Buying Your First Home in Australia
A complete step-by-step guide to purchasing your first property in Australia, from saving a deposit to settlement day.
General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.
Step 1.Assess Your Financial Readiness
Before you start browsing listings, take an honest look at your finances. Calculate your total savings, review your credit score (you can get a free report from Equifax or Illion), and tally up your existing debts including HECS-HELP, car loans, and credit cards. Lenders will assess your borrowing capacity based on your income, expenses, and liabilities. A general rule is that banks will lend you around 5-6 times your gross annual income, but this varies. Use Savings Mate's borrowing power calculator to get a realistic estimate. If your finances need work, it is better to know now and spend 6-12 months strengthening your position before applying.
Step 2.Understand First Home Buyer Benefits
Australia offers significant benefits for first home buyers, but they vary by state and territory. The First Home Owner Grant (FHOG) provides $10,000-$30,000 depending on your state and whether you are buying new or building. Stamp duty concessions can save you tens of thousands — in NSW, for example, first home buyers pay no stamp duty on properties under $800,000. The First Home Super Saver Scheme (FHSSS) lets you withdraw voluntary super contributions (up to $50,000) for your deposit at a lower tax rate. Check your state's revenue office website and the ATO for FHSSS details. These benefits can collectively save you $20,000-$60,000, so do not skip this research.
Step 3.Save Your Deposit
Most lenders require a minimum 5% deposit, but aiming for 20% avoids Lenders Mortgage Insurance (LMI), which can cost $10,000-$40,000 depending on the property price. For a $600,000 home, that means saving $120,000 for the full 20%. Set up a dedicated high-interest savings account and automate weekly transfers. Cut discretionary spending ruthlessly — cancel unused subscriptions, reduce dining out, and consider a side hustle. The FHSSS can boost your savings through tax advantages. If you have family willing to act as guarantors, you may be able to borrow up to 100% of the property value, but understand the risks this places on your guarantor.
Step 4.Get Pre-Approval for a Loan
Pre-approval (also called conditional approval) gives you a clear budget and shows sellers you are a serious buyer. Approach your bank or a mortgage broker — brokers can compare hundreds of loan products and often find better rates. You will need to provide payslips, tax returns, bank statements, and identification. Pre-approval typically lasts 3-6 months. Be aware that each formal loan application creates a credit inquiry on your file, so avoid applying to multiple lenders directly. A mortgage broker submits one application at a time, minimising credit impacts. Compare interest rates, offset account features, redraw facilities, and ongoing fees when choosing your loan.
Step 5.Search for Properties and Make an Offer
With pre-approval in hand, start attending open homes and auctions in your target suburbs. Research recent sale prices on Domain or REA to understand fair market value. At auction, set a firm maximum bid and do not exceed it — emotional bidding is the fastest way to overpay. For private treaty sales, your offer can include conditions such as a building and pest inspection, finance approval, and a cooling-off period. Always get a building and pest inspection ($400-$700) before committing — it can reveal structural issues worth tens of thousands to repair. Engage a conveyancer or solicitor ($800-$2,000) to review the contract of sale before you sign anything.
Step 6.Secure Your Loan and Exchange Contracts
Once your offer is accepted, your lender will conduct a property valuation to confirm the home is worth the purchase price. If the valuation comes in lower than expected, you may need to renegotiate the price or increase your deposit. Your conveyancer will handle the contract exchange, during which you typically pay a 0.25% deposit (or 10% at exchange in some states). Ensure your finance clause gives you enough time to receive formal approval — usually 14-21 days. This is also the time to arrange building insurance, as you become responsible for the property from exchange. Review all contract terms carefully with your conveyancer before signing.
Step 7.Prepare for Settlement
Settlement usually occurs 4-6 weeks after exchange. During this period, finalise your home loan paperwork, arrange contents insurance, and set up utilities (electricity, gas, internet) to transfer on settlement day. Do a final inspection of the property 1-2 days before settlement to ensure it is in the same condition as when you made your offer and that all included fixtures remain. Your conveyancer and lender will coordinate the financial settlement electronically — you do not need to attend. On settlement day, the balance of the purchase price is transferred, and the property title is registered in your name. Collect the keys from the real estate agent and celebrate.
Step 8.Manage Your New Home Finances
Congratulations on becoming a homeowner! Now set yourself up for long-term success. Set up an offset account linked to your home loan — every dollar in the offset reduces the interest you pay. Make extra repayments whenever possible; even an extra $100 per month on a $500,000 loan can save you over $40,000 in interest and cut years off your mortgage. Review your home loan annually to ensure you still have a competitive rate — refinancing can save thousands. Budget for ongoing costs including council rates ($1,000-$3,000/year), water rates, strata fees (if applicable), maintenance, and home insurance. A common rule is to budget 1-2% of the property value annually for maintenance.
Useful Tools
- Borrowing Power Calculator
- Stamp Duty Calculator
- Mortgage Repayment Calculator
- Savings Goal Tracker
Resources
- ATO — First Home Super Saver Scheme (ato.gov.au)
- State Revenue Office — First Home Buyer Benefits
- Moneysmart — Buying a Home (moneysmart.gov.au)
- NHFIC — First Home Guarantee (nhfic.gov.au)