision.
Useful question: What conditions are still outstanding before funds can be advanced?
03 / Before you commit
Before you sign or bid
Pre-approval can help you understand your possible price range. Its conditions, expiry date and level of assessment matter. Final approval may still depend on the property, valuation, updated documents and your circumstances.
Before committing, check:
- Has the lender assessed my documents or is this only an initial estimate?
- What conditions and expiry date apply to my pre-approval?
- Has my solicitor reviewed the contract risks and any conditions I need?
- Is the finance deadline realistic and do I understand what happens if it is missed?
- What must I pay now, at settlement and after I move in?
- Are the inspections, settlement date and insurance arrangements clear?
Home-loan words explained
Select a term to see what it means.
LVR: loan-to-value ratio
The loan amount as a percentage of the property value the lender accepts. For example, a $480,000 loan against a $600,000 value has an 80% LVR. Fees added to a loan can affect the calculation.
Serviceability
The lender’s assessment of whether you can meet repayments after allowing for income, expenses, other debts and its assessment rules.
Genuine savings
A lender’s term for funds that meet its rules about how you saved or held them. A large account balance alone may not satisfy those rules. Requirements and alternatives vary.
Conditional approval or pre-approval
An indication of what a lender may lend, subject to conditions. Read what has actually been assessed and what remains outstanding.
Formal approval
The lender’s written decision to approve the loan. Check the approval and loan documents for any conditions still required before settlement or funds are released.
Subject to finance
A contract condition dealing with finance approval. The wording, dates and notice requirements matter. A solicitor can explain your obligations and whether the condition protects your position.
Valuation
An assessment of the property’s value for the lender. It is different from a real estate agent’s market appraisal and from a building inspection. It does not confirm that the property is free of defects.
Settlement
The completion of the property purchase, when the required funds and transfer arrangements are finalised. Your settlement representative coordinates the process with the other parties.
Principal and interest
The principal is the amount you owe. A principal-and-interest repayment pays some of that balance as well as interest. An interest-only period does not reduce the principal through the scheduled repayments.
Fixed and variable rates
A fixed rate stays the same for an agreed period. A variable rate can change. Check flexibility, fees and any restrictions on extra repayments, especially during a fixed term.
Comparison rate
A figure combining the interest rate with most fees and charges using specified loan assumptions. It helps with comparisons but does not include every possible cost or reflect every loan size and term.
Offset and redraw
An offset is a linked account whose eligible balance reduces the loan amount used to calculate interest. Redraw may let you access extra repayments you have made into the loan. Fees, availability and access rules vary.
Your first conversation
You do not need to have everything perfect
For our first conversation, have a rough idea of your savings, income, debts, expenses and the kind of home you want. Recent payslips and a savings statement can help. If you are self-employed or your situation is more complicated, we can talk through what information is needed.
Bring the questions you think you should already know the answers to. They are often the most useful ones.
See the appointment preparation checklistA clear next step
Work out your next step
Whether you are ready to buy or still building your deposit, we can talk through your position and what to work on next.
Liran Morris, Mortgage Matrix Broker
Grants and schemes have separate eligibility requirements and may change. Seek appropriate legal, tax or other professional advice for your circumstances.