What Are the Steps in a First Home Buyer Checklist?

Getting ready to buy your first home means working through several stages before you reach settlement.

The process involves confirming what you can borrow, understanding which concessions apply to you, choosing between loan structures, and preparing the documents your lender will need. Each stage builds on the last, and completing them in order means fewer surprises when you're ready to make an offer.

Working Out What You Can Borrow and Save

Your borrowing capacity depends on your income, existing debts, living expenses, and the deposit you've saved. Most lenders will lend up to 80% of a property's value without requiring Lenders Mortgage Insurance. If you're borrowing more than that amount, LMI will usually apply and the premium is added to your loan or paid upfront at settlement.

Under the Australian Government 5% Deposit Scheme, eligible buyers can purchase with a 5% deposit and avoid paying LMI because Housing Australia guarantees the portion between your deposit and 20% of the property value. Applications are made through a participating lender, and property price caps apply based on where you're buying. Consider a buyer in regional Victoria looking at a home valued at $640,000. They save $32,000 as a 5% deposit and apply through a participating lender under the scheme. Because the property is under the $650,000 cap for regional Victoria, they're approved without needing LMI, which would otherwise have added around $18,000 to $22,000 to their upfront costs.

If you're using your superannuation under the First Home Super Saver Scheme, you'll need to apply for a determination from the ATO before signing a contract. The determination confirms how much you're eligible to withdraw, and processing can take several weeks.

Understanding Which Concessions and Grants You Can Access

Stamp duty concessions and grants vary by state and are tied to specific eligibility rules. In New South Wales, first home buyers receive full stamp duty exemption on properties valued up to $800,000 and a sliding concession on properties between $800,001 and $1,000,000. The $10,000 First Home Owner Grant applies only to new homes valued under $600,000 or land and build contracts under $750,000.

Queensland offers a $30,000 grant for new homes under $750,000, extended for four years from mid-2026. For established homes, duty is reduced but not eliminated entirely. The first home concession provides a maximum deduction of $17,350 on properties valued up to $709,999, phasing out completely at $800,000. Western Australia removed its geographic distinction in mid-2026, applying a single statewide threshold where no duty is payable on homes up to $600,000 and a concessional rate applies between $600,001 and $800,000.

You can generally combine state concessions with the Australian Government 5% Deposit Scheme, but Help to Buy cannot be used alongside the 5% scheme. If you're considering Help to Buy, the government takes an equity stake of up to 40% for new homes or 30% for established homes in exchange for contributing that portion of the purchase price. Income caps of $100,000 for individuals and $160,000 for joint applicants apply, and property price caps vary by location.

Choosing Between Fixed, Variable, or Split Loan Structures

Once your borrowing capacity is confirmed, you'll need to decide how your home loan will be structured. A variable rate moves with the market and typically comes with an offset account, which reduces the interest you pay by offsetting your account balance against your loan balance each day. A fixed rate locks in your repayments for a set period, usually between one and five years, but offset accounts are rarely available and you'll face break costs if you repay large amounts early or refinance before the fixed term ends.

A split loan divides your borrowing between fixed and variable portions. In a scenario where a buyer borrows $500,000, they might fix $300,000 for three years to lock in repayments on the majority of the loan and leave $200,000 variable with an offset account attached. That structure gives them repayment certainty on the larger portion while keeping flexibility to make extra repayments or use the offset on the smaller variable portion without penalty.

Redraw facilities let you access extra repayments you've made on a variable or fixed loan, but the funds aren't always immediately available and some lenders charge redraw fees or limit how often you can access them. An offset account provides simpler access to your savings while still reducing your interest without technically making extra repayments.

Preparing Your Documents and Getting Pre-Approval

Lenders assess your income, employment, savings, debts, and credit history during the home loan application process. You'll need recent payslips, tax returns if you're self-employed, bank statements showing your savings history, and statements for any existing debts such as credit cards, car loans, or personal loans.

Genuine savings are funds you've held in your own name for at least three months. Gift deposits from immediate family are accepted by most lenders, but if your entire deposit is gifted, some lenders may apply higher scrutiny or adjust your borrowing capacity. If you've been saving through the First Home Super Saver Scheme, the ATO determination and your super fund's release authority will form part of your deposit evidence.

Pre-approval gives you a conditional commitment from a lender based on the information you've provided. It's valid for three to six months depending on the lender and confirms what you can borrow, but it's not a final approval. Once you find a property and sign a contract, the lender will value the property and complete their full assessment before issuing final approval. Pre-approval helps you move quickly when you're ready to make an offer, and it clarifies your budget before you start attending inspections.

Choosing the Right Loan Features for How You'll Use the Property

Not every loan feature suits every buyer. If you're planning to build rather than buy an established home, you'll need a construction loan that releases funds in stages as the build progresses. Interest is charged only on the amount drawn down at each stage, and most lenders offer interest-only repayments during construction before switching to principal and interest once the build is complete.

If you're buying a house and land package, the process involves two contracts: one for the land and another for the building works. Your lender will need to approve both before settlement on the land, and construction funding begins once the slab is laid. Timing matters because you'll start paying interest on the land loan as soon as you settle, even if construction hasn't started yet.

For established homes, you'll settle on a fixed date, usually between four and twelve weeks after signing the contract. Your loan funds are released on settlement day, and repayments begin immediately. Interest rate discounts are sometimes available depending on your deposit size, loan amount, and whether you're a member of a professional association or employed in certain industries. Discounts are applied to the lender's advertised rate, not the market rate, so comparing the final rate after discounts across multiple lenders gives you a clearer picture.

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