First Home Buyer Guide (Australia)
From deposit to settlement — what to save, what to watch, and how to choose the loan. Last updated: 18 June 2026
Rates can change without notice. Last verified: 18 June 2026 (AEST). Please confirm details on the bank’s official page.
Buying your first home comes down to three moving parts: the deposit you save, the amount a lender will give you, and the loan you choose. Get those right and the rest is process. This guide walks through each, with calculators to put real numbers on your situation and a comparison of current home loans when you’re ready.
How much deposit do you need?
The benchmark is 20% of the purchase price, because at that level you avoid lenders mortgage insurance (LMI). But you can often buy with as little as 5% — either by paying LMI, or through the First Home Guarantee, which waives LMI for eligible first buyers by having the government guarantee part of the loan. A smaller deposit gets you in sooner; a bigger one means a smaller loan and lower repayments. Our LVR explainer covers how the deposit-to-loan thresholds affect your rate and LMI.
Your path to a first home loan
1. Work out your deposit and borrowing power
Start with two numbers: how much you can put down, and how much a lender will let you borrow. A bigger deposit means a smaller loan and — past 20% — no lenders mortgage insurance. Our borrowing power calculator gives a stress-tested ballpark, and the savings goal calculator shows how long your deposit target will take.
2. Get your finances lender-ready
Lenders look at your income, regular expenses, existing debts and credit history, and they assess your repayments at a rate higher than the actual one (a serviceability buffer). Trimming buy-now-pay-later accounts and unused credit card limits before you apply can lift how much you can borrow.
3. Consider the First Home Guarantee
The federal Home Guarantee Scheme lets eligible first home buyers purchase with as little as a 5% deposit without paying LMI, because the government guarantees part of the loan. Eligibility, property price caps and place limits change — check the official Housing Australia details for the current rules before counting on it.
4. Get a pre-approval, then compare loans
A pre-approval tells you (and agents) what you can spend. It's not a commitment to one lender — keep comparing. The rate matters, but so do the comparison rate, offset availability and fees. Our home loans comparison and best home loans guide rank current options.
5. Buy, settle, and review
After your offer is accepted, your lender values the property and issues formal approval, then you settle. Once you're in, it's worth reviewing the loan each year — rates and your equity change, and refinancing later can save more than haggling on day one.
Put numbers on it
- → Borrowing power calculator — a stress-tested estimate of how much you could borrow
- → Savings goal calculator — how long until your deposit target is saved
- → Mortgage repayment calculator — what the repayments would look like
Choosing your loan
Once you know your numbers, compare loans on more than the headline rate: the comparison rate (which folds in fees), whether there’s an offset account, and the choice between fixed and variable. The sharpest rates often come from online lenders rather than the big four. See our best home loans guide and the full home loans comparison for current options.
Frequently Asked Questions
How much deposit do I need to buy my first home?
Conventionally 20% of the purchase price, which avoids lenders mortgage insurance (LMI). You can often buy with as little as 5% — either by paying LMI, or through the federal First Home Guarantee, which waives LMI for eligible first home buyers by having the government guarantee part of the loan.
What is LMI and how do I avoid it?
Lenders mortgage insurance protects the lender (not you) if your deposit is under 20% of the property value — i.e. a loan-to-value ratio above 80%. You can avoid it by saving a 20% deposit, qualifying for the First Home Guarantee, or in some cases with a family guarantor. Our LVR explainer covers how the thresholds work.
What is the First Home Guarantee?
A federal scheme that lets eligible first home buyers purchase with as little as a 5% deposit without paying LMI — the government guarantees the gap up to 20%. Income tests, property price caps and the number of places change over time, so confirm the current rules with Housing Australia before relying on it.
How much can I borrow as a first home buyer?
Lenders base it on your income, expenses, existing debts and a serviceability buffer (they test your repayments at a rate above the actual one). Our borrowing power calculator gives a stress-tested estimate; a mortgage broker or the lender can confirm a precise figure.
Should I choose a fixed or variable rate?
Variable rates move with the market and usually offer more flexibility (extra repayments, offset); fixed rates lock in certainty for a set period but limit extra repayments. Many first buyers start variable for the flexibility. Our fixed vs variable guide weighs the trade-offs.
Related guides
Information is general in nature and may change without notice. Government scheme rules (including the First Home Guarantee) change — confirm current eligibility with Housing Australia. Not financial advice; consider your own circumstances and confirm details with each lender before applying.