Buying your first home is one of the biggest financial decisions you’ll make. At Home Owners Association, we’ve helped countless first-time buyers navigate this complex journey successfully.
This guide walks you through essential tips when buying your first home, from getting your finances ready to closing on your new property. We’ll show you exactly what to expect at each stage.
Get Your Finances in Order
Your credit score is the first thing lenders examine, and it directly affects your interest rate and borrowing capacity. A higher score means better loan terms and potentially thousands of dollars in savings over the life of your mortgage. Check your credit report from all three Australian credit bureaux-Equifax, Experian, and Illion-to spot errors or outdated information that could drag your score down. If you find mistakes, dispute them immediately. Lenders typically want to see a score above 650, though scores above 700 open doors to competitive rates. If your score is lower, spend three to six months paying down existing debts and making all payments on time before applying for pre-approval. This isn’t about perfection; it’s about showing lenders that you manage money responsibly.
How much deposit do you actually need?
Forget the myth that you must save 20% before buying. According to realestate.com.au, many first-time buyers start with deposits as low as 5%, though lenders typically require Lenders’ Mortgage Insurance (LMI) if you borrow more than 80% of the property value. For a $500,000 property with a 10% deposit, LMI costs around $12,000 and can be financed into your loan, making it manageable.
The Australian Government’s 5% Deposit Scheme can help eligible first-home buyers avoid this insurance altogether, so check your state’s eligibility. Setting a realistic savings goal means doing price research upfront-use a mortgage calculator to understand what repayments look like and test affordability under higher interest rates (add 2% to see worst-case scenarios). This prevents the painful discovery that you can’t afford your dream home after months of saving.
Pre-approval gives you real buying power
Pre-approval isn’t a guarantee, but it’s your proof of concept. Lenders can issue conditional approval online in as little as 10 minutes if you’re eligible, helping you move quickly in competitive markets. This approval typically lasts 3 to 6 months and shows sellers you’re serious. It also confirms your actual borrowing capacity based on your income, existing debts, credit score, and savings-not just what you hope to borrow. Your Home Lending Specialist can walk you through options and help you understand what you can genuinely afford without overextending. Try building your budget with some rate-rise headroom; if pre-approved for $500,000, don’t chase properties priced significantly higher just because you’re tempted. The buying process takes months, and sticking to your range prevents disappointment and wasted time viewing properties outside your reach.
What lenders actually look at
Lenders assess your income, existing debts, credit history, and savings to determine how much you can borrow. Your debt-to-income ratio matters significantly-the more debts you carry, the less you can borrow. Some lenders accept boarder income up to $150 per week for owner-occupied loans, which can boost your borrowing capacity if you plan to rent out a room. A mortgage broker can compare loan options from multiple lenders, while a bank provides only its own products. Compare options across both to find the best fit for your situation. Interest rate differences (even 0.5%) add up to thousands of dollars over the life of your loan, so this comparison work pays off.
Next, find the right property
With your finances sorted and pre-approval in hand, you’re ready to search for a property that matches your needs and budget.
Finding the Right Property Within Your Budget
List Your Priorities Before You Search
Now that you’re pre-approved and know your borrowing capacity, the real work begins: finding a property that matches both your financial reality and your long-term needs. Start by listing what actually matters versus what’s nice-to-have. Do you need three bedrooms or can two work? Is a large yard essential, or would you prefer low maintenance? Location proximity to work, schools, or family should rank higher than trendy suburbs or cosmetic features. Set a strict price cap based on your pre-approval and resist the temptation to stretch beyond it, even if a property seems perfect.
Research Neighbourhoods and Understand Hidden Costs
Research your target neighbourhoods thoroughly before viewing anything. Check local council rates, water charges, and body corporate fees if you’re considering apartments. Council and water rates vary dramatically by location-annual sewerage charges range from $493.17 to $1,346.39 depending on your area. These costs add hundreds to your monthly budget, so factor them in early. Look at infrastructure development plans; suburbs with planned transport links, schools, or commercial hubs typically experience stronger long-term value growth than stagnant areas. Visit neighbourhoods at different times-weekday mornings, weekend evenings, and late nights-to understand traffic patterns, noise levels, and how the community actually feels when people are living there.
Conduct a Professional Inspection and Review the Contract
Never skip the professional building and pest inspection; it’s your only real defence against hidden structural problems, termite damage, or faulty electrical work that could cost thousands later. Expect to pay between $300–$700 for a combined report, depending on property size and complexity. Have your conveyancer review the contract before you sign anything, checking for cooling-off periods (which vary by state), settlement timelines, and what’s actually included in the sale. Ask explicitly what fixtures and fittings stay with the property-this prevents costly disputes later.
Make Your Offer and Protect Yourself
When making an offer, decide whether you’ll include a finance condition protecting you if your final loan approval falls through. Competitive markets sometimes demand unconditional offers, but this carries real risk if approval delays happen. Most states allow a brief cooling-off period for private treaty purchases, though auctions typically don’t, so understand your state’s rules. After your offer is accepted, immediately notify your lender about the property and begin the final loan approval process. Your lender will arrange a valuation to confirm the property’s worth matches your loan amount. During this stage, avoid making large purchases, changing jobs, or taking on new debts-lenders often conduct last-minute credit checks before final approval. Settlement typically occurs 6 to 8 weeks after your offer is accepted, during which your conveyancer handles title transfers, final inspections, and coordination with your lender. Once you understand what settlement involves and what happens during those final weeks, you’ll be ready to navigate the closing process with confidence.
Sealing the Deal: From Offer to Settlement
Conditional Versus Unconditional Offers
Making an offer on a property means committing real money and understanding the legal framework that protects or exposes you. When you’re ready to bid, decide upfront whether you’ll make a conditional or unconditional offer. Conditional offers protect you by including a finance clause, which means your offer is subject to final loan approval from your lender. This is the safer route for most first-time buyers, but in heated markets, sellers often reject conditional offers in favour of unconditional ones. If you go unconditional, you’re legally bound even if your loan falls through, which is genuinely risky.
Finalising Your Loan and Protecting Your Credit
After your offer is accepted, notify your lender immediately and apply to finalise your loan. Your lender will order a valuation to confirm the property’s value supports your loan amount. This is when you must stay disciplined with your finances-avoid large purchases, changing employment, or taking on new debts, because lenders conduct last-minute credit checks before final approval. The conveyancer (or solicitor) you’ve already hired should review your contract thoroughly before you sign, checking for cooling-off periods, settlement timelines, and what’s actually included in the sale.
Cooling-off periods vary significantly by state; New South Wales allows 5 business days for private treaty purchases, while Victoria allows 14 calendar days. Auctions typically have no cooling-off period at all, so understand your state’s rules before bidding.
Ask your conveyancer explicitly what fixtures and fittings stay with the property-this prevents disputes over whether the curtains, garden shed, or built-in appliances transfer to you.
Settlement: When Ownership Transfers
Settlement is when ownership officially transfers and your mortgage begins. This typically occurs 6 to 8 weeks after your offer is accepted, though timelines vary. Your conveyancer handles the heavy lifting: coordinating with your lender, arranging title transfers, conducting final inspections, and coordination with your lender. You’ll need to arrange home and contents insurance before settlement-lenders require proof of insurance before releasing funds.
Home and contents insurance for a $500,000 property with $100,000 contents coverage averages around $136.73 per month according to Finder analysis, though premiums vary by state and insurer. Underinsurance is a real problem; assess your property’s replacement value honestly rather than just guessing.
Understanding Stamp Duty and Final Costs
Stamp duty is a tax levied by state or territory governments on certain purchases, including buying a home, land or investment property. For a $500,000 property, first-home buyer stamp duty ranges from $0 in some states with exemptions to $21,330 in South Australia, according to realestate.com.au. Use your state’s official stamp duty calculator-NSW Revenue NSW, QLD Office of State Revenue, VIC State Revenue Office, and others-to get exact figures early.
Beyond stamp duty, budget for conveyancing fees around $1,800, mortgage registration and transfer fees (which range from $443 in New South Wales to $4,680 in South Australia), and a final building inspection if you haven’t completed one already. On settlement day, your conveyancer arranges the final walkthrough to confirm the property is empty and in agreed condition.
This is your last chance to spot issues or missing items before money changes hands. Once settlement completes, you own the property outright (subject to your mortgage) and your regular loan repayments begin.
Final Thoughts
Buying your first home demands discipline, patience, and professional guidance at every turn. You’ve learned the essential tips when buying your first home-from checking your credit score and saving strategically to navigating offers, contracts, and settlement. The journey requires you to treat each step seriously, because your credit score, deposit strategy, pre-approval, neighbourhood research, building inspection, and contract review form your foundation for a sound investment.
After settlement, update your budget immediately to account for mortgage repayments, council rates, water charges, insurance, and maintenance costs. These ongoing expenses often catch first-time buyers off guard, so track your spending closely during the first year and adjust as needed. If you purchase an apartment or townhouse, factor in body corporate or strata fees, which can shift significantly if major repairs become necessary.
At Home Owners Association, we’ve supported Melbourne homeowners since 1980, and we understand that ownership extends far beyond settlement day. We provide trade pricing and discounts on construction, renovation, and maintenance materials, plus expert advice to help your projects meet the highest standards. Our members benefit from personalised guidance tailored to the Melbourne market, ensuring confident decisions throughout your home ownership journey.
