Buying your first home is one of the most significant financial decisions you’ll ever make, and it can feel overwhelming. Between saving a deposit, understanding government grants, navigating the loan process and competing with other buyers, there’s a lot to get your head around. But with the right guidance and preparation, the move from renting to owning is achievable, even in today’s market.
This guide walks you through every step of the first home buying process in Australia, with a particular focus on what’s available to buyers in Victoria. Whether you’re just starting to save, ready to start looking, or about to make an offer, you’ll find practical, actionable information to help you move forward with confidence.
At Mortgage & Finance Advisory, we’ve helped hundreds of first home buyers across Geelong, the Surf Coast, Melbourne and regional Victoria buy their first home. We understand the local market, know which grants and concessions apply to your situation, and have access to over 60 lenders to find the right loan for your needs.
Before you settle on a property you can’t afford, the first step is understanding exactly what you can realistically spend. Your borrowing power depends on several factors including your income, existing debts, living expenses, deposit size and the interest rate used for assessment.
Lenders don’t assess you at the actual interest rate you’ll pay. They add a buffer of 2.5-3% to ensure you can still afford repayments if rates rise. So if the actual rate is 6.2%, the lender assesses your ability to repay at around 8.7-9.2%. This is why many first home buyers are surprised to discover their borrowing power is lower than expected.
As a rough guide, most lenders will allow you to borrow approximately 5-6 times your gross household income, though this varies significantly based on your individual circumstances. A single person earning $85,000 might borrow around $450,000-$500,000, while a couple earning a combined $150,000 might borrow $750,000-$850,000.
Your deposit is the foundation of your home purchase. The more you can save, the better your loan options and the less your home will cost you overall.
The absolute minimum deposit most lenders accept is 5% of the purchase price. However, there are significant advantages to saving more. With a 20% deposit, you avoid Lenders Mortgage Insurance entirely. This single saving can be worth $10,000 to $40,000+ depending on the purchase price and your LVR. Between 5% and 20%, you’ll need to factor LMI into your costs unless you qualify for a government guarantee scheme that waives it.
Beyond the deposit, you’ll need additional funds for purchase costs including stamp duty (if applicable), conveyancing/legal fees ($1,500-$3,000), building and pest inspections ($500-$800), loan application fees (if any), moving costs, and potentially connection fees for utilities.
Set up a dedicated high-interest savings account and automate regular transfers on payday, treating your deposit savings like a non-negotiable bill. Reduce discretionary spending where possible, consider a side income stream, and look into whether your employer offers salary sacrifice arrangements that could boost your savings.
Victoria offers several generous schemes for first home buyers that can significantly reduce the cost of getting into the market.
Victorian first home buyers can receive a $10,000 grant when purchasing or building a new home valued up to $750,000. This applies to newly built homes, off-the-plan purchases, and owner-builder constructions. The grant doesn’t apply to established (existing) homes. You must be an Australian citizen or permanent resident, be at least 18 years old, and live in the property as your principal place of residence for at least 12 months.
This is often worth even more than the FHOG. First home buyers in Victoria purchasing a property valued at $600,000 or less pay zero stamp duty, a saving of up to approximately $31,070. For properties valued between $600,001 and $750,000, a sliding scale concession applies, reducing the stamp duty on a proportional basis. This concession applies to both new and established homes, making it available to a much wider group of first home buyers.
The Australian Government also offers schemes that benefit first home buyers. The First Home Guarantee allows eligible buyers to purchase with as little as 5% deposit without paying LMI. The government guarantees up to 15% of the loan. The Regional First Home Buyer Guarantee provides similar benefits specifically for buyers in regional areas. The Family Home Guarantee supports eligible single parents to purchase with as little as 2% deposit. Places in these schemes are limited and allocated on a first-come, first-served basis each financial year.
Pre-approval (also called conditional approval or approval in principle) is where a lender assesses your financial situation and gives you a written indication of how much they’re willing to lend you. This is one of the most important steps in the buying process.
Pre-approval gives you a clear budget to work within, shows sellers and agents you’re a serious buyer, speeds up the final approval process once you find a property, and helps you avoid choosing a property you can’t finance.
Pre-approval typically lasts 3-6 months depending on the lender, and involves a credit check, income verification and preliminary property assessment. Your broker can often arrange pre-approval within 48-72 hours.
With pre-approval in hand, you know exactly what you can spend. Now comes the exciting part: finding the right property. Here are some practical tips for your search.
Be clear on your priorities. Make a list of must-haves versus nice-to-haves. Location, number of bedrooms, proximity to work/transport, and outdoor space are common non-negotiables. Features like a renovated kitchen or extra living space might be nice-to-haves that you can compromise on.
Research suburbs thoroughly. Look at median prices, recent sales, planned infrastructure developments, school zones, and crime statistics. In Victoria’s regional markets like Geelong and the Surf Coast, there can be significant price differences between neighbouring suburbs.
Attend open homes regularly. Even properties outside your budget help you calibrate what good value looks like in your target areas. The more properties you inspect, the more confidently you’ll recognise a good opportunity when it appears.
Build relationships with local agents. Let agents in your target areas know you’re a pre-approved first home buyer actively looking. They may alert you to properties before they hit the market or recommend you to sellers looking for a quick, certain sale.
Once you’ve found the right property, the purchase process differs depending on whether you’re buying via private sale or auction.
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| Factor | Private Sale | Auction |
|---|---|---|
| Cooling-off Period | 3 business days in Victoria | No cooling-off period |
| Conditions | Can include finance and building/pest clauses | Unconditional, no clauses allowed |
| Deposit | Negotiable (typically 5-10%) | Usually 10% on the day |
| Risk Level | Lower, conditions protect you | Higher, contract is binding immediately |
| Negotiation | Can negotiate price and terms | Price determined by competitive bidding |
For first home buyers, private sales are generally less stressful because you have the protection of a cooling-off period and can include conditions like subject to finance and subject to building inspection. If buying at auction, ensure your finance is as close to unconditional as possible and complete all inspections beforehand.
A young couple from Geelong came to us with a combined income of $135,000 and $48,000 in savings. They’d been quoted borrowing capacity of $520,000 by their bank but weren’t sure if they could make it work. We helped them access the First Home Guarantee scheme (avoiding $12,800 in LMI), identified that the property they were considering was under the $600,000 stamp duty exemption threshold (saving them $21,970), and found a lender offering 0.35% lower rate than their bank. They purchased a three-bedroom home in Grovedale for $535,000 with just their $48,000 deposit. Their monthly repayments of $3,160 were comparable to the rent they’d been paying. Total savings from government schemes and our rate negotiation: approximately $38,000.
After your offer is accepted (or you’re the winning bidder at auction), the settlement process begins. In Victoria, settlement typically takes 30-90 days, during which your conveyancer handles the legal transfer of property ownership.
During this period, your lender completes their final assessment and property valuation, you arrange building insurance (required from the day of settlement), your conveyancer conducts title searches, reviews the contract and handles the legal transfer, and any applicable grants (like the FHOG) are processed and applied.
On settlement day, your lender releases the loan funds to the seller’s bank, the title is transferred into your name, and you collect the keys to your new home. Your broker and conveyancer manage the entire process. You don’t need to attend settlement in person.
Not getting pre-approval first. House hunting without knowing your budget wastes time and leads to disappointment. Always get pre-approval before you start looking seriously.
Forgetting about additional costs. The purchase price is just the beginning. Budget for stamp duty (if applicable), conveyancing, inspections, moving costs, connection fees, and initial furnishing. A good rule of thumb is to budget an additional 3-5% of the purchase price for these costs.
Stretching too far. Just because a lender will approve a certain amount doesn’t mean you should borrow that much. Leave yourself a buffer for rate rises, unexpected expenses and lifestyle. Being “house poor” (where most of your income goes to mortgage repayments) leads to stress and limits your quality of life.
Skipping building and pest inspections. A $500 inspection can reveal $50,000 worth of hidden problems. Never skip this step, especially on older properties. If buying at auction, arrange inspections before auction day.
Not using a mortgage broker. A broker compares dozens of lenders to find the best deal for your situation. The service costs you nothing (brokers are paid by the lender), yet can save you thousands in lower rates and fees. Many first home buyers go directly to their bank and miss out on better options available elsewhere.
From the initial consultation with a broker to getting your keys, the typical timeline is 3-6 months. Getting pre-approval takes 2-5 days, finding the right property varies widely (sometimes weeks, sometimes months), and settlement is usually 30-90 days after the contract is signed. The better prepared you are at each stage, the smoother and faster the process goes.
The First Home Super Saver Scheme (FHSSS) allows you to withdraw voluntary super contributions (up to certain limits) to use toward your first home deposit. You can access up to $50,000 in eligible contributions. This can be a tax-effective way to boost your deposit, as contributions receive concessional tax treatment. Speak to your super fund about the process, which requires an application through the ATO.
No. The Victorian FHOG ($10,000) is only available for new homes. However, you may still qualify for stamp duty exemptions or concessions on established homes valued up to $750,000, which can be worth even more than the FHOG in many cases.
Yes, you can purchase as tenants in common with another person. However, all parties need to meet the first home buyer eligibility criteria for the relevant grants and concessions. Both names go on the title and both are liable for the loan. It’s essential to have a co-ownership agreement drawn up by a solicitor that covers scenarios like one party wanting to sell their share.
You don’t need 20%. Most lenders accept deposits as low as 5%, and with the First Home Guarantee scheme, you can purchase with 5% deposit without paying LMI. If you have a family member willing to act as guarantor (using equity in their property), you may even be able to purchase with no cash deposit at all. We regularly help first home buyers find pathways to purchase with smaller deposits.
Our Geelong-based team has helped hundreds of first home buyers get into the market. Free consultation to assess your options, grants and borrowing power.
Or call us on 03 9020 2699
About the Author
Melanie McNaughton is the founder of Mortgage & Finance Advisory, based in Geelong, Victoria. As a specialist mortgage broker, Melanie has helped hundreds of first home buyers across Geelong, the Surf Coast, Melbourne and regional Victoria navigate the home buying process, access government grants and secure competitive home loan rates. Contact Melanie on 03 9020 2699 for a free, no-obligation consultation.
