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Guide · First home

How to buy your first home: every pathway, step by step

Bayley Clarke · Mortgage broker on the road · Last checked 6 September 2026 · 12 min read

The short answer

Most people think there's one path: save 20%, walk into your bank, hope. There are at least five ways in, and the right one depends on where you're standing right now.

"How do I actually buy my first home?" is the question I get more than any other, and it's really six questions in a row. How much can I borrow. How do I get the deposit together. What help is there. How do I get approved. How do I make an offer without getting burnt. What happens between the handshake and the keys. This page walks them in order. Every step has its own full answer one click down, so you can read the map here and go deep where your situation lives.

Where to start, on camera. Everything below is the detail underneath it.

Which pathway is yours?

Do you have a deposit saved?

YES

20% or more saved?

No LMI, the widest lender list, and the deposit is not your problem. Your borrowing power is. Start at step 1.

5% to 19% saved?

Three exits from LMI: the government 5% deposit scheme, an occupation waiver, or a guarantor. Then it's LMI versus waiting.

Family own property?

A guarantor home loan can mean no deposit and no LMI. Their equity stands in for your savings, and it comes off later.

Living at home cheaply?

Save hard for the 5% scheme, or look at rentvesting: buy the investment first and keep your cheap rent.

Not sure which box you're in? Book a chat and I'll tell you.

Step 1: Know your number before you know your suburb

You don't know where to aim if you don't know what's possible. Before you're scrolling listings on the couch, get your real borrowing capacity: not a guess from an online calculator, the actual figure checked against actual lender policy. Everything else, the suburb, the property type, the timeline, hangs off that one number.

Here's how the bank gets to it. It's an income versus outgoings equation. Your income, anything regular on top of it, every debt you're carrying, and a living-expense figure that is the higher of what you declare and a benchmark table for a household like yours. Then, before it tells you a number, it adds a buffer to the interest rate to check you'd still cope if rates went up. Not every lender adds the same buffer, or reads your income the same way, so the same person gets a different number from every bank. That spread is the whole reason I exist.

Two things surprise people at this step. A bigger deposit doesn't lift your borrowing power, it lifts your purchase price. And a frugal budget doesn't help you, because the bank uses its benchmark anyway. If your number comes back lower than you expected, the reasons are nearly always the same five: a HECS debt, a car loan, card limits, buy now pay later and the rent you don't pay. And if your income isn't a simple payslip, bonus, overtime, casual, self-employed, how each lender shades it moves the number more than anything else.

Go deeper

What is the first step to buy your first home? How much can I actually borrow? If I have a bigger deposit, does that change how much the bank will lend me? Why does the bank ignore my actual budget? What will my repayments be per week? I live rent free with family. Why does the bank add a rent expense?

Step 2: The deposit, and the five ways to get there

You don't need 20%. That myth keeps more people renting than any interest rate ever has. What you need is a deposit the bank will accept, and there are five ways to build one.

1. Save 5% or more and pay LMI.

Lenders mortgage insurance is a one-off cost the bank makes you pay when you borrow more than 80% of the property's value. It protects the bank, not you. The cost slides with how much you're borrowing: just over 80% it may not be much, towards 90% it creeps up, and above 95% it can be anywhere between 20 and 30 grand. Most people add it to the loan. Before you pay it at all, there are three exits worth checking, and they're the next three pathways.

2. The government 5% deposit scheme.

The First Home Guarantee: you put in 5%, the government guarantees the gap up to 20%, and you pay no LMI. It got a lot bigger from 1 October 2025. The income caps are gone and so is the limit on places, so there's no queue and no waiting for a new financial year. Property price caps still apply and vary by state and region, you have to live in the property while the guarantee is attached, and not every lender offers it. Single parents and single legal guardians get their own stream at 2%, and you don't have to be a first home buyer to use that one. The full guide to the scheme covers what it does and the three things it doesn't.

3. A guarantor home loan.

If your parents own property, they can let the bank take a limited slice of their equity as extra security for your loan. No cash changes hands. You can buy with no deposit at all and skip LMI, the guarantee is capped at the shortfall rather than the whole loan, and it comes off once your loan is around 80% of what the place is worth. One thing the brochures don't say: you can't stack a guarantor with the 5% scheme. Every lender that offers both treats a guarantor loan as scheme-ineligible, so it's a genuine either-or, and which one wins depends on your deposit timeline and what you're buying.

4. An occupation waiver.

Some lenders waive LMI up to a certain loan size if you're in a certain occupation. Doctors, nurses, lawyers, accountants and a few others. Every lender decides whether it offers a waiver at all and then which jobs qualify, and the lists diverge hard at the edges. The same registered nurse is excluded at one lender and waived to 90% at another. On a low deposit that's a five-figure difference decided entirely by which bank you walk into.

5. Money from somewhere other than your payslip.

Extra super you've put in yourself can come back out under the First Home Super Saver Scheme. Great idea, terrible name, and it only applies to voluntary contributions, never the money your employer put in. A gift from family works too, with a signed letter saying it's a gift and not a loan. What doesn't work is money sitting in your parents' account, no matter how long you've been putting it there. It either becomes a gift, or it sits in your own name for at least 90 days before it counts as genuine savings. Be aware of that early.

Go deeper

What is lenders mortgage insurance, what does it cost, and can I add it to my loan? Should I pay LMI or keep saving for 20%? Do doctors, nurses and lawyers get LMI waived? How does a guarantor home loan actually work? Guarantor loan or the government 5% scheme: which one is best? Can I buy a property with a $0 deposit? I'm a single parent. Can I really buy with a 2% deposit? Can I buy a home with my super? Can I use money sitting in my parents' account as savings? Should I pay my debts off or keep the money for my deposit? Can two friends or siblings buy a home together?

Step 3: Grants, stamp duty and the fine print that takes them away

Stamp duty is the cost that shocks first home buyers, and for most of them it's mostly not there. Every state publishes a purchase price table that shows the exact point where a first home buyer starts paying. Below the line it's nothing, above it there's usually a sliding discount, and past the top of the range you pay the full amount like anyone else. The first home owner grant is a separate pot and in most states it's for new builds only. Both change regularly, and part of my job is making sure you're not leaving money on the table.

The fine print is where people get caught. Buy with someone who has owned before and, by and large, the benefits are gone for both of you. Some lenders will let you buy on your own as a first home buyer if your partner is financially independent, which can save them. Buy an investment property first and you forgo the scheme, the 5% deposit and the stamp duty concessions, which is a fair trade for a lot of people if it gets them into the market years sooner. And if you're planning to live in it first for the exemption and then rent it out, the rule under the 5% scheme isn't twelve months. It's until your loan is 80% of the property's value, and lenders are checking.

Go deeper

Do first home buyers still pay stamp duty? My partner owned a house before. Am I still eligible for first home buyer benefits? Is it worth living in the property first to get the stamp duty exemption? If I buy an investment property first, do I lose my first home buyer benefits?

Step 4: Pre-approval, and the ten minutes of paperwork

Ideally you've spoken to a broker before you're out making offers. You don't necessarily need a formal pre-approval to make one. If I've already got your payslips and run your scenario across the lenders, and the price you're buying at sits well below the bank's theoretical maximum, make the offer subject to finance. If the market is competitive and you're being pushed to go unconditional, or you're bidding at auction, get the pre-approval. It takes a couple of days and it's generally valid for 90 days. If it runs out while you're still hunting, we redo it.

The paperwork is less than you think. ID, payslips, your tax return or income statement depending on where we are in the financial year, evidence of savings, and statements for any debts that aren't already on your credit file. Self-employed, two years of returns. If you sat down and got everything, it'd take you about ten minutes, and that plus one conversation is most of what I need to pre-qualify you across lenders. Pre-qualified is me saying I'm confident you'll be approved. Pre-approval is the bank saying it. Conditional and unconditional come later, once there's a property.

One thing to tidy before any of it: your credit file. A low score on its own isn't the problem, but missed repayments, a default, or a pile of enquiries in one month will be. And the debts the bank counts aren't the ones you'd guess. A card you clear every month costs you about five dollars of borrowing power for every dollar of limit. A car loan costs roughly four for every dollar owed. A HECS debt barely moves with its balance. Know which one to clear before you clear the wrong one.

Go deeper

Do I need pre-approval before I look? How long does it last? What documents do you actually need from me for a home loan? Pre-qualified, pre-approved, conditional, unconditional: what do the stages actually mean? What credit score do I actually need for a home loan? Does my credit card limit affect my borrowing power? Does a car loan stop me getting a home loan? How much does a HECS debt affect your borrowing power? Does Afterpay affect my home loan application? Will the bank give me a home loan if I'm casual? Can I get a home loan on probation or after switching jobs? Will the bank count my bonus income? Do shift allowances and penalties count as income? I work for the family business. Why do banks treat me differently?

Step 5: Finding it, and making the offer without getting burnt

The agent works for the seller. Their job is solely to look after the current owner, so they're not inclined to do you a favour, and the friendly chat at the open home is part of the job. To make an offer: know your price range first, call the agent, name your number, then follow up with an email setting out the terms. Subject to finance, subject to building and pest, your settlement period. They present it to the owner and that's where negotiations start. The right one will be yours for a reason, and the more offers you make, the more chance you have of getting lucky.

Auction is a different animal. Win the bid and you cannot back out. Your offer is unconditional, so you need a formal pre-approval, a building and pest already done, and a plan for a low valuation before you put your hand up. On market you generally have a cooling off period or a finance clause, which is the breathing room most first home buyers should want.

And the question I hear more than any other at this step: should I wait for rates to drop. No one has a crystal ball. What happens to property when rates come down is every man and their dog suddenly wants to buy, and prices reflect it. You shouldn't be trying to time the market with property. It's a long term game, and the only question that matters is whether it's affordable for you today.

Go deeper

How do I make an offer, and who does the agent work for? What's the difference between buying at auction and buying on market? Should I wait for rates to drop or the market to dip before I buy? Can I buy a block of land now and worry about the build later? Why won't banks finance tiny homes? What is a deposit bond?

Step 6: From accepted offer to keys

Offer accepted, you put down a small holding deposit. The rest of the deposit is due at the end of your finance or cooling off period, and it sits in the agent's trust account until settlement. While your conveyancer works the contract, I turn the pre-approval into a full approval. The bank orders a valuation, and typically you don't pay for it. Conditional approval means "yes, once these boxes are ticked". Unconditional means the bank has signed off on everything.

Exchange is the moment you're formally locked in. Settlement is generally 30 to 60 days after it, depending on your state: loan documents, insurance, ID checks with your conveyancer, then the keys. Start to finish, if you're eager and making offers, the whole thing might be two or three months. Sometimes it takes a few stabs to get an offer accepted, and that's normal.

Go deeper

How long does it all take, and who does what before settlement? When do I pay the deposit to the agent, and where does it go? Exchange versus settlement: what does each one actually mean? Do I pay for the bank valuation?

After you buy: the questions that turn up in year one

Fixed or variable is the first. There's no universally right answer, and anyone who tells you where rates are going is guessing. Fixing buys certainty, variable buys flexibility, and once you know which of those your next few years depend on the decision mostly makes itself. Then the ones that arrive later: whether you can rent the place out (not while the 5% scheme guarantee is attached), what happens if prices fall after you bought with a small deposit (you keep paying, the bank doesn't come knocking), and when your parents come off as guarantor (once your loan is around 80% of what the property's worth, and I track it so you don't have to).

Go deeper

Should I go fixed or variable? What happens if prices fall after I buy with a 5% deposit? Can I rent out the home I bought with the 5% deposit scheme? When do my parents come off as guarantor, and can they guarantee more than one kid?

The other fork: rentvesting

If you're living at home with your parents on very low expenses, or you can't afford to buy where you actually want to live, there's a different first move. Buy the investment first and keep renting. You get the asset and the growth without giving up the lifestyle, and a tenant pays most of the mortgage. Lovely buzzword, and it works for a lot of people.

The trade is your first home buyer benefits, all of them, and the bank will add a notional rent to your expenses because it assumes you won't live at home forever. If paying some stamp duty means getting into the market three, four or five years sooner, the growth over that time may more than make up for it. The numbers decide it, and I've put the whole investor side in its own guide: investment property loans.

Go deeper

Rentvesting: buy the investment first and keep renting. Does it work? If I buy an investment property first, do I lose my first home buyer benefits?

When I'd tell you to wait

I'd rather say it here than have you find out mid-application. If the repayments only work on best-case numbers, a guarantor or a scheme just moves the risk around. Fix the income side first: an extra shift, a debt cleared, a card limit cut. If your credit file has a fresh default or a missed repayment on it, three to six months of clean conduct changes the answer more than any lender choice. If your deposit is in your parents' account, start the 90-day clock now. And if you'd be buying somewhere you don't want to live purely to get in, look at rentvesting before you look at the compromise.

Waiting costs me a deal today. It's still the right call more often than you'd think, and the version I'm trying to save you from is being told to wait a year by the first bank you asked when three others would have said yes this week. That's the other reason to get your number checked across a whole panel before you decide anything.

Want to know which pathway is yours?

Half an hour. Your income, your deposit, your debts, and I'll run your borrowing power across the lenders, tell you which of the five deposit routes fits, and what your next step is. Even if that step is "save for another six months", you'll know the number you're saving towards.

Book a 30 minute call Call 0437 189 939

No application, no credit check, nothing on your file. Just the numbers. · How I get paid

Common questions from first home buyers

How much deposit do I actually need to buy my first home?+

As little as 5% under the government's First Home Guarantee, 2% for single parents under the Family Home Guarantee, or nothing at all with a guarantor home loan. Outside those, you can buy with 5% and pay lenders mortgage insurance, or save 20% and avoid it. You don't need 20%. That myth keeps more people renting than any interest rate.

What changed with the 5% deposit scheme in October 2025?+

From 1 October 2025 the income caps and the annual limit on places were removed, so there's no queue and eligibility no longer depends on what you earn. Property price caps still apply and vary by state and region, you have to live in the property while the guarantee is attached, and you can't combine the scheme with a guarantor.

Guarantor or the 5% scheme, which is better?+

Neither is universally better, and you can't stack them. No deposit saved and family with equity: the guarantor gets you in now, before the goalposts move. Deposit already saved: a place that needs work favours the guarantor so your cash goes into the renovation, a set-and-forget property favours the 5% down and the smaller loan.

Does a bigger deposit mean the bank will lend me more?+

Generally no. Borrowing power comes from your income and your outgoings. A bigger deposit lifts your purchase price, not your loan. If the bank says $600k maximum and you have $30k saved, you're shopping at $630k. Where extra deposit does move the needle is lenders mortgage insurance, which falls away as you get closer to 20%.

Do I need pre-approval before I make an offer?+

Not always. If a broker has already verified your income and run your scenario across lenders, and your offer sits well below the bank's maximum, you can offer subject to finance. In a competitive market, or at auction where the bid is unconditional, get the formal pre-approval. It takes a couple of days and is generally valid for 90 days.

How long does it take to buy a first home?+

Pre-approval takes a couple of days. Once an offer is accepted, settlement is generally 30 to 60 days after exchange depending on your state. Start to finish, if you're actively making offers, two to three months is typical. The biggest variable is how quickly the documents come in and how many offers it takes to get one accepted.

Next question

The First Home Guarantee, explained

The 5% deposit pathway in full: what changed in October 2025, who can use it, and the three things it doesn't do.