What Are the Steps for First Home Buyer Planning?

What Does Pre-Purchase Planning Actually Mean?

Pre-purchase planning is the work you do before you start looking at properties. It means knowing how much you can borrow, understanding what deposit you need, and working out which schemes and concessions you qualify for so you can act quickly when the right property comes up.

Most buyers make the mistake of scrolling through listings before they understand their own numbers. You end up emotionally attached to properties you cannot afford, or you miss out on places you could have bought because you were not organised enough to make an offer. Planning first removes both problems.

The difference between a buyer who has done this work and one who has not is visible at inspection. One has pre-approval, knows their budget including all the extra costs, and can put in an offer the same day. The other is still trying to work out if they can afford it.

How Much Deposit Do You Actually Need?

You can buy your first home with as little as 5% deposit if you qualify for the First Home Guarantee. This scheme was expanded in October 2025 with no income caps and no place limits, which means more first home buyers now have access to low deposit options without paying Lenders Mortgage Insurance.

Without the guarantee, you will typically need at least 10% deposit plus enough to cover stamp duty and settlement costs. Stamp duty varies by state. In Victoria, first home buyers pay no duty up to $600,000 and reduced amounts up to $750,000. In Queensland, eligible buyers purchasing new homes can access a full stamp duty concession from May 2025, and there is also a $30,000 grant available for new homes under $750,000 until 30 June 2026.

Consider a buyer looking at an established apartment in Melbourne's inner east at the current median. With a 10% deposit, they would need the deposit itself plus settlement costs including conveyancing, building and pest inspections, and any strata or council adjustments. Buyers often underestimate these extra costs by around $5,000 to $8,000. If you are working with a 5% deposit under the guarantee, the deposit amount is smaller but the other costs remain the same.

Can You Use Gifted Money or Savings From Super?

You can use a gift from a parent or close family member as part of your deposit, and most lenders accept this without issue. The person giving the gift will need to sign a statutory declaration confirming the money does not need to be repaid. Some lenders require you to contribute at least 5% genuine savings yourself, even if the rest is gifted.

The First Home Super Saver Scheme lets you save for a deposit inside your superannuation fund at a concessional tax rate of 15%. You can contribute up to $15,000 per financial year and withdraw a total of up to $50,000 to use towards your first home. This is one of the most underutilised tools available, especially for buyers who are still a year or two away from purchasing and want to build their deposit faster than a standard savings account would allow.

In our experience, buyers who combine super contributions with a family gift and their own genuine savings often hit their deposit target months earlier than expected. Timing matters when rental increases are outpacing savings rates.

What Order Should You Tackle the Paperwork?

Start with a pre-approval for a home loan. This tells you exactly how much you can borrow and locks in your position for three to six months depending on the lender. Pre-approval is not just a number. It includes a full credit assessment, income verification, and a review of your living expenses.

Once you have pre-approval, you know your maximum purchase price. From there, you can research which state grants and concessions apply. If you are buying in Victoria, the stamp duty concession alone can save you tens of thousands, but you need to ensure the property value and your eligibility align before making an offer.

You will also need to organise proof of your deposit, including bank statements for genuine savings and any gift letters. If you are using the super saver scheme, you will need to request a determination from the ATO before settlement. Lenders want to see all of this upfront, so gathering it early means you are not scrambling when an offer is accepted.

Should You Fix or Keep Your Rate Variable?

Your first home loan will typically offer a choice between a fixed rate, a variable rate, or a split. A variable rate moves with the market, which means your repayments can go up or down. At current variable rates, you also get access to features like an offset account, which can reduce the interest you pay if you keep savings in the linked account.

A fixed rate locks in your repayments for a set period, usually one to five years. You get certainty, but you lose flexibility. Most fixed loans do not allow offset accounts, and you will pay break costs if you need to refinance or sell before the fixed term ends.

Many brokers recommend splitting your loan, putting part on a fixed rate for stability and part on variable for flexibility. This gives you some protection if rates rise, but still lets you make extra repayments and use an offset without restriction on the variable portion.

What Happens After Pre-Approval?

Pre-approval is conditional. It is based on the information and documents you provided, and it assumes the property you buy meets the lender's requirements. Once you find a property and your offer is accepted, the lender will order a valuation to confirm the property is worth what you are paying. If the valuation comes in lower than the purchase price, the lender will only lend against the valuation figure, which means you need to make up the difference or renegotiate.

You will also need to provide a copy of the contract of sale, and the lender will review any special conditions. If you are buying an apartment, they will check the owners corporation records and strata report. If there are any issues such as low sinking fund balances or upcoming special levies, some lenders will decline or reduce what they are willing to lend.

Final approval usually takes five to ten business days, assuming there are no issues with the valuation or contract. Once you receive unconditional approval, your conveyancer will prepare for settlement.

Where Do Melbourne Buyers Get Caught Out?

Melbourne's inner and middle-ring suburbs are popular with first home buyers, especially areas along the Glen Waverley, Belgrave, and Frankston train lines. Demand is high, and auction clearance rates in these areas can sit above 70% in active months. Buyers who attend an auction without pre-approval and a clear budget often find themselves either missing out or overstretching.

Another issue specific to Melbourne is apartment oversupply in some postcodes. Lenders are cautious about certain buildings, particularly those with a high proportion of investors or short-term rental listings. If you are buying an apartment in Southbank, Docklands, or the CBD fringe, your lender may apply a higher interest rate or lower loan-to-value ratio. Some buildings are on lender blacklists altogether, which means you cannot borrow against them regardless of your deposit size.

If you are buying in regional Victoria under the Regional First Home Buyer Guarantee, the property must be located in an eligible regional area as defined by the government. Suburbs on the edge of Melbourne such as Melton or Pakenham may or may not qualify depending on postcode boundaries, so check this before you assume you are eligible.

How Do You Know If You Are Actually Ready?

You are ready when you can answer all of these questions without hesitation: how much can I borrow, how much deposit do I have, what are my repayments going to be, what government schemes do I qualify for, and how much do I need to keep aside for settlement and moving costs. If any of those are still vague, you are not ready to make an offer.

Being ready does not mean having the maximum deposit or the perfect credit score. It means having a clear plan, knowing your numbers, and being able to move quickly when the right property appears. First home buyers who do the planning work upfront are the ones who secure properties in competitive markets, because they can make strong offers without delays.

If you want to work through your own situation and confirm what you qualify for, call one of our team or book an appointment at a time that works for you. We will help you pull together your deposit strategy, run the numbers, and get your pre-approval sorted so you are ready to buy when you find the right place.

Frequently Asked Questions