Start with the number, not the listing
Almost everyone does this in the wrong order: browse, fall for a place, then work out whether it was ever affordable.
Settle your capacity first — a real figure built from your income, expenses and commitments, checked against lenders who would realistically say yes to you. Then look at property you can actually act on.
How lenders read your borrowing power
Lenders do not lend against your salary. They lend against your surplus.
- They stress-test the rate. Lenders must check you could still afford the loan at a rate well above the one you will pay.
- Card limits count, not balances. An unused card with a big limit still reduces your capacity.
- Declared expenses have a floor. If your stated living costs fall below a household benchmark, the lender uses the benchmark instead.
- HECS and buy-now-pay-later show up. Both reduce what you can borrow.
Government schemes and grants
This is where most of the leverage is for a first home buyer, and it’s the part almost everyone under-researches.
Assistance generally falls into three categories — a lower deposit with no LMI, a straight cash grant, or a discount on transfer duty — and depending on where you buy and what you buy, more than one can often apply to the same purchase.
Stamp duty concessions
State based, and usually the single biggest saving available to a first home buyer. Full or partial concessions typically apply up to a price threshold that varies by state, and by whether the home is established or newly built. Our calculator applies the current concession for your state.
First home owner grants
A direct cash contribution from your state government, paid at or shortly after settlement. Amounts and rules differ by state, and most restrict it to a new build or a substantially renovated home rather than an established one.
Guarantee & shared equity schemes
Federal and state programs that let eligible buyers purchase with a deposit well under 20% and no LMI, or with government co-ownership reducing what you need to borrow. Places are often capped, and income and price limits apply.
Deposit, and the 20% question
20% is the level at which most lenders stop requiring lenders’ mortgage insurance. It is a threshold, not a rule.
LMI protects the lender, not you, and gets more expensive the smaller your deposit. Whether paying it is worth it usually comes down to one thing: what buying sooner in a rising market is worth, against the cost of the premium. We work through that trade-off with you rather than defaulting to “20% or nothing” — and check the schemes above before assuming you need LMI at all.
What to budget for beyond the deposit
Your deposit is not your only up-front cost.
- Stamp duty, unless you are exempt.
- Legal or conveyancing fees, and building and pest inspections.
- Lender application and valuation fees.
- Mortgage registration and transfer fees.
- Council and water rate adjustments at settlement.
- Building and contents insurance, from the day you are on the hook.
Then there is moving, and the list of things a first home always turns out to need. Leaving a buffer after settlement is planning, not pessimism.