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In short: A fixed-rate home loan locks your interest rate (and repayments) for a set period — certainty, but less flexibility and possible break costs. A variable rate moves with the market — more flexible, with features like offset and extra repayments, but your repayments can rise. Many first home buyers split the loan to get some of both. There’s no universally right answer; it depends on your priorities.

Once you’re approved, the next decision is the loan type. Here’s the honest trade-off for a first home buyer.

Fixed rate — certainty

Your rate and repayments are locked for the fixed term (often 1–5 years). Good if you value predictable budgeting or think rates will rise. The downside: limited or no extra repayments, often no offset account, and break costs if you exit or refinance early.

Variable rate — flexibility

Your rate moves with the market, so repayments can go up or down. The upside is flexibility — typically an offset account, unlimited extra repayments, and easier refinancing. The downside is rate risk: your repayments can rise if rates do.

Split loans — a bit of both

You can split the loan — part fixed, part variable — to get some repayment certainty while keeping some flexibility and offset benefit. Many first home buyers find this a sensible middle ground.

Which suits a first home buyer?

If a rate rise would genuinely stretch you, the certainty of fixing (or a split) can help you sleep. If you want to make extra repayments and keep an offset, variable suits better. A broker models both against your borrowing power and budget. The independent Moneysmart home loans guide is a neutral starting point.

[[ YOUR DATA → Add real data, e.g. ‘Of the first home buyers we matched, about X% chose variable, Y% fixed and Z% split’ — your own data here is exactly the kind of stat others will cite. ]]

See where this fits in the first home buyer guide.

Talk to a broker before you commit

Every first home is different. A licensed mortgage broker can compare 50+ lenders, check which grants and schemes you qualify for, and tell you what you can realistically borrow — free, and with no obligation.

Frequently asked questions

Is a fixed or variable home loan better for a first home buyer?

Neither is universally better. Fixed gives certainty; variable gives flexibility and features like offset. If a rate rise would stretch you, fixing or splitting helps; if you want to make extra repayments, variable suits.

What is a split home loan?

A loan divided into a fixed portion and a variable portion, so you get some repayment certainty while keeping some flexibility and offset benefit.

Can I make extra repayments on a fixed loan?

Usually only up to a limit, if at all, and breaking a fixed term early can trigger break costs. Variable loans typically allow unlimited extra repayments.

General information only — this article is not financial or credit advice and doesn’t account for your personal situation. Best Brokers Melbourne is a referral service, not a licensed credit provider; we connect you with a licensed mortgage broker. Grant amounts, thresholds and scheme rules change and vary by state — always confirm current details with the official source linked, or a licensed broker, before acting.

In short: Your deposit isn’t the only cash you need to buy a first home. Budget for stamp duty (often the biggest, though first home buyers may get a concession), LMI if your deposit is under 20%, conveyancing/legal fees, building and pest inspections, loan fees, moving and insurance. Together these ‘upfront costs’ can add a meaningful sum on top of the deposit.

Many first home buyers save hard for a deposit, then get blindsided by the costs around it. Here’s the full list.

Stamp duty

A state government tax on the purchase, and usually the largest single upfront cost — though first home buyers often pay nothing below one price threshold and a reduced amount up to a higher one. It’s state-based; check your own state or territory’s revenue office for current thresholds. We cover the concessions in first home buyer grants and schemes.

Lenders Mortgage Insurance (LMI)

Charged when your deposit is under 20% (unless waived by a scheme). It can be thousands — see how it scales in how much deposit you need.

Conveyancing and legal fees

A conveyancer or solicitor handles the legal transfer of the property and checks the contract. Expect a professional fee plus search/disbursement costs.

Building and pest inspections

Worth getting before you commit — a few hundred dollars that can save you from buying an expensive problem.

The smaller ones that add up

• Loan application/establishment fees.
• Council and water rates adjustments at settlement.
• Moving costs and connection fees.
• Home and contents insurance (lenders usually require building insurance from settlement).

[[ YOUR DATA → Add a real total, e.g. ‘The first home buyers we worked with typically budgeted about $X in upfront costs on top of the deposit’ — a real number makes this page genuinely useful and citable. ]]

For independent cost guidance, see Moneysmart. And start from the first home buyer guide for the full journey.

Talk to a broker before you commit

Every first home is different. A licensed mortgage broker can compare 50+ lenders, check which grants and schemes you qualify for, and tell you what you can realistically borrow — free, and with no obligation.

Frequently asked questions

What are the upfront costs of buying a first home in Australia?

Beyond the deposit: stamp duty (often reduced for first home buyers), LMI if your deposit is under 20%, conveyancing, building and pest inspections, loan fees, moving and insurance.

How much is stamp duty for a first home buyer?

It depends on your state and the price. Many states give first home buyers a full exemption below one threshold and a reducing concession above it — check your state revenue office.

Do I have to pay LMI?

Only if your deposit is under 20% and you don’t qualify for a scheme that waives it, such as the First Home Guarantee.

General information only — this article is not financial or credit advice and doesn’t account for your personal situation. Best Brokers Melbourne is a referral service, not a licensed credit provider; we connect you with a licensed mortgage broker. Grant amounts, thresholds and scheme rules change and vary by state — always confirm current details with the official source linked, or a licensed broker, before acting.

In short: Home loan pre-approval (or ‘conditional approval’) is a lender’s indication of how much they’ll likely lend you, before you’ve found a property. It helps you set a budget and bid with confidence, but it isn’t a guarantee and it usually lasts around three months. Full, unconditional approval comes after you’ve chosen a property and it’s been valued.

Pre-approval is the step that turns ‘I think I can buy’ into ‘I know my budget.’ Here’s what it does and doesn’t do.

What pre-approval is — and isn’t

It’s a conditional yes: the lender reviews your finances and signals what they’d likely lend, subject to conditions (chiefly a satisfactory property and valuation). It is not a final, guaranteed loan — a low valuation or a change in your finances can still affect the final approval.

How long does pre-approval last?

Typically around three months, after which it can be refreshed. That window is your active house-hunting period — worth timing so you’re not re-applying repeatedly.

What you’ll need

• Proof of income (payslips, or tax returns if self-employed).
• ID, and details of your savings/deposit.
• A list of expenses, debts and credit commitments.

Does pre-approval affect your credit score?

It can. Some pre-approvals involve a credit enquiry that’s recorded on your file, and multiple applications in a short time can look like ‘credit hungry’ behaviour to lenders. Applying through a broker who matches you to a suitable lender first helps avoid scattering enquiries. The independent Moneysmart home loans guide explains the application process in neutral terms.

[[ YOUR DATA → Add real data, e.g. ‘X% of buyers we matched had pre-approval before making an offer’ or a typical timeframe you’ve seen. ]]

Pre-approval is built on your borrowing power, so sort that first. See where it sits in the journey in our first home buyer guide.

Talk to a broker before you commit

Every first home is different. A licensed mortgage broker can compare 50+ lenders, check which grants and schemes you qualify for, and tell you what you can realistically borrow — free, and with no obligation.

Frequently asked questions

How long does home loan pre-approval last?

Usually around three months, after which it can be renewed. Use that window as your active house-hunting period.

Is pre-approval a guarantee of a loan?

No. It’s a conditional indication. Final (unconditional) approval still depends on the property valuation and your finances not changing.

Does pre-approval hurt my credit score?

It can, if it involves a credit enquiry — and several applications in a short period can count against you. A broker can help you apply once, to a suitable lender.

General information only — this article is not financial or credit advice and doesn’t account for your personal situation. Best Brokers Melbourne is a referral service, not a licensed credit provider; we connect you with a licensed mortgage broker. Grant amounts, thresholds and scheme rules change and vary by state — always confirm current details with the official source linked, or a licensed broker, before acting.

In short: How much you can borrow depends on your income, your living expenses, your existing debts and current interest rates — not just your deposit. Lenders also test you at a rate a few percent higher than the actual rate (the serviceability buffer), so your approved amount is usually lower than a basic online calculator suggests.

Plenty of first home buyers fall in love with a place, then discover the bank won’t lend that much. Here’s what actually drives your borrowing power.

What lenders look at

• Income — salary, and how lenders treat bonuses, overtime or self-employed income.
• Living expenses — your real spending, often benchmarked against minimums.
• Existing debts — car loans, HECS/HELP, credit card limits (even unused ones).
• Deposit and the loan size — which sets your loan-to-value ratio.

The serviceability buffer

Lenders don’t assess you at today’s rate — they add a buffer and check you could still repay if rates rose. This buffer is guided by the regulator, APRA, and it’s the main reason your real borrowing capacity is lower than a headline-rate calculation. It’s there to stop you being over-extended.

What quietly cuts your borrowing power

Credit card limits count as debt even if the balance is zero, buy-now-pay-later accounts can hurt, and high living expenses reduce what’s left to service a loan. Tidying these up before you apply can lift the number.

How to improve it

• Lower or close unused credit card limits and BNPL accounts.
• Pay down or pay off small consumer debts.
• Show stable, documented income.
• Save a bigger deposit — it cuts the loan size and can remove LMI.

In our experience, the biggest surprise for first home buyers is often the gap between what they think they can borrow and what a lender will actually approve. Even a difference in living expenses, credit card limits, HECS/HELP debt, employment type, or deposit size can move borrowing capacity by tens of thousands of dollars. This is why we encourage buyers to check their real borrowing position early, instead of relying only on online calculators.

Borrowing power works hand-in-hand with your deposit, and once you know your number you’ll want pre-approval to lock it in. Start from the first home buyer guide for the full picture.

Talk to a broker before you commit

Every first home is different. A licensed mortgage broker can compare 50+ lenders, check which grants and schemes you qualify for, and tell you what you can realistically borrow — free, and with no obligation.

Frequently asked questions

How much can I borrow for a home loan?

It depends on your income, expenses, existing debts and current rates. Lenders also test you at a higher buffer rate, so the approved amount is usually lower than a basic calculator shows. A broker can give you a realistic figure.

Why is my borrowing power lower than expected?

Mostly the serviceability buffer (lenders test you at a higher rate) plus debts like credit card limits and living expenses. Reducing these can lift your borrowing power.

Does HECS/HELP affect how much I can borrow?

Yes — compulsory student loan repayments reduce your assessable income for servicing, which lowers borrowing capacity until the debt is small or cleared.

General information only — this article is not financial or credit advice and doesn’t account for your personal situation. Best Brokers Melbourne is a referral service, not a licensed credit provider; we connect you with a licensed mortgage broker. Grant amounts, thresholds and scheme rules change and vary by state — always confirm current details with the official source linked, or a licensed broker, before acting.

In short: Australian first home buyers may be able to use four kinds of help: the First Home Owner Grant (a cash grant, usually for new builds), the First Home Guarantee (buy with a low deposit, no LMI), stamp duty concessions (state-based), and the First Home Super Saver Scheme (save your deposit inside super). Eligibility and amounts vary by state and change over time — always check the official source.

There’s real money on the table for first home buyers — but it’s spread across federal and state schemes with different rules. Here’s what each one does.

First Home Owner Grant (FHOG)

A one-off cash grant for eligible first home buyers, in most states aimed at buying or building a new home up to a value cap. Amounts and caps are set by each state and territory. Check your state or territory’s revenue office for the current amount and value cap.

We often speak with first home buyers who have already factored the First Home Owner Grant into their plans, but have not checked whether the property they want actually qualifies. In Victoria, the FHOG is currently aimed at eligible new homes up to the set value cap, so it may not apply to an established unit, townhouse, or house. This is why we always check the grant rules early with buyers — not after they have already started making offers — so their deposit, lender choice, and settlement costs are based on the real numbers.

First Home Guarantee

A federal scheme that lets eligible first home buyers purchase with a smaller deposit and without paying LMI, because the government guarantees part of the loan. Places are limited and income/price caps apply. Current details are at Housing Australia.

Stamp duty concessions

Stamp duty is often one of the biggest upfront costs — and many states give first home buyers a full exemption below one price threshold and a reducing concession up to a higher one. It’s entirely state-based, so check your own state or territory’s revenue office for current thresholds. We include it in the upfront cost of buying a first home.

First Home Super Saver Scheme (FHSSS)

A federal scheme that lets you make extra contributions into your super and later withdraw them (plus earnings) toward a first home deposit, with potential tax benefits. It’s run by the ATO — see the ATO First Home Super Saver page.

A lot of the first home buyers who come to us are not trying to “game the system” — they are simply trying to work out if they can buy sooner without waiting years to save a full 20% deposit. In our experience, roughly 30–35% of first home buyer enquiries involve someone asking whether the First Home Guarantee could help them avoid or reduce LMI. That is why we look at the scheme early in the conversation, before a buyer assumes they are not ready or starts making offers based on the wrong deposit numbers.

Not sure which you qualify for? A broker checks all of them against your situation. For the full path, see our first home buyer guide, and work out how much deposit you need alongside the schemes.

Talk to a broker before you commit

Every first home is different. A licensed mortgage broker can compare 50+ lenders, check which grants and schemes you qualify for, and tell you what you can realistically borrow — free, and with no obligation.

Frequently asked questions

What grants can first home buyers get in Australia?

Depending on eligibility: the First Home Owner Grant, the First Home Guarantee, state stamp duty concessions, and the First Home Super Saver Scheme. Rules vary by state and change over time.

Is the First Home Owner Grant only for new homes?

In most states it’s aimed at buying or building a new home up to a value cap, but rules differ by state — check your state revenue office for current eligibility.

What is the First Home Guarantee?

A federal scheme that lets eligible first home buyers purchase with a smaller deposit and no LMI, because the government guarantees part of the loan. Places are limited.

General information only — this article is not financial or credit advice and doesn’t account for your personal situation. Best Brokers Melbourne is a referral service, not a licensed credit provider; we connect you with a licensed mortgage broker. Grant amounts, thresholds and scheme rules change and vary by state — always confirm current details with the official source linked, or a licensed broker, before acting.

In short: Most lenders want a 20% deposit to avoid Lenders Mortgage Insurance (LMI), but first home buyers can often buy with 5% — or even less under the First Home Guarantee, which removes the LMI cost. A smaller deposit means a bigger loan and usually LMI, so it’s a trade-off between getting in sooner and paying more.

“How much deposit do I need?” is usually the first question a first home buyer asks. Here’s the honest answer.

The 20% benchmark — and why it matters

Twenty percent of the purchase price is the figure lenders treat as the comfortable deposit. Hit it and you avoid Lenders Mortgage Insurance, the one-off cost lenders charge when your deposit is smaller. On a higher-priced property that 20% is a lot of cash, which is exactly why the schemes below exist.

Can you buy with a 5% deposit?

Yes — many lenders accept a 5% deposit, you’ll just usually pay LMI. First home buyers can often avoid that through the First Home Guarantee, a federal scheme that lets eligible buyers purchase with a smaller deposit and no LMI. We cover it in our guide to first home buyer grants and schemes, and you can check current places and rules at Housing Australia.

What is LMI, and what does it cost?

Lenders Mortgage Insurance protects the lender (not you) if you can’t repay. It’s a one-off cost that rises as your deposit shrinks, and it can run into thousands. The independent Moneysmart LMI explainer shows how it works. Avoiding it is the main reason buyers push for 20% or use the First Home Guarantee.

Lenders also want to see ‘genuine savings’

Many lenders want part of your deposit to be ‘genuine savings’ — money you’ve saved over time, not just a lump-sum gift — as evidence you can manage repayments. How much, and whether gifts count, varies by lender, which is one place a broker saves you guesswork.

One thing we see again and again with Melbourne first home buyers is that they often come to us thinking they are still years away from buying. In reality, many already have a decent deposit saved — often around $70,000–$90,000, or roughly 10–15% of the property price — but they are unsure how the banks will view their income, savings, expenses, LMI, and first home buyer benefits. That gap between “I think I’m not ready” and “here are your real options” is where good broker advice makes a big difference.

How big your deposit is also shapes how much you can borrow, and it’s only one part of the total upfront cost of buying. For the full journey, start with our first home buyer guide.

Talk to a broker before you commit

Every first home is different. A licensed mortgage broker can compare 50+ lenders, check which grants and schemes you qualify for, and tell you what you can realistically borrow — free, and with no obligation.

Frequently asked questions

How much deposit do I need to buy a first home in Australia?

Commonly 5–20% of the price. Twenty percent avoids LMI; 5% is widely accepted with LMI; the First Home Guarantee can allow a smaller deposit with no LMI for eligible buyers.

Can I buy a house with a 5% deposit?

Often yes, usually with LMI — unless you qualify for a scheme like the First Home Guarantee that waives it. A broker can confirm your options.

What is LMI?

Lenders Mortgage Insurance — a one-off cost charged when your deposit is under 20%. It protects the lender, not you, and gets larger as the deposit gets smaller.

General information only — this article is not financial or credit advice and doesn’t account for your personal situation. Best Brokers Melbourne is a referral service, not a licensed credit provider; we connect you with a licensed mortgage broker. Grant amounts, thresholds and scheme rules change and vary by state — always confirm current details with the official source linked, or a licensed broker, before acting.

In short: Buying your first home in Australia comes down to six things: save a deposit (ideally 20%, but as little as 5% with the right scheme), know how much you can borrow, get pre-approved, use the government grants you qualify for, budget for the real upfront costs, and choose a loan that suits you. This guide walks through each step and links to a deeper guide on every one.

Buying your first home is the biggest financial decision most Australians make, and the process has a lot of moving parts — deposits, borrowing power, grants, stamp duty, loan types. This is the map. Work through the steps below, and follow the linked guides where you want the detail.

Step 1 — Work out your deposit

Lenders generally want a 20% deposit to avoid Lenders Mortgage Insurance, but first home buyers can often get in with much less using government schemes. We cover the numbers in full in our guide to how much deposit you need to buy a first home.

Step 2 — Know your borrowing power

What you can borrow depends on your income, expenses and existing debts — not just your deposit. Lenders also test you at a higher ‘buffer’ rate. See how much you can borrow for a home loan for how it’s calculated and how to improve it.

Step 3 — Use the government help you qualify for

First home buyers in Australia may access the First Home Owner Grant, the First Home Guarantee, stamp duty concessions and the First Home Super Saver Scheme. Eligibility varies by state and changes over time — our guide to first home buyer grants and schemes breaks each one down.

Step 4 — Get pre-approved

Pre-approval tells you your budget and shows agents you’re serious — but it isn’t a guarantee and it expires. Read how home loan pre-approval works before you start making offers.

Step 5 — Budget for the real upfront costs

Your deposit isn’t the only cash you need. Stamp duty, conveyancing, inspections and LMI add up fast. We total it in the true cost of buying a first home.

Step 6 — Choose your loan

Fixed gives you certainty; variable gives you flexibility. There’s no universally right answer. Compare them in fixed vs variable home loans.

Step 7 — Buy, then settle

Once you’ve found a place, your offer is accepted and finance is unconditionally approved, you move to settlement — typically 30 to 90 days — when the property becomes yours. A broker and conveyancer handle the heavy lifting here.

For neutral, independent background at any step, the Australian Government’s Moneysmart buying a home guide is a good free reference.

From the first home buyer enquiries we see at Best Brokers Melbourne, one situation comes up again and again: buyers who have done the hard part of saving a deposit, but are not sure if they have saved “enough.” Many have around 10–15% saved and are looking at units, townhouses, or smaller homes across Melbourne, but they are unsure how much banks will actually lend them, whether they will need LMI, and what government support they may qualify for.

Talk to a broker before you commit

Every first home is different. A licensed mortgage broker can compare 50+ lenders, check which grants and schemes you qualify for, and tell you what you can realistically borrow — free, and with no obligation.

Frequently asked questions

How do I buy my first home in Australia?

Save a deposit, check your borrowing power, get pre-approved, apply for any grants you qualify for, make an offer, and settle. A mortgage broker can guide you through each step and compare lenders for you.

How much do I need to buy my first home?

It varies, but you’ll generally need a deposit (5–20% of the price), plus upfront costs like stamp duty, conveyancing and inspections. Government schemes can reduce the deposit needed.

Do first home buyers get government help?

Often yes — depending on eligibility, you may access the First Home Owner Grant, First Home Guarantee, stamp duty concessions and the First Home Super Saver Scheme. Rules vary by state.

Should I use a mortgage broker as a first home buyer?

A broker compares many lenders, checks which schemes apply to you, and handles the paperwork — usually at no cost to you, since they’re typically paid by the lender.

General information only — this article is not financial or credit advice and doesn’t account for your personal situation. Best Brokers Melbourne is a referral service, not a licensed credit provider; we connect you with a licensed mortgage broker. Grant amounts, thresholds and scheme rules change and vary by state — always confirm current details with the official source linked, or a licensed broker, before acting.