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First Home Buyer's Guide

Buying your first home is one of the biggest financial decisions you'll make, and it's normal to feel a mix of excitement and uncertainty. This guide walks through the practical steps involved in preparing for a home loan — from working out your deposit to what happens on settlement day — so you know roughly what to expect at each stage.

Step 1: Work Out What You Can Realistically Afford

Before you start looking at properties, it helps to get a rough sense of your borrowing power and your comfortable monthly repayment. Lenders will look at your income, existing debts, living expenses and credit history, but you can start by estimating repayments yourself using a mortgage calculator across a few different loan amounts and interest rates.

It's worth budgeting for more than just the repayment itself. Rates, insurance, maintenance and moving costs all add up once you own a home, so building some buffer into your budget from the start can save stress later.

Step 2: Save Your Deposit

Most lenders prefer a deposit of at least 20% of the property price, though many will lend with a smaller deposit. A larger deposit generally means a smaller loan-to-value ratio (LVR), which can help you avoid Lenders Mortgage Insurance (LMI) and may support a better interest rate.

A simple example

If you're buying a $600,000 property with a 10% deposit ($60,000), your loan-to-value ratio is 90%, and LMI is likely to apply. With a 20% deposit ($120,000), your LVR drops to 80%, which typically avoids LMI altogether. Every extra percentage point of deposit reduces both your loan size and your risk profile in the eyes of a lender.

Step 3: Understand the Extra Costs of Buying

Beyond the deposit, first home buyers often underestimate the additional costs involved in a purchase, including:

• Stamp duty, which varies by state and property value
• Loan establishment and valuation fees
• Building and pest inspections
• Conveyancing or solicitor fees
• Moving costs and initial setup for the property

Government schemes and stamp duty concessions for first home buyers do exist in various forms, but eligibility rules and thresholds change over time and differ by state, so always check current details directly with your state revenue office or a conveyancer rather than relying on outdated information.

Step 4: Get Pre-Approval

Pre-approval (sometimes called conditional approval) gives you an indication of how much a lender may be willing to lend you, based on your financial situation at the time. It's not a guarantee of final approval, but it gives you a clearer budget to shop with and shows sellers you're a serious, prepared buyer.

Step 5: Choose Your Loan Structure

Once you've found a property, you'll need to settle on a loan structure. This typically means deciding between a fixed or variable interest rate, and whether features like an offset account or redraw facility matter to you. These decisions affect your repayments and flexibility, so it's worth comparing a few scenarios before signing anything.

Step 6: Settlement Day

Settlement is when ownership of the property formally transfers to you and the loan funds are released to the seller. In the lead-up, your conveyancer or solicitor will handle the legal transfer, and your lender will finalise the loan documentation. Once settlement is complete, you'll receive the keys and officially become a homeowner.

Ready to see what your repayments could look like? Try the Smarter Mortgage Calculator to estimate repayments for different deposit sizes and loan terms.