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First Home Buyer Guide Australia (2026): Step-by-Step From Deposit to Settlement

Buying your first home in Australia means working out how much you can borrow, saving a deposit, understanding which government grants and schemes you are qualified for, and getting through pre-approval, house hunting, contracts and settlement, usually in that order. This guide walks through each stage, in plain English, so you know what to do next no matter where you are in the process.

Last updated: 2026. Scheme rules, price caps and stamp duty thresholds change  always confirm current figures with your lender, broker or state revenue office before signing anything.

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What Every First Home Buyer Needs

Deposit

As little as 5% under the Australian Government’s 5% Deposit Scheme (formerly the First Home Guarantee), or 20% to avoid Lenders Mortgage Insurance (LMI) on a standard loan.

Grants

The First Home Owner Grant (FHOG) a state-based one-off payment, usually for new or substantially renovated homes.

Stamp duty

Most states and territories offer a full or partial exemption for eligible first home buyers, up to a property value threshold.

Pre-approval

Get this before you start seriously house hunting, it tells you your real budget and makes offers more credible.

Timeline

Budget roughly 3–6 months from serious saving/searching to settlement, longer if you’re building.

Who Counts as a First Home Buyer in Australia?

A first home buyer is generally someone who has never owned residential property in Australia either on their own or with someone else and who is at least 18 years old. Most schemes also require Australian citizenship or permanent residency, and that you move into the property as your principal place of residence, usually within 12 months of settlement and for a minimum continuous period (commonly six to twelve months, depending on the state).
One detail that catches people out: several current schemes now

also count you as a first home buyer if you haven’t owned a property in Australia in the past 10 years,

even if you owned one earlier.

Eligibility rules differ slightly between the federal schemes and each state’s stamp duty concession, so it’s worth checking both separately rather than assuming one automatically covers the other.

01

Work Out How Much You Can Borrow

Before you fall in love with a suburb, find out your borrowing power: the maximum a lender is likely to lend you based on your income, expenses, existing debts and the interest rate they use to "stress test" your application (typically your actual rate plus a buffer of around 1–3%).

Lenders will look at:

  • Gross income (base salary, plus a discounted portion of overtime, bonuses or rental income)
  • Living expenses, based on either your actual spending or a standard benchmark, whichever is higher
  • Existing debts  credit cards, car loans, Buy Now Pay Later, and HECS/HELP debt (this reduces borrowing power even though it's not a traditional loan)
  • Employment type and length of time in your current role, especially if you're casual, self-employed, or in probation

A borrowing power calculator gives you a starting estimate, but it's not a substitute for pre-approval  lenders vary in how conservatively they treat overtime, casual income or HECS debt, which is one reason two lenders can quote very different maximums for the same applicant.

02

Save Your Deposit (and Understand Your Options)

The bigger your deposit, the more choice you have and the less you pay in interest and insurance over the life of the loan. Broadly:

20%

deposit  avoids Lenders Mortgage Insurance (LMI) entirely and gives you access to the widest range of loan products.

10–15%

deposit  workable, but you'll usually pay LMI unless you're using a government guarantee.

5%

deposit  accessible via the Australian Government's 5% Deposit Scheme (see below), without paying LMI, provided the property is under the relevant price cap for your location.

Most lenders want to see genuine savings  money you've accumulated yourself over at least three months  rather than a lump sum that appeared just before you applied. Gifted deposits from family are usually accepted, but lenders will ask for a signed gift letter confirming it doesn't need to be repaid. Don't forget to budget beyond the deposit itself: stamp duty, conveyancing, building and pest inspections, and moving costs all sit on top.

03

Know the Government Grants and Schemes You Can Use

This is the area where first home buyers leave the most money on the table, simply because they don't realise how many schemes exist or that some can be combined. Here's what's currently available.

The Australian Government 5% Deposit Scheme (formerly First Home Guarantee)

This scheme lets eligible first home buyers purchase with as little as a 5% deposit  or 2% for eligible single parents and guardians under the related Family Home Guarantee  without paying LMI. The government guarantees the gap to the lender (typically up to 15–18%); it is not a cash grant, and you still need to service the full loan and pass normal lender checks on income, credit history and employment.

Since 1 October 2025, the scheme has been significantly expanded:

  • No income caps  the previous $125,000 (single) / $200,000 (couple) limits have been removed.
  • No annual place limits  every eligible applicant can now access the guarantee, with no waiting list.
  • Higher property price caps, which vary by state, territory, and whether the property is in a capital city, regional centre, or regional area.

Because price caps are location-specific and reviewed periodically, always confirm the current cap for your exact postcode via Housing Australia or your broker before you sign a contract  some suburbs straddle more than one price-cap zone.

First Home Owner Grant (FHOG)

A one-off, state-administered payment (commonly up to $10,000, though amounts and eligibility vary by state) generally aimed at new or substantially renovated homes rather than established properties. Eligibility, amount and property value caps differ significantly by state and territory, so check your specific state revenue office rather than relying on a national figure.

Stamp Duty Concessions and Exemptions

Every state and territory offers some form of stamp duty relief for eligible first home buyers, typically a full exemption below one price threshold and a tapering partial concession up to a higher threshold. Because these thresholds vary considerably by state, this is often the single biggest saving a first home buyer can access  sometimes tens of thousands of dollars  so it's worth confirming the exact bracket for your state before budgeting.

First Home Super Saver Scheme (FHSSS)

Allows you to make voluntary contributions into your superannuation and later withdraw them (plus associated earnings, less tax) to help fund your first home deposit. It can be a useful top-up strategy alongside genuine savings, though the contribution and withdrawal caps and processing timeframes mean it needs to be planned well ahead of when you intend to buy.

Help to Buy (Shared Equity)

A separate federal shared-equity pathway where the government contributes toward the purchase price of an eligible new home in exchange for a share in future capital gains (or losses). It has its own caps and state participation rules, and generally can't be combined with the 5% Deposit Scheme on the same purchase  the two are different pathways solving the same problem in different ways, so it's worth comparing rather than assuming one is automatically better.

04

Get Pre-Approved Before You Start Inspecting

Pre-approval (sometimes called conditional approval) is a lender's indication of how much they're likely to lend you, subject to final conditions like a satisfactory property valuation. It typically takes a few days to a couple of weeks and is generally valid for around three to six months.

Getting pre-approved before you attend open homes matters for two reasons: it stops you wasting time on properties outside your real budget, and it makes your offer more credible to agents and vendors  particularly useful in a competitive market or at auction, where there's no cooling-off period and the sale is final once the hammer falls.

Documents you'll typically need:

  • Photo ID (primary and secondary)
  • Recent payslips and employment confirmation
  • Bank statements showing savings history
  • Details of existing debts, credit cards and living expenses
05

Choose the Right Loan Structure

The "best rate" isn't always the best loan for you  features matter as much as the headline interest rate. Key decisions:

  • Fixed vs. variable vs. split  fixed gives repayment certainty; variable gives flexibility (extra repayments, redraw); split does a bit of both.
  • Offset account vs. redraw facility  an offset account is a linked transaction account where every dollar reduces the interest-charged balance; a redraw facility lets you access extra repayments you've already made. They achieve a similar goal but suit different saving habits.
  • Principal & interest vs. interest-only  most first home buyers should default to principal & interest unless there's a specific reason not to, since interest-only delays building equity.
  • Loan term  a shorter term costs more per month but far less in total interest; a longer term eases cash flow but costs more overall.

This is also where a mortgage broker earns their keep: brokers compare products across a panel of lenders and can help match your specific circumstances (casual income, HECS debt, a gifted deposit, self-employment) to the lender whose credit policy actually fits, rather than you finding out after applying.

06

House Hunting and Making an Offer

Once you know your budget, narrow down suburbs based on lifestyle, commute and amenities, then start comparing listed prices against recent comparable sales, not just asking prices  the two can differ substantially depending on how a property is marketed. Expect the process from active searching to an accepted offer to take a few months on average, since it usually involves multiple inspections, some missed offers, and negotiation.

If you're buying at auction, be aware there's no cooling-off period  the sale is final and not subject to finance or inspection conditions, so all your due diligence (building/pest inspection, finance approval, contract review) needs to happen beforehand. Buying via private treaty gives you a cooling-off period in most states (typically a matter of days) and the contract will specify the deposit amount and payment timing.

07

Building and Pest Inspections, and Contract Review

Before you're legally committed, arrange:

  • A building inspection to identify structural issues, pests, or safety concerns
  • A pest inspection (sometimes combined with the building report)
  • A solicitor or conveyancer's review of the contract of sale  the legal document setting out the terms agreed between you and the seller, including settlement date, inclusions/exclusions, and any special conditions

A conveyancer or solicitor will also run title searches and check for anything that could affect your ownership (easements, zoning restrictions, outstanding rates) before you exchange contracts.

08

Exchange, Cooling-Off and Settlement

Exchange of contracts is when both parties sign and you pay the initial deposit (commonly 5–10%, as specified in the contract). Depending on your state, a cooling-off period may follow, during which you can withdraw (usually forfeiting a small percentage of the purchase price).

Settlement is the final step  typically 30–90 days after exchange  when the remaining balance is paid, the property title transfers into your name, and you receive the keys. In the lead-up to settlement, your lender will finalise the loan, and you'll typically need to arrange:

  • Home and contents insurance, usually required as a condition of settlement
  • A final pre-settlement inspection, to confirm the property is in the agreed condition
  • Removalists and utility connections, timed around your settlement date

Hidden Costs First Home Buyers Forget

Beyond the deposit, make sure you budget for these additional costs:

  • Stamp duty and government transfer/registration fees – Even if you qualify for a concession, check whether it provides a full or partial exemption.
  • Conveyancing or solicitor fees – These cover the legal work involved in purchasing your property.
  • Building and pest inspection fees – An important upfront cost that can help identify costly problems before you buy.
  • Lenders Mortgage Insurance (LMI) – This may apply if your deposit is below 20% and you are not using a government guarantee.
  • Home and contents insurance – Make sure you understand your insurance requirements and have appropriate cover in place.
  • Moving costs and minor setup expenses – Don’t forget utility connections, essential furniture, appliances, and other costs associated with moving into your new home.

Common First Home Buyer Mistakes to Avoid

Buying your first home can be exciting, but it’s easy to overlook important details. Avoid these common mistakes:

  • House hunting before getting pre-approved – This can lead to falling in love with a property that’s outside your realistic budget.
  • Assuming every scheme applies automatically – Grants, the 5% Deposit Scheme, and stamp duty concessions each have their own eligibility requirements and application processes. Make sure you understand the rules before relying on any government assistance.
  • Underestimating settlement costs – Make sure you have enough cash available to cover your upfront costs without becoming cash-poor immediately after moving in.
  • Skipping the building and pest inspection – It can be tempting to skip an inspection to move faster, particularly at auction. However, this can leave you exposed to expensive problems with little or no fallback.
  • Not verifying payment details directly with your solicitor – Before transferring settlement funds, always confirm the bank account details by calling your solicitor or conveyancer using a trusted phone number. Property buyers are increasingly targeted by scammers impersonating conveyancers via email.
  • Comparing only interest rates – The lowest rate isn’t always the best loan. Consider the loan’s features, fees, flexibility, and whether the lender’s lending policy is a good fit for your income type and financial circumstances.

Frequently Asked Questions

Many buyers still aim for 20% to avoid Lenders Mortgage Insurance. Others buy with 10–15% and pay LMI, or use the Australian Government's 5% Deposit Scheme (2% for eligible single parents) to avoid LMI with a smaller deposit, provided the property is under the relevant price cap.
Possibly. Several current schemes extend eligibility to buyers who haven't owned property in Australia in the past 10 years, even if they owned one earlier but check the specific rules for each scheme, as they're not all identical.
Generally yes the FHOG (a state grant, usually for new builds) and the 5% Deposit Scheme (a federal deposit guarantee) address different parts of the purchase and can often be used together if you meet both sets of eligibility criteria. Confirm with your lender or broker, since eligibility for each is assessed separately.
Either can work. A broker compares products across multiple lenders and can be particularly useful if your situation isn't entirely straightforward, casual income, HECS debt, a gifted deposit, or self-employment since lender policies on these vary more than most people expect.
Roughly three to six months from serious searching to settlement is typical, though it can be longer if you're building or if the market in your area is especially competitive.

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