Buying your first home is one of life’s biggest financial steps, and one of its most confusing. Deposits, pre-approval, stamp duty, inspections, contracts, the jargon alone is enough to put people off. But underneath it, buying a first home follows a clear, logical sequence. Here’s the complete plain-language guide, from the first dollar you save to the day you pick up the keys.
Step 1: Work Out What You Can Afford
Before anything else, get honest about your budget. Your borrowing capacity depends on your income, expenses, existing debts and deposit, and lenders will “stress test” your ability to repay at a higher rate than today’s. Work out not just what a bank might lend, but what you can comfortably afford, including rates, insurance, and maintenance once you own.
A realistic budget at the start saves heartbreak later, and it tells you which suburbs and property types are genuinely within reach.
Step 2: Save Your Deposit
The deposit is usually the biggest hurdle. Traditionally, a 20 per cent deposit lets you avoid Lenders Mortgage Insurance (LMI), the insurance that protects the lender, not you, when your deposit is smaller. But saving 20 per cent is hard, which is where government schemes come in (more below), some let eligible first home buyers purchase with as little as 5 per cent without paying LMI.
Remember to budget beyond the deposit itself: you’ll also need funds for stamp duty (unless exempt), legal fees, inspections and moving costs.
Step 3: Understand the Schemes That Can Help
First home buyers have more help available than many realise. The federal Home Guarantee Scheme lets eligible buyers purchase with a 5 per cent deposit while the government guarantees the rest, avoiding LMI. Shared-equity schemes like Help to Buy can reduce the amount you need to borrow. And most states offer first home buyer stamp duty concessions or exemptions below certain price thresholds, which can save tens of thousands.
These schemes have eligibility rules and price caps, and they change, so check the current details for your situation. They can genuinely be the difference between buying now and waiting years.
Step 4: Get Pre-Approval
Pre-approval (or conditional approval) is a lender’s indication of how much they’ll likely lend you, based on your finances. It gives you a clear budget and shows sellers you’re serious, which strengthens your position.
Getting pre-approval before you seriously shop means you can move quickly when you find the right place. But remember it’s conditional, not a guarantee, final approval depends on the specific property and your circumstances at the time. You can go directly to lenders or use a mortgage broker to compare across many.
Step 5: Find the Right Property
Now the exciting part. Research your target suburbs thoroughly, look at recent comparable sales (not just asking prices), and inspect widely to calibrate what your budget actually buys. In the current softer market, buyers have more choice and negotiating room than in recent years, so take your time and don’t feel rushed.
Think about the practical things that matter long term: location, transport, the trajectory of the area, and whether the home suits your needs for years to come, not just today.
Step 6: Do Your Due Diligence
Before you commit, protect yourself. Get a building and pest inspection to uncover any hidden problems, and have a solicitor or conveyancer review the contract of sale and the vendor’s disclosure statement. These modest costs can save you from an expensive mistake.
If you’re buying at auction, all of this must happen before the auction, because there’s no cooling-off period once you win. For a private treaty purchase, you may have a cooling-off period and can make your offer subject to finance and inspections.
Step 7: Make Your Offer or Bid
For a private sale, you negotiate, and in a buyer’s market, price your offer to recent comparable sales rather than the asking price. For an auction, register to bid, set a firm limit in advance, and stick to it. Either way, know your maximum before emotion takes over.
Step 8: Settlement and the Keys
Once your offer is accepted (or you win at auction) and contracts are exchanged, you pay your deposit and move toward settlement, typically 30 to 90 days later, when the balance is paid and ownership transfers. Your conveyancer handles the legal mechanics. On settlement day, the property is legally yours, and you collect the keys.
Your First Home Checklist
To buy your first home: work out what you can genuinely afford; save your deposit and budget for the extra costs; understand the schemes you qualify for; get pre-approval; find the right property in a suburb you’ve researched; do building, pest and contract due diligence; make a disciplined offer or bid; and complete settlement. Take it one step at a time and the process becomes genuinely manageable. Independent guidance is on the government’s Moneysmart site.
The Bottom Line
Buying your first home is a big journey, but a step-by-step one: afford, save, understand your schemes, get pre-approved, find the place, do your due diligence, offer, and settle. The current softer market gives first home buyers more choice and negotiating power than they’ve had in years, and the available schemes can meaningfully lower the barrier. Go in prepared, take each step in turn, and the keys are closer than they feel. This is general information, not financial or legal advice.
Epik Wire covers property and housing in plain language for buyers, owners and families. Subscribe to our newsletter to stay informed.
