First-home buyer home loans
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Compare first-home buyer home loans with rates as low as 5.48% (comparison rate^ 6.24%)
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Find your best deal
In our first-home buyer home loans guide:
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Compare first-home buyer home loans (variable rate)
Variable rate owner-occupier home loans (principal & interest) available to first-home buyers, sorted by the lowest interest rate, then the lowest comparison rate.
LCU - Savvy First Home Buyer Loan Variable | |
|---|---|
| Variable interest rate | 5.69% p.a. variable (3-year intro rate) |
| Comparison rate^ | 6.11% p.a. |
| Max LVR | 95% |
| Features |
|
Regional Australia Bank - Introductory Basic Home Loan Variable | |
| Variable interest rate | 5.74% p.a. variable (3-year intro rate) |
| Comparison rate^ | 6.23% p.a. |
| Max LVR | 80% |
| Features |
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Arab Bank Australia - The Basics Home Loan Variable | |
| Variable interest rate | 5.75% p.a. variable (special offer) - discount of 3.54% over the life of the loan |
| Comparison rate^ | 5.88% p.a. |
| Max LVR | 60% |
| Features |
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Summerland Bank - Eco Home Loan Variable | |
| Variable interest rate | 5.84% p.a. variable (special offer) |
| Comparison rate^ | 5.89% p.a. |
| Max LVR | 60% |
| Features |
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Reduce Home Loans - Eco Home Loan Variable | |
| Variable interest rate | 5.84% p.a. variable |
| Comparison rate^ | 5.89% p.a. |
| Max LVR | 80% |
| Features |
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Pacific Mortgage Group - Owner Occupied Variable | |
| Variable interest rate | 5.89% p.a. variable |
| Comparison rate^ | 5.89% p.a. |
| Max LVR | 80-90% |
| Features |
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The Mutual Bank - Budget Owner Occupied Variable Home Loan | |
| Variable interest rate | 5.89% p.a. variable |
| Comparison rate^ | 5.89% p.a. |
| Max LVR | 80% |
| Features |
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Australian Mutual Bank - Gumleaf Basic Variable | |
| Variable interest rate | 5.89% p.a. variable |
| Comparison rate^ | 5.96% p.a. |
| Max LVR | 60% |
| Features |
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G&C Mutual Bank - First Home Buyer Loan (Special) | |
| Variable interest rate | 5.90% p.a. variable |
| Comparison rate^ | 5.93% p.a. |
| Max LVR | 95% (subject to approval) |
| Features |
|
Arab Bank Australia - Essentials Home Loan Variable | |
| Variable interest rate | 5.90% p.a. variable (special offer) - discount of 3.49% off the standard variable rate |
| Comparison rate^ | 5.94% p.a. |
| Max LVR | 60% |
| Features |
|
The Mac Credit Union - Owner Occupied Variable | |
| Variable interest rate | 5.92% p.a. variable (2-year intro rate) |
| Comparison rate^ | 7.57% p.a. |
| Max LVR | 95% |
| Features |
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Greater Bank - Great Rate Home Loan Variable | |
| Variable interest rate | 5.94% p.a. variable (special offer) |
| Comparison rate^ | 5.95% p.a. |
| Max LVR | 80% |
| Features |
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Community First Bank - Basic Home Loan Variable | |
| Variable interest rate | 5.94% p.a. variable |
| Comparison rate^ | 5.99% p.a. |
| Max LVR | 95% |
| Features |
|
Up Home - Variable Rate Home Loan | |
| Variable interest rate | 5.95% p.a. variable |
| Comparison rate^ | 5.95% p.a. |
| Max LVR | 90% |
| Features |
|
The Capricornian - Offset Owner Occupied | |
| Variable interest rate | 5.99% p.a. variable |
| Comparison rate^ | 5.99% p.a. |
| Max LVR | 97% |
| Features |
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| Variable interest rate | Comparison rate^ | Max LVR | Features | |
|---|---|---|---|---|
LCU - Savvy First Home Buyer Loan Variable | 5.69% p.a. variable (3-year intro rate) | 6.11% p.a. | 95% |
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Regional Australia Bank - Introductory Basic Home Loan Variable | 5.74% p.a. variable (3-year intro rate) | 6.23% p.a. | 80% |
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Arab Bank Australia - The Basics Home Loan Variable | 5.75% p.a. variable (special offer) - discount of 3.54% over the life of the loan | 5.88% p.a. | 60% |
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Summerland Bank - Eco Home Loan Variable | 5.84% p.a. variable (special offer) | 5.89% p.a. | 60% |
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Reduce Home Loans - Eco Home Loan Variable | 5.84% p.a. variable | 5.89% p.a. | 80% |
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Pacific Mortgage Group - Owner Occupied Variable | 5.89% p.a. variable | 5.89% p.a. | 80-90% |
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The Mutual Bank - Budget Owner Occupied Variable Home Loan | 5.89% p.a. variable | 5.89% p.a. | 80% |
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Australian Mutual Bank - Gumleaf Basic Variable | 5.89% p.a. variable | 5.96% p.a. | 60% |
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G&C Mutual Bank - First Home Buyer Loan (Special) | 5.90% p.a. variable | 5.93% p.a. | 95% (subject to approval) |
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Arab Bank Australia - Essentials Home Loan Variable | 5.90% p.a. variable (special offer) - discount of 3.49% off the standard variable rate | 5.94% p.a. | 60% |
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The Mac Credit Union - Owner Occupied Variable | 5.92% p.a. variable (2-year intro rate) | 7.57% p.a. | 95% |
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Greater Bank - Great Rate Home Loan Variable | 5.94% p.a. variable (special offer) | 5.95% p.a. | 80% |
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Community First Bank - Basic Home Loan Variable | 5.94% p.a. variable | 5.99% p.a. | 95% |
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Up Home - Variable Rate Home Loan | 5.95% p.a. variable | 5.95% p.a. | 90% |
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The Capricornian - Offset Owner Occupied | 5.99% p.a. variable | 5.99% p.a. | 97% |
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Compare first-home buyer home loans (fixed rate)
Fixed-rate owner-occupier home loans (principal & interest) available to first-home buyers, sorted by the lowest interest rate, then the lowest comparison rate.
Australian Mutual Bank - Fixed Rate Home Loan | |
|---|---|
| Interest rate | 5.48% p.a., fixed for 3 years 5.63% p.a., fixed for 2 years 5.63% p.a., fixed for 5 years |
| Comparison rate^ | 6.24% p.a. (3-year fixed) 6.35% p.a. (2-year fixed) 6.16% p.a. (5-year fixed) |
| Max LVR | 80% |
| Features |
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Australian Mutual Bank - First Home Owner Occupied Special | |
| Interest rate | 5.53% p.a., fixed for 2 years (special offer) |
| Comparison rate^ | 6.30% p.a. (2-year fixed) |
| Max LVR | 80% |
| Features |
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HSBC - Home Loan Package Fixed | |
| Interest rate | 5.69% p.a., fixed for 4 years 5.79% p.a., fixed for 5 years 5.79% p.a., fixed for 3 years 5.79% p.a., fixed for 2 years |
| Comparison rate^ | 6.31% p.a. (4-year fixed) 6.33% p.a. (5-year fixed) 6.37% p.a. (3-year fixed) 6.40% p.a. (2-year fixed) |
| Max LVR | 80% |
| Features |
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Horizon Bank - Fixed Rate Home Loan | |
| Interest rate | 5.69% p.a., fixed for 3 years |
| Comparison rate^ | 6.48% p.a. |
| Max LVR | 70% |
| Features |
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Police Credit Union - Owner Occupied Fixed | |
| Interest rate | 5.69% p.a., fixed for 3 years |
| Comparison rate^ | 7.02% p.a. |
| Max LVR | 80% |
| Features |
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Regional Australia Bank - Fixed Home Loan | |
| Interest rate | 5.71% p.a, fixed for 3 years |
| Comparison rate^ | 5.87% p.a. |
| Max LVR | 80% |
| Features |
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MOVE Bank - Everyday Home Loan Fixed | |
| Interest rate | 5.79% p.a, fixed for 3 years |
| Comparison rate^ | 5.95% p.a. |
| Max LVR | 95% |
| Features |
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BOQ - Owner Occupied Fixed Special Offer | |
| Interest rate | 5.79% p.a. (discounted 3-year fixed rate) |
| Comparison rate^ | 6.34% p.a. |
| Max LVR | 90-95% |
| Features |
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Illawarra Credit Union - The Works Package Home Loan Fixed | |
| Interest rate | 5.79% p.a., fixed for 3 years 5.79% p.a., fixed for 2 years |
| Comparison rate^ | 6.91% p.a. (3-year fixed) 6.99% p.a. (2-year fixed) |
| Max LVR | 95% |
| Features |
|
Up Home - Owner Occupied Fixed | |
| Interest rate | 5.80% p.a., fixed for 5 years 5.80% p.a., fixed for 4 years 5.80% p.a., fixed for 3 years |
| Comparison rate^ | 5.89% p.a. (5-year fixed) 5.90% p.a. (4-year fixed) 5.91% p.a. (3-year fixed) |
| Max LVR | 90% |
| Features |
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G&C Mutual Bank - Owner Occupied Fixed | |
| Interest rate | 5.80% p.a., fixed for 3 years |
| Comparison rate^ | 5.86% p.a. |
| Max LVR | 95% |
| Features |
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People's Choice - Home Loan Package First Home Buyer | |
| Interest rate | 5.89% p.a., fixed for 3 years |
| Comparison rate^ | 6.35% p.a. |
| Max LVR | 80% |
| Features |
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Queensland Country Bank - Fixed Rate Package Home Loan | |
| Interest rate | 5.89% p.a., fixed for 2 years |
| Comparison rate^ | 6.48% p.a. |
| Max LVR | 80% |
| Features |
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| Interest rate | Comparison rate^ | Max LVR | Features | |
|---|---|---|---|---|
Australian Mutual Bank - Fixed Rate Home Loan | 5.48% p.a., fixed for 3 years 5.63% p.a., fixed for 2 years 5.63% p.a., fixed for 5 years | 6.24% p.a. (3-year fixed) 6.35% p.a. (2-year fixed) 6.16% p.a. (5-year fixed) | 80% |
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Australian Mutual Bank - First Home Owner Occupied Special | 5.53% p.a., fixed for 2 years (special offer) | 6.30% p.a. (2-year fixed) | 80% |
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HSBC - Home Loan Package Fixed | 5.69% p.a., fixed for 4 years 5.79% p.a., fixed for 5 years 5.79% p.a., fixed for 3 years 5.79% p.a., fixed for 2 years | 6.31% p.a. (4-year fixed) 6.33% p.a. (5-year fixed) 6.37% p.a. (3-year fixed) 6.40% p.a. (2-year fixed) | 80% |
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Horizon Bank - Fixed Rate Home Loan | 5.69% p.a., fixed for 3 years | 6.48% p.a. | 70% |
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Police Credit Union - Owner Occupied Fixed | 5.69% p.a., fixed for 3 years | 7.02% p.a. | 80% |
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Regional Australia Bank - Fixed Home Loan | 5.71% p.a, fixed for 3 years | 5.87% p.a. | 80% |
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MOVE Bank - Everyday Home Loan Fixed | 5.79% p.a, fixed for 3 years | 5.95% p.a. | 95% |
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BOQ - Owner Occupied Fixed Special Offer | 5.79% p.a. (discounted 3-year fixed rate) | 6.34% p.a. | 90-95% |
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Illawarra Credit Union - The Works Package Home Loan Fixed | 5.79% p.a., fixed for 3 years 5.79% p.a., fixed for 2 years | 6.91% p.a. (3-year fixed) 6.99% p.a. (2-year fixed) | 95% |
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Up Home - Owner Occupied Fixed | 5.80% p.a., fixed for 5 years 5.80% p.a., fixed for 4 years 5.80% p.a., fixed for 3 years | 5.89% p.a. (5-year fixed) 5.90% p.a. (4-year fixed) 5.91% p.a. (3-year fixed) | 90% |
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G&C Mutual Bank - Owner Occupied Fixed | 5.80% p.a., fixed for 3 years | 5.86% p.a. | 95% |
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People's Choice - Home Loan Package First Home Buyer | 5.89% p.a., fixed for 3 years | 6.35% p.a. | 80% |
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Queensland Country Bank - Fixed Rate Package Home Loan | 5.89% p.a., fixed for 2 years | 6.48% p.a. | 80% |
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First-home buyer discounts & incentives (April 2024)
Reduce Home Loans — $2,000 - $10,000 cashback
Eligible first-home buyers can get up to $2,000 - $10,000 cashback with a Reduce Home Loan. Cashback offers available based on your home loan amount:
- $250,000 - $499,999: $2,000
- $500,000 - $749,999: $3,000
- $750,000 - $1,999,999: $5,000
- $2,000,000+: $10,000.
First loan applications must be submitted between January 1 2024 and June 30 2024. Available for home loans with a maximum 90% LVR. Cashback is paid within 30 days of settlement.
You must keep the loan for at least 24 months after settlement, or the cashback amount will need to be repaid. It will be added to your total balance payable at the time of your discharge or refinance.
ANZ — $3,000 cashback
Eligible first-home buyers get a $3,000 bonus with an ANZ home loan of $250,000 or more. You must have an ANZ Access Advantage, ANZ Plus or ANZ One offset account at loan drawdown. Drawdown on the Eligible ANZ Home Loan(s) must occur within 180 days of applying. Bonus is paid after settlement.
Bank of Queensland (BOQ) — $2,000 cashback
Eligible first-home buyers get a $2,000 bonus with a BOQ home loan of $250,000+ and a maximum 90% LVR. Settlement must be within 120 days. Owner-occupier home loans with principal & interest repayments only.
RAMS — $1,000 cashback
Eligible first-home buyers get a $1,000 rebate on loan applications over $250,000 and must settle within 120 days. Owner-occupier home loans with principal & interest repayments only.
What is LVR & how does it impact my home loan?
Loan-to-value ratio (LVR) is your loan amount as a percentage of your property's value. For example, if you buy a $600,000 home with a $120,000 deposit, you'd need to borrow $480,000 from the bank, resulting in an 80% LVR. The formula for calculating your LVR is: loan amount ÷ property value x 100 = LVR.
If your LVR exceeds 80% (which means you have less than a 20% deposit), you’ll have to pay lender’s mortgage insurance (LMI), which covers the lender against the risk of default. A larger deposit means a lower LVR and a better rate on your home loan.
LVR represents your risk as a borrower. It’s an important factor for lenders to evaluate your home loan application and determine your interest rate. That's why when you see a rate advertised, you'll see 'based on an LVR of X' in the fine print. See this example from Ubank.
Loan types for first-home buyers
Home loans for first-time buyers can be categorised based on two main factors — the interest type and how you make repayments.
Your home loan interest rate can be variable, fixed or split (a combination of the two).
1. Variable rate home loan: The interest rate can fluctuate over the life of the loan. Your repayments will be lower when interest rates drop but higher when they go up. Some first-home buyers may choose a variable rate home loan as they often come with more features like offsetting interest from a linked transaction account and the ability to make extra repayments and build more equity in the home. It’s also usually easier to refinance your home loan if you’re on a variable rate. According to the RBA, most owner-occupier loans in Australia have a variable interest rate. Use our home loan calculator to estimate your mortgage repayments.
2. Fixed rate home loan: The interest rate on the loan is fixed for a period of time — typically between one and five years. Some first-home buyers may like having certainty over their repayments in the first few years as it makes it easier to budget. However, there’s usually limited flexibility to make additional repayments and it's less likely you'll have access to extra features like an offset account. Break fees also apply if you want to refinance (switch to a different loan or lender). Most borrowers who fix their mortgage interest rate do so for three years or less, according to the RBA.
Compare fixed rate home loans for different durations:
- 1-year fixed rate home loans
- 2-year fixed rate home loans
- 3-year fixed rate home loans
- 4-year fixed rate home loans
- 5-year fixed rate home loans
3. Split home loan: A split loan has a fixed and variable rate component. This can give you the best of both worlds, the certainty of fixed rate repayments and the flexibility of a variable loan. You can choose your split based on your preference or financial situation, whether it’s 50/50, 60/40 or 70/30 etc.
Principal & interest vs interest-only home loan repayments
Your home loan is made up of two parts: the loan principal (what you borrow) and the interest (what the bank charges you for borrowing). So, when you apply for a home, you'll generally have two repayment options:
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Principal and interest repayments (P&I): You pay both the principal of your home loan and the interest. Your regular repayments will be higher, but you’ll pay less interest over the life of the loan. This is the most common type of loan repayment structure for owner-occupiers as it helps build equity in your home from day one.
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Interest-only repayments: With an interest-only home loan you only pay the interest portion of your loan for a set period (up to five years). Your mortgage repayments will be lower during that period, but it means you'll pay more interest over the life of the loan (which may be 25 years or more). Interest-only loans are popular among investors to free up more cash and interest repayments are tax deductible.
Owner-occupier vs residential investor loans
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Owner-occupier home loan: A home loan to buy a property you intend to live in. Owner-occupier home loans generally have lower interest rates as they’re considered less risky than investment loans.
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Investor home loan: A residential investor home loan to buy a property you want to rent out (called an investment property). Investment home loans generally have higher interest rates because investors are considered riskier borrowers compared to owner-occupiers.
Construction loan
First-home buyers who are building their home will need a construction loan. This type of loan works differently to standard loans, with funds released by the lender gradually as the build progresses. You generally need a fixed-price contract with a builder to be approved for a construction loan.
Home loan fees
Application fee
This is an upfront fee to set up your home loan. It’s also known as a loan processing fee or establishment fee.
Service fees
Monthly service fees (or account keeping fees) cover the costs of keeping your home loan account open.
Annual package fee
A yearly fee charged on a package home loan to bundle your mortgage with other financial products like a credit card or savings account.
Legal, valuation and settlement fees
These fees compensate the lender for the legal paperwork, property valuation and settlement.
Exit fee
You might pay an exit fee (or a discharge fee) when you pay your mortgage in full. This covers the cost of processing and closing out the loan. Early exit fees or break costs apply when you pay off your home loan early.
Feature fees
Some loans charge a fee to use certain features like your redraw facility or extra repayment option.
Here’s an example of home loan fees from Bank Australia.
Additional first-home buyers costs to consider
Lender’s mortgage insurance (LMI)
You may have to pay lender’s mortgage insurance (LMI) if your LVR is above 80%. Or in other words, your deposit is less than 20% of the value of the home you’re buying. LMI is an insurance policy that covers the lender against the risk of the borrower defaulting on their loan. It’s calculated on a tiered scale, based on the property's value and your deposit. Most lenders will allow you to add LMI to your loan amount if your LVR doesn’t exceed 95%.
Stamp duty & government fees
Stamp duty is a state government tax calculated as a percentage of the property’s value, ranging from 3-5%. Each state or territory calculates stamp duty differently and has different rules on how it applies. Most states offer stamp duty concessions or exemptions to eligible first-home buyers. Use a stamp duty calculator to estimate your costs.
Conveyancing fees
When you buy a home, you’ll usually need to employ a conveyancer or solicitor who specialises in handling contract negotiations and lodging all required legal paperwork, such as the contract of sale and title transfer. Conveyancing fees can range between $500 and $1,500. Your conveyancer may also charge fees for title searches and other administrative expenses.
Building and pest inspections
A building and pest inspection is generally completed before you sign the contract to buy your home. It’s usually included as a condition of sale. This is to ensure that the home is structurally sound (i.e. has no major structural defects) or pest problems like a termite infestation. Building and pest inspections combined can cost between $200 and $1,000, depending on the size of the property and your location. The buyer (you) will be responsible for this cost.
Moving costs
After buying your home comes moving! If you hire a removalist you could pay upwards of $1,000 for the service, depending on how much furniture and belongings you have, mileage, and if you require additional boxing and wrapping. You could opt to DIY to save money by hiring a truck or van to get the job done with family and friends.
Home loan features for first-home buyers
Offset account
An offset account is a transaction account linked to your home loan where every dollar goes towards offsetting the interest of your mortgage. This is the best feature to reduce the interest you pay over the life of the loan.
Extra repayments
Most home loans offer the option to make extra repayments on top of your minimum mortgage repayments. This allows you to pay off your home loan faster and save on interest. Fixed-rate home loans may have limits on additional repayments.
Redraw facility
Allows you to withdraw any extra repayments you've made on your home loan. You can use your redraw facility to free up cash for any purpose. Additional repayments in your redraw facility reduce your interest payable. If you want to learn more, read our simple guide to the differences between redraw and offset.
Portability
The ability to transfer your home loan to another property without incurring fees. This saves you the trouble of having to go through the refinancing process if you move home and to keep your fixed rate without break costs.
Repayment holiday
Some lenders may allow you to pause or reduce your home loan repayments for a period of time. Repayment holidays are granted on a case-by-case basis. Remember that this will increase your future repayments as accrued interest will be added (capitalised) to your home loan balance.
Should you use a guarantor?
Many first-home buyers use a family guarantor to get a home loan if saving up a big enough deposit is a barrier. While a guarantor home loan can help you get into the property market sooner, putting some of your savings to work is still important.
"You need to create a discipline of saving money, so we recommend that you save up at least 10% of the purchase price and place these existing savings into the offset account of your proposed guarantor home loan to reduce your interest costs.”
Mansour Soltani, Money.com.au's home loan expert
Government support for first-home buyers
First Home Owner Grant (FHOG) & stamp duty exemptions by state
State | VIC |
|---|---|
| First Home Owner Grant (FHOG) | $10,000 FHOG towards buying or building a new home valued up to $750,000 |
| Stamp duty exemption | Stamp duty exemption for properties valued under $600,000 |
State | NSW |
| First Home Owner Grant (FHOG) | $10,000 FHOG towards buying a new home valued at $600,000 or house and land package valued up to $750,000. |
| Stamp duty exemption | Stamp duty exemption for properties valued under $800,000 and vacant land under $350,000 |
State | QLD |
| First Home Owner Grant (FHOG) | $30,000 FHOG towards buying or building a new home valued up to $750,000 (until June 2025) |
| Stamp duty exemption | Stamp duty exemption for properties valued under $500,000 |
State | WA |
| First Home Owner Grant (FHOG) | $10,000 FHOG towards buying or building your first new home valued up to $750,000 in Perth metropolitan areas |
| Stamp duty exemption | Stamp duty exemption for properties valued under $430,000 and vacant land under $300,000 |
State | SA |
| First Home Owner Grant (FHOG) | $15,000 FHOG towards buying or building a new home valued up to $650,000 |
| Stamp duty exemption | Stamp duty exemption for properties valued under $650,000 and vacant land under $400,000 |
State | ACT |
| First Home Owner Grant (FHOG) | Not available |
| Stamp duty exemption | Stamp duty exemption for properties valued under $1,000,000 based on household income and number of dependent children |
State | NT |
| First Home Owner Grant (FHOG) | $10,000 FHOG towards buying or building a new home (no price caps) |
| Stamp duty exemption | Not available |
State | TAS |
| First Home Owner Grant (FHOG) | Up to $30,000 FHOG towards buying or building a new home |
| Stamp duty exemption | 50% concession for first-home buyers of properties valued under $600,000 |
| State | First Home Owner Grant (FHOG) | Stamp duty exemption |
|---|---|---|
VIC | $10,000 FHOG towards buying or building a new home valued up to $750,000 | Stamp duty exemption for properties valued under $600,000 |
NSW | $10,000 FHOG towards buying a new home valued at $600,000 or house and land package valued up to $750,000. | Stamp duty exemption for properties valued under $800,000 and vacant land under $350,000 |
QLD | $30,000 FHOG towards buying or building a new home valued up to $750,000 (until June 2025) | Stamp duty exemption for properties valued under $500,000 |
WA | $10,000 FHOG towards buying or building your first new home valued up to $750,000 in Perth metropolitan areas | Stamp duty exemption for properties valued under $430,000 and vacant land under $300,000 |
SA | $15,000 FHOG towards buying or building a new home valued up to $650,000 | Stamp duty exemption for properties valued under $650,000 and vacant land under $400,000 |
ACT | Not available | Stamp duty exemption for properties valued under $1,000,000 based on household income and number of dependent children |
NT | $10,000 FHOG towards buying or building a new home (no price caps) | Not available |
TAS | Up to $30,000 FHOG towards buying or building a new home | 50% concession for first-home buyers of properties valued under $600,000 |
Home Guarantee Scheme (HGS)
The Home Guarantee Scheme (HGS) is a federal government initiative that can help eligible home buyers secure a home with a smaller deposit. These include:
- First Home Guarantee (FHBG): Supports eligible first-home buyers to buy a home with a deposit starting from 5%. Housing Australia guarantees the remaining 15%. There are 35,000 FHBG places available for FY 2023-24.
- Regional First Home Buyer Guarantee (RFHBG): Supports eligible first-home buyers to buy a home in a regional area with a deposit starting from 5%. There are 10,000 RFHBG places available for FY 2023-24.
About a third of first-home buyers in Australia have used a government guarantee scheme in the last financial year, according to the National Housing Finance and Investment Corporation (NHFIC).
Help to Buy scheme
Although not specifically designed for first-home buyers, the Help to Buy scheme is a new national shared equity scheme allowing low-to-middle-income earners to buy a property with a deposit of as little as 2%, with the government contributing 30-40% equity towards the purchase.
The Help to Buy Scheme is expected to commence sometime in 2024, according to the Treasury. Income thresholds apply. To be eligible, single homebuyers must earn less than $90,000 annually and couples less than $120,000 per year.
There are other alternative routes to home ownership, such as a rent-to-own homes, that may be available depending on where you want to buy a home. But there are risks as well as upsides to these schemes that you need to consider. It's important to get independent advice before you commit.
How to apply for a first-home buyer home loan
1
Check your borrowing capacity
Your lender will first check your eligibility for a home loan and borrowing capacity — the maximum amount you can borrow. They will check your income against your expenses and liabilities to estimate how much you can borrow and apply an additional serviceability buffer of 3% (to ensure you can still afford your mortgage if interest rates rise). Liabilities include any debt you may have, including credit card debt, HECS debt or other student loans, and buy now, pay later payments.
2
Complete the lender’s home loan application form
Fill out the lender’s home loan application form and prepare all your supporting paperwork like payslips, identification documents, etc. You should notify your lender if you intend to use the First Home Guarantee (FHBG) or any other government scheme, as they will typically handle this application. If you’re using a mortgage broker, they should guide you through the whole application process from start to finish.
3
The lender will conduct a credit check
A credit check will be conducted before your lender can process your home loan application to the next stage. A home loan specialist will check your credit file for any outstanding debts, missed payments, defaults, or directorships (if you own a business). Keep in mind that the lender will have to ask your permission before conducting an official credit check.
4
Get conditional approval
You will be asked to submit all your supporting documents at this stage. You can ask for pre-approval (or conditional approval), which confirms you qualify for a loan and for how much. The lender will assess your financial information and credit score to determine this. Pre-approval is valid for up to three months, depending on the lender. Keep in mind pre-approval is not a formal approval. If your employment or financial situation changes after pre-approval, the lender can still deny your application.
5
The lender will conduct a property valuation
Once you’ve found a property, the lender will order a valuation to determine its market value and your LVR. The valuation will either be completed electronically based solely on previous comparable sales data, or there may be a physical inspection of the property too. The lender will conduct a title search to ensure the seller’s name is on the contract of sale and to look for any caveats (i.e. a type of interest that prevents the property from being sold).
6
Get unconditional approval
Once all due diligence is done, you may be granted unconditional approval to seal the deal on your property purchase. Your lender will issue you a formal loan offer detailing the terms and conditions of the loan, including your rate. Review the loan offer carefully with your conveyancer and sign it if you accept the terms.
7
Settlement
Your lender will oversee your home loan through to settlement and disburse the funds to the seller. Your deposit will be taken out of the trust account at settlement. Your conveyancer should manage your home loan registration and property title transfer.
What documents do you need to provide for a home loan?
First-home buyers applying for a home loan will typically need to provide:
- Proof of income, including two payslips for the year to date or tax returns for the year to date if self-employed
- Proof of your assets (e.g. savings, shares) and liabilities (e.g. other loans)
- 100 points of ID (e.g. driver’s licence, passport)
First-home buyers with a deposit of less than 20% may be asked to provide additional paperwork, including:
- Bank statements showing your deposit has been accrued over time and sitting in a bank account for at least three months.
OR
- A tenant ledger or rental reference letter signed by a real estate or property manager confirming you’ve always paid rent on time. The letter should show your name, start lease date and weekly rent sum.
First home buyers who can't provide the standard documentation that's required (e.g. self-employed borrowers) may need to consider a low doc home loan.
“For every $10,000 of credit you hold, it can decrease your borrowing capacity by up to $50,000. Another way to put it is for every $1 of debt you hold, it decreases your borrowing capacity by $5. Debts can include personal loans, credit cards (even if you pay off your balance in full each month) and HECS debts.”
Mansour Soltani, Money.com.au's home loan expert
Tips for first-home buyers
1. Allow yourself time to save for a deposit
It usually takes years to save enough for a house, so the sooner you start, the sooner you can be a proud homeowner. Using a high interest savings account or term deposit with a high rate can help you grow your savings faster.
The bigger your deposit, the more you can borrow. You need at least a 20% deposit to avoid paying LMI, meaning on the average mortgage in Australia for first home buyers, you'd need a deposit of around $130,000. That said, some lenders will accept a 5-10% deposit if you apply through a government first-home buyer scheme. Alternatively, you could ask a family guarantor with enough equity to cover any remaining deposit up to 20% to avoid LMI.
2. Check out government first-home buyer schemes
Various state and federal government assistance programs are available to help eligible first-home buyers buy a property. Check out the First Home Guarantee (FHBG) and your state government's website for more information on home buyer grants.
3. Evaluate your financial situation
Put your income, expenses, and existing debts under the microscope. Can you reduce non-essential spending and pay off any small debts? Start with your credit card. Lenders will look at your credit card limit, not your balance. You could use a snowball method which involves paying off your smallest debts first, then moving on to the next smallest. Lenders want to see a history of responsible spending and three months of living expenses in savings to ensure you can comfortably service a home loan.
4. Check your credit score
Get a free copy of your credit report and work on improving your credit score if necessary. A higher credit score can mean you’re eligible to apply with more lenders and can get a better interest rate on your home loan. Bad credit home loans can be significantly more expensive.
You can request a free copy of your credit report from any of the main credit bureaus in Australia (e.g. Equifax, illion and Experian) every three months.
5. Set yourself a budget
Look at your income against your living expenses to set a realistic budget that includes home loan repayments if approved for a home loan. According to the ABS, home loan repayments should be less than 30% of your household's gross income, or you risk falling into mortgage stress territory. You also need to consider the additional costs of buying a property, like conveyancing fees, government charges, etc.
6. Create a wish list
Buying a home is a big investment, so create a list of your needs and wants for your dream property. How many bedrooms and bathrooms do you need? Do you want a big backyard to eventually build a pool? What features are you not compromising on? This information will give you an idea of what’s available in the market within your price range and a headstart on your property search.
7. Consider a mortgage broker
A mortgage broker can help assess your borrowing capacity and find a home loan that suits your situation and goals. They handle the whole home loan application and settlement process for you and can also help with your property search by running reports on the properties and suburbs you're looking at.
8. Understand the additional costs
Your deposit and mortgage fees aren’t the only costs involved when buying your first home. You'll need to factor in other upfront costs such as LMI (if applicable), stamp duty, conveyancing fees, building and pest inspections, insurance, etc.
9. Prepare your paperwork
Gather all necessary documents like proof of income (e.g. payslips), bank statements, and details about your assets and liabilities. Your lender will ask for this paperwork as part of the home loan application process.
10. Get pre-approval
Submit an online application for pre-approval to get an indication of how much you can borrow for a home loan based on the information you provide.
First-home buyer home loan FAQs
What is a comparison rate?
The comparison rate estimates you the overall cost of a loan per year. It combines the loan’s interest rate and most fees into a percentage to help you accurately compare products across different lenders and find the cheapest first-home buyer loan.
How long can I fix my home loan for?
You can generally fix your home loan for a period of one to five years. Compare interest rates on fixed rate home loans:
How much can I borrow as a first-home buyer?
How much you can borrow for first-home buyers mortgage will depend on how much of a deposit you have (i.e. your LVR) as well as your income, expenses and liabilities (including outstanding debts). To assess your borrowing capacity, lenders will consider your financial situation and credit profile.
How much do I need to save for a deposit?
You generally need a deposit of 20% of the property's value to avoid paying LMI, but most lenders will accept a deposit as low as 10%, although with a lower you deposit you might not qualify for a lender’s lowest interest rates. If you apply for a home loan through the Home Guarantee Scheme (HGS) you may only need a 5% deposit.
What does refinancing mean?
Refinancing means replacing your current mortgage with a new loan (usually with better rates and terms). Refinance costs and switching fees apply. It's generally advised to wait at least one year before refinancing your home loan.
What is equity?
Equity is the difference between your property’s value and how much you owe on it. For example, if you own a $600,000 property but only owe $500,000 on your mortgage, your equity in the property is $100,000. You build equity over time by paying down your home loan or increasing your property’s value with renovations or other improvements.
How much will the repayments be on my home loan?
Your home loan repayments will depend on your loan amount, your interest rate, your loan term and how frequently you make repayments (monthly, fortnightly or weekly).
To help you understand what your repayment could be, we've compared the repayments on different loan amounts based on on loans from a wide range of lenders:
- Compare repayments on a $300,000 home loan
- Compare repayments on a $350,000 home loan
- Compare repayments on a $400,000 home loan
- Compare repayments on a $450,000 home loan
- Compare repayments on a $500,000 home loan
- Compare repayments on a $550,000 home loan
- Compare repayments on a $600,000 home loan
- Compare repayments on a $650,000 home loan
- Compare repayments on a $700,000 home loan
- Compare repayments on a $750,000 home loan
- Compare repayments on a $800,000 home loan
- Compare repayments on a $850,000 home loan
- Compare repayments on a $900,000 home loan
- Compare repayments on a $950,000 home loan
- Compare repayments on a $1,000,000 home loan
Shopping around for the right loan can save you thousands of dollars in interest and fees.
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What's the next step on your property journey? Our home loan guides will help you navigate the road ahead, whether you're buying, building or looking to save on an existing loan.
Written by
Senior Finance Writer
Megan Birot
Reviewed by
Home Loans Expert
Mansour Soltani
