The first home buyer process in Australia, step by step

The first home buyer process in Australia follows a clear path: work out what you can afford, save your deposit, get loan pre-approval, find a property, make an offer, complete checks, and settle. Most people move through these steps over several months, and the order rarely changes. Knowing the sequence up front means fewer surprises and better decisions along the way.

This guide walks through the steps to buy your first home in Australia in plain language. It explains what happens at each stage, the figures that matter, and where the buying process for first time buyers tends to slow down. Every figure here is drawn from the Australian Securities and Investments Commission (ASIC) MoneySmart service. Your own numbers will depend on your circumstances and lender criteria.

Step 1: Work out what you can afford

The first step in the home buying process is honest budgeting. Look at your income, your regular expenses, and any existing debts, because lenders look at all of these too, not just the size of your deposit.

A useful test is to check what your repayments would look like if interest rates went up. MoneySmart suggests calculating your repayments as if interest rates went up by 2 per cent, so you can see whether the loan would still be comfortable. A higher repayment now could leave little room if rates move later.

You can run the numbers yourself before you speak to anyone. A borrowing power calculator gives you a rough range based on income and expenses, which is a sensible starting point.

Step 2: Save your deposit

Your deposit shapes the whole process. A common savings goal for a house deposit is 20 per cent of the purchase price, plus enough to cover buying costs. The reason 20 per cent matters is lenders mortgage insurance.

Lenders mortgage insurance (LMI) is a one-off fee that protects the lender if you cannot repay the loan. It does not protect you or your guarantor. LMI is generally triggered when your loan-to-value ratio (LVR) is above 80 per cent, which means you are borrowing more than 80 per cent of the property value. A 20 per cent deposit will avoid you needing to pay LMI.

You do not always need the full 20 per cent. Some lenders may accept a deposit as little as 5 per cent. There are also support measures that may reduce the cash you need:

• The First Home Super Saver scheme lets eligible savers withdraw up to $15,000 of voluntary super contributions each year, and up to $50,000 in total.
• The Home Guarantee Scheme lets eligible first home buyers purchase a home with a deposit as small as 5 per cent, without paying LMI, because the government guarantees part of the loan.

Step 3: Get loan pre-approval

Once you have a deposit in sight, the next step is pre-approval. Loan pre-approval shows what a lender may be willing to lend you without committing you to a loan, and it is usually valid for 3 to 6 months. It tells you a realistic price range and shows agents you are a serious buyer.

This is also the point where a mortgage broker can help. 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. Lenders generally pay brokers a commission, so you do not pay them directly in most cases. We explain how this works in Using a mortgage broker as a first home buyer

When you reach this stage it pays to understand how loans are priced. A comparison rate is a single figure of the cost of the loan that includes the interest rate and most fees, so it gives a fairer picture than the headline rate alone. You will also choose between rate types and repayment types.

To get pre-approval sorted, see Home loan pre-approval for first home buyers

Step 4: Find a property

With pre-approval in hand, you can search with confidence. Separate your must-haves from your nice-to-haves and stay inside your price range. It is easy to stretch when you find a place you like, but the budget you set in step one is there to protect you.

Inspect properties carefully and research recent sale prices in the area so your eventual offer is grounded in evidence rather than emotion.

Step 5: Make an offer

When you find the right property, you make an offer. An offer can be conditional, for example subject to finance or to a satisfactory building inspection, or unconditional. A conditional offer gives you protection if something goes wrong, while an unconditional offer is binding and carries more risk.

This is the stage to engage a solicitor or conveyancer to review the contract of sale before you sign anything.

Step 6: Carry out checks

Before the sale becomes final, do your due diligence. A building and pest inspection by a professional can reveal structural problems or pest damage that are not visible on a walk-through. In many cases there is a cooling-off period after signing during which these checks can be completed, though the rules differ by state and territory.

Step 7: Settle and move in

Settlement is the final step. At settlement the property title is transferred to you and your mortgage begins. Your lender or conveyancer handles most of the paperwork, and the balance of the purchase price is paid to the seller.

There are costs to plan for around settlement. Stamp duty is a state or territory tax on property transfers and is generally due within 30 days of settlement. You should also arrange home and contents insurance and update your budget for ongoing repayments.

Try the calculators first

Before you commit to any step, it helps to see the numbers for your own situation. A borrowing power calculator shows a realistic range, and the MoneySmart mortgage calculator estimates repayments on a principal and interest loan.

How long does the first home buyer process take?

There is no fixed timeline. Saving a deposit is usually the longest stage and can take years, while pre-approval, searching, and settlement typically run over a few months once you are ready to buy. The pace depends on your savings, the market, and your circumstances.

A few common slip-ups can stretch the process out. We cover them in Common first home buyer mistakes

Frequently asked questions