First Home Buyer Guide

The Genuine Savings Myth

You've probably heard you need 20% saved through "genuine savings" – money sitting in your account for at least three months. That's the traditional rule, but it's not the whole story. We've helped first home buyers with as little as 5% deposit enter the market, sometimes even less. The First Home Guarantee scheme has revolutionised the deposit game, allowing eligible buyers to purchase with just 5% down and no Lenders Mortgage Insurance (LMI). That's potentially saving you $15,000-$30,000 in insurance costs alone.

The Family Guarantee Game-Changer

Here's something most people don't realise: your parents can help you buy a home without giving you a single dollar. If they own property with available equity, they can use it as additional security for your loan. This means you could potentially buy with a 5% deposit or even less, avoiding LMI entirely. We've seen families unlock home ownership for their children without touching their retirement savings. The parents don't pay your mortgage; they simply provide security that gives the bank confidence.

Alternative Deposit Sources

Your deposit can come from places you might not expect:

• First Home Super Saver Scheme: You can contribute up to $50,000 into super and withdraw it (plus earnings) for your deposit. Tax breaks on the way in, concessional treatment on the way out.
• Gift funds: Money from family is acceptable, provided it's genuinely a gift with proper documentation.
• First home owner grants: State-specific grants can boost your deposit by $10,000-$25,000 depending on where you're buying.
• Equity from land: Already own land? Some lenders will use this as your deposit for building.

First Home Guarantee (FHBG)

This is the big one. The government essentially guarantees part of your loan, allowing you to buy with just a 5% deposit without paying LMI. There's a catch: places are limited (35,000 spots per year) and there are price caps depending on your location. In Sydney and Melbourne, you're looking at caps around $800,000-$900,000. Regional areas have lower caps but also lower property prices.

Here's what most people miss: you need to move fast when these spots open. We've seen all allocations fill within weeks. Having your finances pre-approved and being ready to act makes the difference between securing a spot and missing out.

Regional First Home Buyer Guarantee

If you're willing to live outside capital cities, there's an additional 5,000 spots just for regional buyers. The same 5% deposit benefit applies, but the price caps and location requirements differ. Some regional areas are only 30-60 minutes from major cities, making this a genuine option for many first home buyers.

First Home Owner Grant (FHOG)

Each state runs its own version. In Victoria and NSW, you can receive $10,000 for buying or building a new home (not existing homes) under certain price thresholds. Queensland offers $15,000-$30,000 depending on location and whether you're building. These grants are literally free money – there's no repayment required. But they're only available once in your lifetime, so use them wisely.

Stamp Duty Concessions

This is where you can save massive amounts. In NSW, first home buyers purchasing under $800,000 pay no stamp duty at all. In Victoria, you might save up to $27,500 on stamp duty exemptions. Each state varies wildly, but the savings are substantial. On a $600,000 property, stamp duty could be $20,000-$30,000. Getting a concession or exemption is like finding an instant deposit top-up.

The Property Hunt Reality

Picture this: you find your dream home. Perfect location, right price, ticks every box. You make an offer, but the seller chooses someone else. Why? Because the other buyer had pre-approval and you didn't. Sellers want certainty. Pre-approval proves you're a serious buyer with finance ready to go. In hot markets, properties can receive multiple offers within days. Pre-approval is your competitive edge.

What Pre-Approval Actually Means

Let's be clear: pre-approval isn't a guarantee, but it's pretty close. The lender has reviewed your finances, confirmed your borrowing capacity, and given conditional approval pending property assessment. It's typically valid for 90 days, giving you a clear budget and confidence to negotiate. We've had clients negotiate $20,000-$30,000 off purchase prices because sellers knew they were genuine, pre-approved buyers.

Documents You'll Need

Getting pre-approved is faster than you think if you're organised. You'll need:

• Last two payslips (or two years of tax returns if self-employed)
• Three months of bank statements
• Proof of savings/deposit
• Identification (driver's license, passport, Medicare card)
• Details of any debts (credit cards, car loans, HECS)

Beyond the Salary Multiplier Myth

You've probably heard you can borrow "five or six times your salary." Forget that outdated rule. Modern lending assesses your genuine ability to service a loan while maintaining your lifestyle. A couple earning $120,000 combined might borrow anywhere from $500,000 to $750,000 depending on their debts, expenses, and deposit size. We've helped clients earning $80,000 borrow over $600,000 by strategically structuring their finances and choosing the right lender.

The Hidden Borrowing Power Killers

Small things can slash your borrowing capacity dramatically:

• Credit card limits: It's not what you owe; it's your total limit. A $20,000 limit you never use can reduce borrowing by $100,000. Close unused cards before applying.
• Buy now, pay later services: Afterpay and Zip show up on credit reports now. Multiple accounts can hurt your application.
• Existing debts: Car loans, personal loans, and HECS debts all reduce what you can borrow. Pay them down or off if possible.
• Living expenses: Lenders use either your actual expenses or a benchmark (whichever is higher). Showing lower genuine expenses helps.

The Lender Choice Strategy

Here's an insider secret: different lenders assess borrowing capacity differently. Some are generous with young professionals expecting salary growth. Others favour couples with dual stable incomes. Some treat HECS debt lightly while others factor it heavily. We've seen borrowing capacity vary by $100,000+ between lenders for the same applicant. Choosing the right lender isn't just about rates; it's about getting approved for what you need.

Maxing Out Your Borrowing Capacity

Just because the bank will lend you $800,000 doesn't mean you should borrow that much. Banks assess what you can service in a rising rate environment, but they don't factor in life's curveballs. What if you want to start a family? Change careers? Take a sabbatical? We recommend keeping a 20% buffer below your maximum borrowing capacity. It's not about buying the biggest house possible; it's about buying a home you can comfortably afford while still living your life.

Skipping the Building and Pest Inspection

This $500-$800 inspection could save you $50,000 in unexpected repairs. We've seen buyers discover structural issues, termite damage, and illegal renovations through inspections. Some sellers get offended when you request inspections. Let them. It's your money and your future home. Make your offer conditional on satisfactory inspections, and don't skip this step to save a few hundred dollars.

Forgetting About Hidden Costs

The deposit and loan aren't your only expenses. Budget for:

• Stamp duty (unless exempt): $10,000-$40,000 depending on state and price
• Conveyancing/legal fees: $1,200-$2,500
• Building and pest inspections: $500-$800
• Lenders mortgage insurance (if applicable): $10,000-$30,000
• Moving costs: $500-$2,000
• Initial home setup: $3,000-$10,000 (lawn mower, tools, minor repairs)

Choosing Rate Over Features

The lowest rate isn't always the best deal. A loan 0.1% higher with an offset account could save you more than a rock-bottom rate without one. We've seen first home buyers save thousands by choosing feature-rich loans over rate-only products. Flexibility matters when you're new to property ownership and still figuring out your financial rhythm.

New vs Established Properties

New properties look gorgeous in marketing materials, but they come with a price premium. You're paying for brand new everything, but you're also covering the builder's profit margin and GST. Established properties offer more negotiation room and you can see exactly what you're getting. The trade-off? Potential maintenance and renovation costs. For first home buyers on tight budgets, established properties in good condition often provide better value per square metre.

Location Compromises That Make Sense

You might not afford that trendy inner-city suburb yet, but smart location choices now can pay dividends later. Look for areas with upcoming infrastructure projects, new transport links, or gentrification signs. We've seen first home buyers purchase in "unsexy" suburbs that became hotspots within 5-10 years. The strategy: buy the worst house in the best street you can afford, rather than the best house in a declining area.

The Investment Mindset for First Homes

Your first home probably won't be your forever home, so think about resale from day one. Properties with broad appeal (3 bedrooms, 2 bathrooms, parking, outdoor space) are easier to sell later. Quirky features you love might limit your buyer pool when you're ready to upgrade. Balance personal preferences with investment fundamentals.

Beyond Basic Brokering

We don't just compare rates and submit applications. Our first home buyer service includes financial health checks six months before you want to buy, identifying exactly what's holding back your borrowing capacity and how to fix it. We explain every government scheme in plain English and determine which ones you actually qualify for (many first home buyers miss out on benefits simply because they didn't know they existed).

The Pre-Purchase Strategy Session

Before you start house hunting, we run through your complete financial picture. Where can you realistically buy? What deposit do you actually need? Which lenders will give you the best deal based on your specific situation? This session alone has saved our clients months of searching in the wrong price bracket or wrong locations.

Ongoing Support Through Settlement

The journey doesn't end at approval. We coordinate with conveyancers, ensure valuations come through smoothly, and troubleshoot any last-minute issues. We've prevented deals from falling apart by catching problems early and finding solutions. You'll have direct access to your broker throughout the process, not a call centre.