TL;DR — Key takeaways
- You can buy with as little as 5% deposit. The First Home Guarantee lets eligible buyers skip LMI entirely.
- LMI protects the lender, not you. On a $600k loan at 5% deposit it typically costs $20,000–$25,000.
- Pre-approval tells you your budget. Conditional approval locks in a property. Unconditional is the green light.
- Stamp duty exemptions can save you $30,000+ as a first home buyer — thresholds vary by state.
- Every lender assesses borrowing power differently. A broker comparing 40+ lenders finds the best fit for you.
- From first conversation to settlement typically takes 6–12 weeks.
Buying your first home is one of the biggest financial decisions you’ll ever make. And for most people, it’s the most confusing.
Variable rates, fixed rates, LMI, LVR, stamp duty, pre-approval, conditional approval. Here’s what actually matters.
How much deposit do you actually need?
A 20% deposit is the benchmark. At 20%, you avoid Lender’s Mortgage Insurance (LMI). But most first home buyers don’t have 20%. And that’s fine.
First Home Guarantee: A government scheme letting eligible buyers purchase with as little as 5% deposit without paying LMI. The government guarantees up to 15% of the loan. Income caps apply: $125,000 (singles) or $200,000 (couples). Places are limited each financial year — your broker can check and apply on your behalf.
What is LMI and how much does it cost?
Lender’s Mortgage Insurance protects the lender — not you — if you default. It kicks in when you borrow more than 80% of the property’s value.
LMI is usually capitalised into your loan, meaning you pay interest on it over the loan’s life. For some buyers, paying LMI to get into the market sooner still makes financial sense — especially when property values are growing faster than savings.
Your broker will model the real LMI cost against projected property growth before you commit — so you can make the call with actual numbers, not guesswork.
Pre-approval vs conditional approval
Stage 1 Pre-approval A borrowing limit assessed by a lender based on your financials. Tells you your budget before you search. Valid for 90 days. Not a guaranteed loan. |
Stage 2 Conditional approval Comes after you’ve found a property. Lender assesses it, orders a valuation, and confirms the loan subject to conditions being met. |
Stage 3 Unconditional approval The green light. All conditions met. Settlement can proceed. This is the point where your purchase is fully confirmed by the lender. |
Stamp duty concessions for first home buyers
Stamp duty is often the biggest surprise cost. As a first home buyer you may be eligible for a full exemption or significant concession.
Thresholds change annually. Always confirm current figures with your broker before factoring stamp duty into your budget.
Understanding your borrowing power
Borrowing power is the maximum a lender will offer based on your income, expenses, debts, and dependants. Every lender assesses it differently — which is exactly why a broker who can compare across 40+ lenders makes a real difference.
Key factors: your income (salary, bonuses, casual income averaged over 2 years), your declared expenses, existing debts including credit card limits, and your deposit size. Use the borrowing power calculator for a quick estimate.
Step-by-step: application to settlement
Credit file, debts, documents: payslips, tax returns, bank statements, ID.
Know your budget and the right lenders before you search.
Typically 3–5 business days. Valid for 90 days.
With a budget you know is real.
Your conveyancer reviews the contract before you sign.
Lender assesses the specific property. Valuation ordered.
All conditions met. Settlement can proceed.
30–90 days after contracts. Keys are yours.
From first conversation to settlement typically takes 6–12 weeks. Your broker manages the lender relationship the whole way through.
Frequently asked questions
| ? | Can I use the First Home Super Saver Scheme? Yes. The FHSS lets you withdraw up to $50,000 in voluntary super contributions for a deposit. There are rules around timing and contribution types — speak to your broker or financial adviser first. |
| ? | Can I buy with a guarantor? Yes. A guarantor — usually a parent — uses their property equity to guarantee part of your loan, letting you avoid LMI with a smaller deposit. They’re not making repayments but they are liable if you default. |
| ? | Is a mortgage broker free? In most cases, yes. Brokers are paid commission by the lender at settlement — not by you. All commissions are disclosed upfront and your broker has a legal obligation to act in your best interests. |
| ? | How long does pre-approval last? Most pre-approvals are valid for 90 days. Your broker can usually refresh it if needed. |