Buying your first home can be an exciting and highly rewarding experience, but the process can be daunting if you haven’t done a little homework.

This guide takes you through some of the key considerations around the financing of a property purchase, from saving a deposit, getting a loan, to ensuring you receive any government financial benefits available.

The Deposit for your first home.

The deposit is your down-payment or contribution to the cost of the property and the more you can save as a deposit, the less you may need to borrow. The financial discipline or budgeting required to build a substantial deposit is good practice to ensure you can manage loan repayments once you have a mortgage, and it also demonstrates your financial capacity to the bank or lender. Lenders will like to see proof of what’s known as genuine savings through your bank records, (in preference to receiving your deposit as a gift, or separate loan.)

Exactly how much deposit you need will depend on the price range of the properties you seek, and the amount of money you are planning, or able to borrow. A deposit of 5% of the property price is generally a minimum starting point, and the more the better. A 20% deposit is usually the minimum required to avoid paying the extra cost of Mortgage Insurance; which insures the lender, but not you, from a failure to pay the loan.

Borrowing capacity for first time buyers

Lenders assess your overall financial situation to determine how much you can borrow eg:

• Your income (wages, salary, or from other investments)
• Current financial commitments (credit cards, personal loans, etc)
• Credit history
• Number and ages of any children
• Size and Type of property (urban or rural, house or apartment)

Each lender applies their own formula to this information to calculate what you should be able to repay, and thus what the maximum loan they can offer. At we can advise you on your maximum borrowing capacity with over 30 different banks and lenders, so while you may not qualify for the loan you need from one lender, you may still receive an offer from another.

You can increase your borrowing capacity with the following measures:

• Save a bigger deposit
• Draw up a Budget – and stick to it!
• Pay off consumer debt like credit cards (and reduce your card limits if possible)
• Consider consolidating any debts to a lower rate of interest
• Resolve any credit issues

First Home Owners Grant

In recent years, state and federal governments have offered financial assistance of lump sum payments to people buying their first home. The grant application is submitted at the time of your finance application, and funds are made available at settlement to help fund the purchase of the property. Eligibility guidelines apply:

• You or your partner must be an Australian citizen or permanent resident
• You (or your partner/spouse) must not have previously owned a home in Australia
• Property must be owner-occupied, i.e. generally you’d need to live in it for at least six months, commencing in the first year of ownership (with some exceptions)
• Property price limits apply – please refer to the relevant Office of State revenue below.

What is the First Home Owner Grant NSW (New Homes)

Availability, conditions and value of First Home Owners Grants and stamp duty exemptions and or reductions vary from state to state. Please refer to the following links for information applicable to your state or territory