How to Prepare for Your First Home Loan Application

Your deposit will likely determine which government schemes you can access and how much you pay upfront.

The Australian Government 5% Deposit Scheme allows eligible first home buyers to purchase with a 5% deposit without paying Lenders Mortgage Insurance. The scheme has no income caps and no annual place limits, but property price caps apply depending on your location. In New South Wales, the cap is $1,500,000 in capital city and regional centres and $800,000 in other areas. In Queensland, the cap is $1,000,000 in capital city and regional centres and $700,000 elsewhere. Applications are made through a participating lender, not directly through Housing Australia.

If you have a smaller deposit, Help to Buy allows you to purchase with as little as 2% down. The government takes an equity stake of up to 40% for a new home or 30% for an existing home. Income limits apply: $100,000 for individuals and $160,000 for joint applicants. Help to Buy is available in New South Wales, Victoria, Queensland, South Australia, Western Australia, the Australian Capital Territory and the Northern Territory, but not in Tasmania.

Consider a buyer in Brisbane purchasing an established apartment valued at the suburb's current median. With a 5% deposit under the Australian Government scheme, they avoid LMI and can combine the concession with Queensland's first home stamp duty concession. If they were purchasing a new home, they would also be eligible for the $15,000 First Home Owner Grant. The combined savings on stamp duty and LMI can exceed $30,000 depending on the property value and loan size.

Low Deposit Options Beyond 5%

You can purchase with a 10% deposit outside the government schemes, but you will pay LMI unless you qualify for a waiver.

LMI protects the lender if you default, but the cost is added to your loan. On a property valued at $600,000 with a 10% deposit, LMI can add $15,000 to $20,000 to your total loan balance depending on the lender and your credit profile. Using a government scheme removes this cost entirely.

Some lenders accept a gifted deposit from immediate family members, but the gift must be genuine and non-refundable. Lenders will ask for a signed declaration from the person providing the gift confirming it does not need to be repaid. If you are combining genuine savings with a gifted deposit, the lender will still assess your borrowing capacity based on your income and liabilities, not the size of the gift.

First Home Buyer Grants and Stamp Duty Concessions by State

Each state and territory offers different grants and concessions, and most can be combined with federal schemes.

In New South Wales, you can access a full stamp duty exemption on homes valued up to $800,000 and a sliding concession on properties between $800,001 and $1,000,000. The $10,000 First Home Owner Grant applies only to new builds or substantially renovated homes valued under $600,000, or land and build contracts up to $750,000. You must move in within 12 months and live in the property for at least 12 continuous months.

In Victoria, the First Home Owner Grant is $10,000 for new homes valued up to $750,000. Stamp duty is fully exempt on properties valued up to $600,000, with a sliding concession on properties between $600,001 and $750,000. Both new and established homes qualify for the stamp duty concession.

Queensland increased its First Home Owner Grant to $15,000 from 1 July 2026 for new homes valued under $750,000. The grant was $30,000 for contracts signed between November 2023 and June 2026. For new homes, you pay no stamp duty regardless of property value. For established homes, duty is reduced but not eliminated, with a maximum concession of $17,350 for properties valued up to $709,999. The concession phases out and reaches nil at $800,000.

In Western Australia, the First Home Owner Grant is $10,000 for new homes valued up to $800,000 south of the 26th parallel and $1,000,000 north of it. No stamp duty applies on homes valued up to $600,000 statewide, with a concessional rate on homes between $600,001 and $800,000. The geographic distinction between Perth, Peel and regional areas was removed from May 2026, meaning a single statewide threshold now applies.

South Australia offers a $15,000 grant for new homes with no property price cap for contracts entered into from June 2024 onwards. Stamp duty relief is available on new homes and vacant land only, with no value cap. You must live in the property for at least 6 continuous months starting within 12 months of settlement.

In Tasmania, the First Home Owner Grant increased to $20,000 for new homes from July 2026. The full stamp duty exemption for established homes that applied until June 2026 has ended.

The Australian Capital Territory removed the property value limit and income threshold for the Home Buyer Concession from July 2026. Eligible buyers are now fully exempt from stamp duty regardless of the property value or household income. You must own and occupy the property as your principal place of residence for at least one year starting within 12 months of settlement.

The Northern Territory offers a $50,000 HomeGrown Territory Grant for new homes purchased or built under contracts signed between October 2024 and September 2027. There is no cap on the purchase or build price. The Territory Home Owner Discount provides a reduction of up to $18,601 on transfer duty for eligible buyers.

What to Gather Before You Apply for Pre-Approval

Lenders assess your income, savings, debts, and credit history before approving a loan.

You will need payslips covering at least the most recent three months, tax returns if you are self-employed, and bank statements showing at least three months of transaction history. Lenders want to see genuine savings, which means funds held in your account for at least three months. A gifted deposit does not count as genuine savings, but it can still form part of your total deposit if declared correctly.

If you have existing debts such as a car loan, personal loan, or credit card, lenders will factor the repayments into your borrowing capacity even if the balance is low. A credit card with a $10,000 limit reduces your borrowing capacity by roughly $30,000 to $40,000 depending on the lender's assessment rate, even if you pay the balance in full each month. Closing accounts you do not use or reducing limits before applying can improve your capacity.

As an example, a couple in Melbourne earning a combined income of $120,000 with no dependents and minimal liabilities could borrow around $650,000 to $700,000 depending on their lender and the assessed interest rate. If they had a $15,000 credit card limit and a $400 monthly car loan repayment, their borrowing capacity might drop by $80,000 or more. Clearing the car loan and closing the credit card before applying would restore most of that capacity.

Fixed Rate, Variable Rate, or Split Loan Structures

Your loan structure affects your repayments, flexibility, and ability to make extra payments without penalty.

A variable rate loan allows you to make unlimited extra repayments and typically includes features like an offset account or redraw facility. Rates can rise or fall depending on market conditions. A fixed rate loan locks your rate for a set period, usually one to five years, which protects you from rate increases but restricts extra repayments. Most lenders allow up to $10,000 to $30,000 in additional repayments per year on a fixed loan without penalty, but limits vary.

A split loan divides your borrowing between fixed and variable portions, giving you rate certainty on part of the loan and flexibility on the rest. In our experience, buyers who want the security of fixed repayments but also want to pay down the loan faster often choose a 50/50 or 60/40 split. If you are planning to use an offset account to manage cash flow, make sure the variable portion of your split loan includes that feature, as offset accounts do not typically apply to fixed portions. For more on how split structures work in practice, see our page on split loans for granny flat construction.

How Pre-Approval Works and How Long It Lasts

Pre-approval tells you how much you can borrow and gives you confidence when making an offer.

Pre-approval is conditional. The lender assesses your income, liabilities, and credit history and provides an approval in principle, usually valid for three to six months depending on the lender. Pre-approval does not guarantee final approval. Once you find a property and sign a contract, the lender will value the property and review your financial position again. If your circumstances change between pre-approval and settlement, such as a job change or new debt, the lender can withdraw or adjust the approval.

Pre-approval is not mandatory, but it speeds up the process once you find a property. Without it, you may need to make your offer subject to finance, which can weaken your position in a competitive market. Some sellers will not consider offers without pre-approval or proof of funds.

Using the First Home Super Saver Scheme to Boost Your Deposit

The First Home Super Saver Scheme allows you to save for a deposit inside your superannuation fund and withdraw up to $50,000 in eligible contributions.

You can release up to $15,000 of personal contributions from any one financial year, with a total cap of $50,000 across all years. Concessional contributions are taxed at 15% instead of your marginal income tax rate, which can deliver significant tax savings if you are on a higher income. You need to obtain a determination from the Australian Taxation Office before signing a purchase contract, and you must use the released funds toward a deposit within 12 months of release.

The scheme works in addition to other government schemes and state concessions. If you are planning to use the scheme, factor the ATO processing time into your timeline. Applications can take several weeks, and you cannot sign a contract or make an unconditional offer until the determination is issued.

Offset Accounts and Redraw Facilities

An offset account reduces the interest you pay without locking your money into the loan.

An offset account is a transaction account linked to your home loan. The balance in the offset account is subtracted from your loan balance when calculating interest. If you have a $500,000 loan and $20,000 in your offset account, you only pay interest on $480,000. Your repayment amount stays the same, but more of each repayment goes toward the principal instead of interest.

A redraw facility allows you to withdraw extra repayments you have made on your loan. Redraw is available on most variable loans and some fixed loans, but lenders can restrict or suspend redraw access at any time. Offset accounts offer more flexibility because the funds remain in a separate account and are not subject to lender restrictions. If you are planning to build or renovate after purchasing, keeping funds in an offset account rather than paying them directly into the loan gives you immediate access without needing to apply for redraw. For more on how equity can be used for future construction, see our page on using home equity to build a granny flat.

Call one of our team or book an appointment at a time that works for you. We work with first home buyers across Australia and can help you structure your deposit, apply for the right government schemes, and submit your application to a lender that fits your situation.

Frequently Asked Questions