Buying your first home is a structuring problem, not a leap of faith
A first home purchase feels like one large decision. In practice it is a sequence of smaller ones — how much deposit you genuinely need, which grants and concessions you qualify for, what your borrowing capacity actually is, and which lender's policy fits the way your income and savings are shaped. Get the order right and the purchase stops being a scramble. The question is rarely "can a first home buyer get a loan"; it is "given your deposit, your income and your goals, which lender and which loan structure puts you in the strongest position."
Most first home buyers come in worried about the deposit and the rate. Those matter, but the more useful early work is understanding the full cost of entry and how government assistance changes the maths. Map that properly and you borrow well from the start, rather than discovering surprises at settlement.
The deposit, and the costs around it
The headline number most people focus on is the deposit, but the real figure is deposit plus the costs of acquisition. Borrowing up to 80% of the property value keeps you inside mainstream lender policy and avoids Lenders Mortgage Insurance (LMI). Below a 20% deposit, LMI generally applies — a one-off cost that protects the lender, not you, and it can be added to the loan or paid upfront. Some first home buyer schemes let you borrow with a smaller deposit without paying LMI, which is where eligibility for government support becomes worth checking early.
Around the deposit sit the transaction costs that catch first buyers out:
- Stamp duty (transfer duty). Often the largest single cost after the deposit, but many states offer first home buyer exemptions or concessions below certain price thresholds. Whether you pay full duty, reduced duty or none at all can shift your usable deposit by tens of thousands of dollars.
- First Home Owner Grant. A state-based grant, usually directed at new builds or newly constructed homes. Eligibility, the amount and the property type rules differ by state and change over time, so it is worth confirming against current rules rather than assumptions.
- Lenders Mortgage Insurance. Applies below a 20% deposit and varies with loan-to-value ratio and loan size.
- Conveyancing and legal fees. For the conveyancer or solicitor who handles the contract, searches and settlement.
- Mortgage registration and transfer fees. Government charges to register the mortgage and transfer the title into your name.
- Home and contents insurance. Lenders require the building to be insured from the date you become liable under the contract.
Knowing these in advance changes the conversation. A grant or a stamp duty concession can be the difference between needing a 20% deposit and getting in sooner — but only if the property and the timing fit the rules.
Borrowing capacity and the loan that fits
Serviceability is the lender's assessment of whether you can comfortably repay the loan. It is not a single national formula — each lender applies its own income shading, expense benchmarks and assessment rate (a buffer above the actual rate), which is why borrowing capacity can vary noticeably between lenders for the same applicant. How your income is structured — PAYG, casual, self-employed, bonus or overtime reliant — affects how each lender reads it. That is a policy question, and it is the part most worth getting right before you make an offer.
A guarantor arrangement, where a family member uses equity in their own property to support your deposit, can lift you over the LMI threshold or strengthen a borderline application. It carries real obligations for the guarantor and needs to be structured carefully, not entered into casually.
The loan product itself is the next layer:
- Variable rate loans. The rate moves with the lender's pricing, broadly tracking the RBA cash rate. Generally flexible, with redraw and offset features common.
- Fixed rate loans. The rate is locked for a set term, giving repayment certainty for that period at the cost of some flexibility.
- Split loans. Part fixed and part variable, so you get some certainty and some flexibility rather than committing entirely to one.
- Construction loans. For building a home or buying a house-and-land package, where funds are drawn down in stages as construction progresses.
There is no single best product. The right structure depends on how long you expect to hold, how much certainty you want, and whether you plan to make extra repayments. A comparison rate — which folds most fees into a single figure — gives a more honest read on cost than the advertised rate alone, though it assumes a standard loan that may not match yours.
Time and sequence are the levers
The strongest position a first home buyer can be in is to understand the maths before house hunting, not after a contract is signed. Clearing or consolidating personal debt before you apply lifts your borrowing capacity. Confirming grant and stamp duty eligibility shapes which properties and price points actually work for you. And knowing which lenders read your income favourably means you apply where you are most likely to be assessed well, rather than where you happen to walk in.
If you are early in the journey, a short conversation now is worth more than a rushed application later. There are frequently steps you can take in the months before you buy — to your deposit, your debts, or your timing — that change which lenders will consider you and on what terms.
Book a strategy session and we will map where you stand, what you qualify for, and the cleanest path into your first home.
General information only — not personal financial product or credit advice. Eligibility for grants, concessions and lending is subject to each lender's policy, current government rules, your full circumstances and responsible-lending assessment. AeFin is an Australian Credit Representative (CR 464548) of Finsure (ACL 384704).