The First Home Buyer Checklist: Your Step by Step Guide

A first home buyer checklist gives you one clear list to work through, from your first savings goal to settlement day. Buying your first home involves a lot of moving parts, and it is easy to miss a step when you are juggling deposits, loan applications and inspections. This checklist for buying your first home walks through each stage in order, with the figures and definitions that matter, so you can see what to do next and roughly when to do it.

Use it as a first home buyer to-do list you can tick off as you go. Every dollar figure and threshold here is drawn from Australian Government guidance, and nothing on this page is advice about your situation. What you can borrow and which features suit you will depend on your circumstances and lender criteria.

Stage 1: Get your savings in shape

Before you look at homes, get your money sorted. A common savings goal is 20% of the purchase price, plus enough to cover buying costs. Saving a 20% deposit lets you avoid lenders mortgage insurance, which we explain below.

It also helps to keep a separate buffer. A good target is to have enough in your emergency fund to cover three months of expenses, so an unexpected bill does not derail your plans once you own the home.

When you work out what you can afford, build in a safety margin. MoneySmart suggests checking that you could still manage your repayments if interest rates rose by 2%. Running that test now may help you avoid stretching too far.

Stage 2: Understand the costs beyond the deposit

The deposit is the largest cost, but it is not the only one. Two figures catch many first home buyers off guard.

Lenders mortgage insurance, or LMI, applies when your deposit is below 20% of the purchase price. LMI protects the lender, not you, if you cannot repay the loan. It is a real cost, so factor it in if your deposit is smaller. You can estimate it before you apply with the borrowing power calculator.

Stamp duty is a state based tax on property transfers and is generally due within 30 days of settlement. First home buyers should check whether they are eligible for an exemption or concession, because these vary by state and by what you are buying.

If saving a full 20% is out of reach, you may still have options. MoneySmart refers to an Australian Government scheme that supports eligible first home buyers to purchase with a smaller deposit. Whether you qualify depends on your circumstances and the scheme rules at the time you apply.

Stage 3: Sort your finance and pre-approval

A pre-approval shows you may be eligible to borrow up to a set amount without committing you to a loan. It usually lasts 3 to 6 months, and having it ready can strengthen your position when you make an offer.

When you compare loans, look past the headline rate. A comparison rate is a single figure of the cost of the loan that includes the interest rate and most fees, so you can compare loans on a like for like basis. MoneySmart suggests contacting at least two different lenders, because a rate even 0.5% lower could save you thousands of dollars over time.

You will also choose a rate type. A fixed interest rate stays the same for a set period, for example five years, while a variable interest rate can go up or down as the lending market changes. Neither is better in every case, and which suits you depends on your circumstances and lender criteria.

Watch the fees too. An application fee is a one off payment when starting a loan, also called an establishment, up front or set up fee. Ongoing fees are charged every month or year to administer the loan.

Fixed versus variable at a glance

Stage 4: Should you use a mortgage broker

A mortgage broker is a go between who deals with banks or other lenders to arrange a home loan. Brokers must act in your best interests when suggesting a loan for you.

Two points are worth knowing. First, brokers must hold a credit licence or be a credit representative, which you can check on the Australian Securities and Investments Commission professional registers. Second, lenders generally pay brokers a commission, so you usually do not pay the broker directly. A broker can do the legwork of comparing lenders for you, which is useful when you are short on time.

Stage 5: Find the home and make an offer

Once your finance is lined up, you can shop with confidence. Two checks protect you here.

Building and pest inspections should be done during the cooling off period so you understand any structural or pest issues before the contract becomes binding. Skipping them can be a costly mistake.

Be clear on what kind of offer you are making. A conditional offer only becomes binding once the stated conditions, such as finance, valuation or inspections, are met. An unconditional offer is binding straight away, so only make one when you are certain.

Stage 6: Settlement and beyond

Settlement is when ownership transfers and your loan starts. Make sure your stamp duty is paid within its deadline, your buildings insurance is in place from settlement day, and you have set up your repayments. From here, your job is to manage the loan well over time.

A simple timeline

Where to learn more

This checklist sits alongside our wider first home buyer guide, which covers the journey in more depth. If a smaller deposit changes your sums, read what LVR means for first home buyers and our explainer on home loan pre-approval. To avoid the traps, see the common first home buyer mistakes.

Frequently asked questions

Talk it through with the team at Finance Lab

A checklist gets you organised, but every first home is different. The team at Finance Lab can walk you through your numbers, compare lenders and explain your options based on your circumstances and lender criteria. Get in touch when you are ready to take the next step.