How to Enter the Property Market as a First Home Buyer

Getting into your first property happens faster when you know which schemes apply to you and how lenders assess your application.

The difference between waiting another two years and buying within six months often comes down to understanding low deposit options and matching them to your location and property type. Federal programs now remove annual place limits, and most states have expanded stamp duty relief or removed price caps entirely on new builds. That changes the timeline for buyers who previously assumed they needed to save 20% before applying.

What Deposit Do You Actually Need?

You can purchase with a 5% deposit under the Australian Government 5% Deposit Scheme, which guarantees the gap between your deposit and 20% of the property value. No lenders mortgage insurance applies, and there are no income caps or annual place limits. Applications go through one of 31 participating lenders, including three major banks and 28 non-major lenders. Property price caps vary by city: $1,500,000 in Sydney, $950,000 in Melbourne, and $1,000,000 in Brisbane, with separate caps applying to regional areas.

Single parents or legal guardians can apply with just 2% under the same scheme. The deposit must be genuine savings or a gifted deposit from an immediate family member, depending on lender policy. Some lenders accept first home super saver scheme withdrawals as part of the deposit, while others count only funds held in your account for at least three months.

Consider a buyer approved under the 5% scheme who had been renting while saving. With the LMI waiver, they saved around $12,000 to $18,000 in upfront costs compared to a standard low deposit loan, and their monthly repayments remained the same as if they had paid the 20% deposit. The scheme removed the need to save for another 18 months while rental costs continued to climb.

How State Concessions Change Your Budget

Stamp duty exemptions and grants directly affect how much deposit you need and what you can afford. In New South Wales, full transfer duty exemption applies on properties up to $800,000, with a sliding concession extending to $1,000,000. That exemption can save you $30,000 or more, depending on the purchase price.

Victoria offers a full stamp duty exemption on new and established homes up to $600,000, with a concession phasing out at $750,000. Queensland removed the price cap on transfer duty concessions for new builds from 1 May, meaning eligible buyers pay no stamp duty on a new home regardless of price. South Australia followed the same approach for new homes and vacant land.

In the ACT, all eligible buyers are now fully exempt from conveyance duty regardless of property value or household income from 1 July 2026. The previous income threshold and property value limit no longer apply. That change opens up more suburbs and property types to buyers who were previously caught just above the income cap.

Grants vary more widely. Queensland's First Home Owner Grant dropped from $30,000 to $15,000 for contracts signed from 1 July 2026, though all other eligibility criteria remain the same. Tasmania's grant increased to $20,000 for new homes, subject to final assent. The Northern Territory still offers $50,000 under the HomeGrown Territory Grant for new builds, the highest in the country, for contracts signed by 30 September 2027.

You can generally combine state concessions with the Australian Government 5% Deposit Scheme. The Help to Buy equity program cannot be combined with the 5% scheme, but it can sit alongside most state grants and duty relief. Restrictions depend on the jurisdiction and the specific programs you are using.

Fixed or Variable: Which Rate Structure Suits a Tight Budget?

Your first home loan application will ask you to nominate a rate structure. A variable rate gives you access to an offset account, which reduces the interest charged by offsetting your savings balance against the loan principal. If you regularly hold savings or receive income into that account, the offset can cut years off your loan term without increasing repayments.

A fixed rate locks in your repayment amount for a set period, usually one to five years. That certainty helps with budgeting, but fixed loans rarely allow offset accounts and often limit extra repayments to a capped amount each year. If rates drop, you remain locked in unless you pay break costs to exit early.

Some buyers split the loan, fixing part and leaving part variable. That structure gives partial rate protection while retaining access to an offset and the flexibility to make extra repayments on the variable portion. Splitting works when you want budget certainty on a portion of the debt but expect to hold savings or make lump sum payments over time.

In our experience, buyers who receive irregular income or expect bonuses, tax refunds, or gifted funds after settlement tend to benefit more from a variable loan with a full offset. Buyers on a stable salary who prefer a set repayment figure and do not expect to accumulate offset balances often lean toward a fixed rate, particularly if they are stretching serviceability.

What Lenders Look for in a First Home Loan Application

Lenders assess your income, expenses, existing debts, and deposit source. Serviceability calculations include your living costs, credit card limits (even if the balance is zero), personal loans, buy now pay later accounts, and any other ongoing commitments. If your credit card limit is $10,000 but you never use it, the lender still factors in a repayment based on that limit when calculating how much you can borrow.

Closing unused accounts or reducing card limits before applying can increase your borrowing capacity. Even a $5,000 limit reduction can lift your maximum loan amount by $30,000 or more, depending on the lender's buffer and assessment rate.

Your deposit must be verified. Bank statements showing the full deposit amount and how it was accumulated are mandatory. If part of the deposit is a gift, most lenders require a signed letter from the person providing the funds confirming it is a genuine gift with no repayment expectation. Some lenders also require the donor's bank statement showing the withdrawal.

Pre-approval gives you certainty before you start looking at properties. It locks in your borrowing capacity and confirms the lender will proceed subject to a satisfactory valuation and final checks. Most pre-approvals last three to six months. That window lets you make an offer with confidence and strengthens your position in a negotiation, particularly if you are competing with other buyers.

How to Use Help to Buy Without Losing Flexibility

Help to Buy allows the Australian Government to take an equity share of up to 40% on a new home or 30% on an established home in exchange for a contribution toward the purchase price. You need a minimum 2% deposit, and income limits apply: $100,000 for individuals and $160,000 for joint applicants or single parents. Property price caps vary by location, and the scheme is now available in New South Wales, Victoria, Queensland, South Australia, the ACT, the Northern Territory, and Western Australia. Tasmania has opted out.

The equity share means the Government owns a portion of the property and receives the same proportion of any capital gain or loss when you sell or buy them out. If the property increases in value by $100,000 and the Government holds a 30% share, they are entitled to $30,000 of that gain. The same applies in reverse if the property falls in value.

You can buy out the Government's share at any time by refinancing or paying cash. Some buyers use Help to Buy to enter the market sooner, then buy out the equity share within a few years once their income or savings position improves. Others hold the arrangement longer and accept the shared capital outcome in exchange for lower repayments and a smaller deposit requirement upfront.

Help to Buy cannot be combined with the 5% Deposit Scheme, so you need to choose one or the other. For buyers within the income limits and purchasing below the relevant price cap, Help to Buy can reduce both the deposit and the loan amount, which lowers repayments and makes serviceability easier. For buyers above the income threshold or purchasing outside the price caps, the 5% Deposit Scheme remains the primary low deposit option.

Does Borrowing Capacity Change Between Lenders?

Every lender applies a different serviceability buffer and assessment rate. One lender might assess your application at 3% above the actual interest rate, while another adds only 2.5%. That difference can change your maximum borrowing capacity by tens of thousands of dollars on the same income and expenses.

Some lenders exclude certain income types or apply a discount to variable income such as bonuses, overtime, or commission. Others accept 100% of that income if it has been consistent over two years. The same variation applies to rental income if you are buying an investment property or a property with a secondary dwelling that generates rent.

If one lender declines your application or offers a lower amount than you need, a different lender may approve the full amount without any change to your financial position. Borrowing capacity is not a fixed number. It depends on which lender assesses the application and how their policy treats your specific income and expense profile.

We regularly see buyers assume they can only borrow a certain amount based on an online calculator, then discover they can borrow significantly more once the application is structured correctly and submitted to a lender whose policy suits their circumstances. The reverse also happens: buyers who assume they will be approved find out their buy now pay later accounts or high living expenses have reduced capacity below what they expected.

Call one of our team or book an appointment at a time that works for you. We will walk through your income, deposit, and circumstances, match you to the right lender and loan structure, and make sure your application is positioned to get approved at the amount you need.

Frequently Asked Questions