First Home Buyer Guide: From Pre-Approval to Settlement

Understanding the First Home Buying Process in Australia

Buying your first home is an exciting milestone, but it can also feel overwhelming if you’re unfamiliar with the process. Between saving a deposit, understanding loan approvals, navigating government grants and completing legal steps, many first home buyers are unsure where to begin. This guide explains the full first home buying journey in Australia, from pre-approval through to settlement, so you know exactly what to expect.

Assessing Your Financial Position Before Buying

Before you start looking at properties, it’s important to understand your financial position. Lenders will assess your income, expenses, existing debts, savings and credit history to determine how much you can borrow. While online calculators can provide a rough estimate, they often overstate borrowing capacity. Speaking with a mortgage broker early can give you a more accurate figure based on real lender policies and help you set a realistic budget.

How Much Deposit Do You Need as a First Home Buyer?

Saving a deposit is one of the most important steps in buying your first home. Most lenders prefer a deposit of 20 per cent to avoid Lenders Mortgage Insurance, although many first home buyers enter the market with as little as 5 to 10 per cent plus LMI. Your deposit may come from genuine savings, the First Home Super Saver Scheme, gifted funds from family or, in some cases, government incentives. Generally, a larger deposit provides access to better loan options and more competitive interest rates.

First Home Buyer Grants and Government Incentives

Many first home buyers are eligible for government support that can significantly reduce upfront costs. Depending on your state or territory, this may include the First Home Owner Grant, stamp duty concessions or exemptions, and low-deposit schemes backed by the Australian Government. Eligibility depends on factors such as property price caps, whether the home is new or established, your residency status and whether you’ve previously owned property. Understanding these incentives early can increase your buying power.

What Is Home Loan Pre-Approval and Why It Matters?

Home loan pre-approval, also known as conditional approval, is when a lender assesses your financial situation and confirms how much they are willing to lend, subject to certain conditions. Pre-approval gives you confidence when house hunting, shows sellers you are a serious buyer and helps prevent you from purchasing outside your budget. Pre-approvals typically last between three and six months and can be reviewed if your circumstances change.

Finding the Right Property as a First Home Buyer

Once pre-approval is in place, you can start searching for a property within your approved price range. When inspecting homes, it’s important to consider location, future growth potential, strata fees for apartments, building and pest inspections, council restrictions and ongoing costs such as rates and maintenance. If you plan to buy at auction, all legal checks and finance arrangements should be completed beforehand, as there is no cooling-off period.

Making an Offer or Buying at Auction

When you find a suitable property, you’ll either make an offer through a private treaty sale or bid at auction. In a private sale, your offer may include conditions such as finance approval or building and pest inspections, and negotiations may take place before contracts are exchanged. At auction, the purchase is unconditional, meaning finance must already be in place and a deposit is paid immediately if you are successful. In both cases, having your conveyancer or solicitor review the contract is essential.

Formal Home Loan Approval Explained

After contracts are exchanged, your lender will move toward formal or unconditional loan approval. This process includes ordering a property valuation, verifying your financial information and ensuring all lender conditions have been met. Once formal approval is issued, your loan is fully approved and ready for settlement.

What Happens at Property Settlement?

Settlement usually occurs between 30 and 90 days after contracts are exchanged. On settlement day, your lender transfers the funds to the seller, ownership of the property is legally transferred into your name and you receive the keys. At this point, you officially become a homeowner.

Common First Home Buyer Mistakes to Avoid

Many first home buyers make avoidable mistakes, such as borrowing the maximum amount without considering lifestyle costs, overlooking upfront expenses like stamp duty and legal fees, making major financial changes before settlement or relying solely on online calculators. Proper planning and professional guidance can help you avoid these issues and ensure a smoother buying experience.

How a Mortgage Broker Helps First Home Buyers

A mortgage broker supports you throughout the entire process by comparing loans across multiple lenders, explaining grants and concessions, structuring your loan correctly and guiding you through each stage. Brokers are required to act in your best interests, making them especially valuable for first home buyers and those with complex financial situations.

Ready to Buy Your First Home?

If you’re considering buying your first home, getting expert advice early can make a significant difference. Understanding your options, planning ahead and having professional guidance can help you move forward with confidence and clarity.