Question 1

How much deposit do I actually need to buy a first home in Australia?

Accepted Answer

Most lenders want a 20% deposit to avoid Lenders Mortgage Insurance (LMI). With a 5–10% deposit you can still buy, but you'll typically pay LMI (which can run $10k–$30k+ on a typical loan). Under the First Home Guarantee scheme, eligible first home buyers can purchase with as little as 5% deposit without paying LMI — the government effectively guarantees the gap. A guarantor loan from a parent can also let you avoid LMI with a smaller deposit.

Question 2

What is Lenders Mortgage Insurance (LMI) and when is it worth paying?

Accepted Answer

LMI is insurance the lender takes out to protect itself if you default — paid by you, but only protecting the bank. It applies when your loan-to-value ratio (LVR) is above 80%. It can be capitalised onto the loan rather than paid upfront. It's often worth paying when the cost of waiting to save a full 20% deposit (rising house prices, rent paid in the meantime, lost compounding) exceeds the LMI premium itself.

Question 3

How does a guarantor loan work and what are the risks?

Accepted Answer

A guarantor (usually a parent) uses equity in their property as additional security. This lets you borrow up to 100%+ of purchase price without LMI. Risks: the guarantor's home is on the line if you default, and it limits the guarantor's own borrowing capacity. The guarantee is usually released once you've paid the loan down to 80% LVR.

Question 4

What is the First Home Super Saver (FHSS) Scheme and is it worth using?

Accepted Answer

FHSS lets you make voluntary contributions to your super (up to $15k per year, $50k total) and later withdraw them — plus associated earnings — to put toward your first home deposit. The tax advantage of super contributions (taxed at 15% inside super vs your marginal rate) means most savers end up with more in hand than a regular savings account. You apply for a determination through the ATO before you sign a contract.

Question 5

What is the First Home Guarantee (FHBG) and am I eligible?

Accepted Answer

The First Home Guarantee, administered by Housing Australia, allows eligible first home buyers to purchase with a 5% deposit without paying LMI. There are income caps (singles and couples), property price caps that vary by city/region, and you must be an Australian citizen or permanent resident intending to live in the home. Caps and rules are reviewed regularly — check the current settings before relying on them.

Question 6

What first home owner grants are available in QLD, NSW, VIC and WA?

Accepted Answer

Each state runs its own scheme and they change frequently. Broadly: Queensland offers a First Home Owner Grant for new builds and substantial renovations. New South Wales offers grants for new homes plus stamp duty concessions for first home buyers. Victoria runs a First Home Owner Grant for new homes (with a higher amount in regional VIC). Western Australia offers a First Home Owner Grant for new builds plus generous stamp duty concessions. Always confirm current amounts and eligibility on the relevant state revenue office website before relying on them — caps and thresholds change.

Question 7

What stamp duty concessions can a first home buyer get?

Accepted Answer

Most states offer either a full exemption or significant concession on stamp duty for first home buyers up to a certain price threshold. NSW has the First Home Buyers Assistance Scheme. VIC offers a concession up to a specific value. QLD offers a transfer duty concession. Use our stamp duty calculator on the Resources page for an estimate based on your state and price.

Question 8

What is the Help to Buy shared equity scheme?

Accepted Answer

Help to Buy is a federal shared-equity scheme where the government takes an equity share in your property (up to 30% for an existing home, 40% for a new home), reducing the loan you need. Eligibility is income-tested and capped by property value. You can buy out the government's share over time. There are pros (lower repayments, smaller deposit) and trade-offs (capital gains shared, restrictions on changes).

Question 9

Should my first home be a 'forever home' or a stepping stone?

Accepted Answer

There's no universal answer — it depends on your timeline, income trajectory and lifestyle. Stepping-stone purchases let you get into the market sooner, build equity and upgrade later, but you pay stamp duty twice. A forever-home purchase avoids those transaction costs but locks up more capital and may stretch borrowing capacity. We model both scenarios with clients before recommending.

Question 10

Should I rentvest instead of buying where I want to live?

Accepted Answer

Rentvesting means renting where you want to live and buying an investment property somewhere more affordable. It can be powerful when (a) where you want to live is too expensive to buy, (b) the rent-to-buy ratio favours renting, and (c) the investment property has stronger growth and yield prospects. The downside is you're not building equity in your own home and you forgo the CGT main residence exemption on the investment.

Question 11

House vs apartment vs townhouse — what's right for a first home buyer?

Accepted Answer

Houses generally have a stronger land-to-asset ratio (land appreciates, buildings depreciate) and broader appeal on resale, but cost more upfront. Apartments are more affordable but supply risk in high-density areas can suppress growth, and strata fees plus special levies eat into returns. Townhouses sit in between — better land component than apartments but often constrained by body corporate. The right answer depends on budget, location, time horizon and goal.

Question 12

What hidden costs should I budget for beyond the deposit?

Accepted Answer

Stamp duty (unless exempt as a first home buyer in your state). Conveyancing/legal fees ($1,500–$3,000). Building & pest inspection ($400–$700). Mortgage application and registration fees. Lender's Mortgage Insurance if your deposit is below 20%. Council and water rate adjustments at settlement. Moving costs and immediate repairs/improvements. Use our budget calculator on the Resources page to model the full upfront cost.

Question 13

What is the true cost of buying a first home in Australia?

Accepted Answer

On top of your deposit, plan for stamp duty (often reduced or fully waived under first home buyer concessions depending on state and price), conveyancing or legal fees ($1,500–$3,000), a combined building and pest inspection ($550–$900), lender application and government registration fees, and LMI if your deposit is below 20%. As a rough example, an $800,000 purchase in NSW with a 20% deposit and a full first home buyer stamp duty exemption can still need around $165,000 in cash at settlement once all fees, adjustments and buffers are added. Your state, price bracket and eligibility shift the number significantly.

Question 14

What's the minimum deposit to buy a house in Australia?

Accepted Answer

Most lenders accept a 5% deposit, but anything under 20% generally triggers Lenders Mortgage Insurance. On an $800,000 property, a 20% deposit is $160,000; a 10% deposit is $80,000 plus an LMI premium that can run into five figures. Government schemes like the First Home Guarantee allow eligible buyers to use a 5% deposit without paying LMI. Don't forget your deposit is just one part of the cash you need at settlement — stamp duty (where payable), legal fees, inspections and insurance also come out of pocket.

Question 15

How long does the buying process take from offer to keys?

Accepted Answer

Typically 30–60 days from accepted offer to settlement, though it varies by state, finance complexity and the contract conditions. Pre-approval is usually valid for 90 days. Building & pest is normally completed within 7–14 days of contract. Auction purchases settle on the same timeline but skip the cooling-off period.

Question 16

What does a building & pest inspection check, and what's a deal breaker?

Accepted Answer

Inspectors check structural integrity, roof, plumbing, electrical (visual only), drainage, signs of rising damp, evidence of termites and other pests, and major safety items. Deal breakers: significant structural movement, active termite damage, major non-compliant work, asbestos in poor condition, or signs of major water ingress. Cosmetic issues are usually negotiable on price.

Question 17

What credit score and conduct do lenders actually look at?

Accepted Answer

Australian lenders use comprehensive credit reporting — they see your repayment history (24 months), credit enquiries, defaults and current credit limits. A clean repayment record matters more than a high score. Multiple recent enquiries (especially for short-term loans like Afterpay/buy-now-pay-later) reduce capacity. Lenders also assess your living expenses, ongoing commitments and savings discipline.

Question 18

What are the ongoing costs of owning a home in Australia?

Accepted Answer

Beyond your mortgage repayments, expect council rates (roughly $1,300–$3,700 per year depending on the council), building insurance for houses or strata levies for apartments and townhouses, water and sewerage rates ($720–$1,400 per year), and maintenance budgeted at around 1% of the property's value annually. For an $800,000 house, ongoing costs typically add about $1,000 per month on top of the loan. Investment properties also need to allow for property management fees, land tax (above the threshold) and vacancy buffer.

Question 19

What are strata fees and what do they actually cover?

Accepted Answer

Strata levies (also called body corporate or owners corporation fees) are quarterly or monthly contributions paid by owners of apartments and townhouses. They fund shared building costs: common-area cleaning and maintenance, building insurance, lifts, pools, gyms, gardens, and a sinking fund that builds up reserves for major future works (roof, lift replacement, painting). Apartment levies are usually higher than townhouse levies because there's more shared infrastructure to maintain. Always read the strata report and sinking fund balance before buying — under-funded schemes lead to large special levies later.

Question 20

Do I really need a building and pest inspection before buying?

Accepted Answer

For any house or townhouse, yes — the few hundred dollars you spend ($550–$900 combined) protects you from tens of thousands in hidden defects. Inspectors check the structure, roof, drainage and visible plumbing/electrical, plus active termite, borer and other pest activity. For apartments, a building inspection on your individual lot is less critical (the structure belongs to the body corporate) — but reviewing the strata records, sinking fund and any planned major works is essential and arguably more important.

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