Everything You Need to Know About Entering the Market

What Does It Really Take to Get Into the Property Market?

You need a deposit, proof of income, and eligibility for a loan that fits what you can afford. The deposit can be as low as 5% if you use the First Home Guarantee, which now has no income cap and covers the cost of Lenders Mortgage Insurance. Your borrowing capacity depends on your income, debts, and living expenses, not just what you think you can afford to repay each month.

The confusion usually starts when people try to figure out how much they actually need saved. A 5% deposit sounds achievable until you add legal fees, building and pest inspections, and moving costs. Then there's the question of whether your savings count as genuine savings, or if a gift from family is acceptable. Lenders have different rules, and what works with one might not work with another.

Consider someone earning around the median wage who's been renting and saving for two years. They've built up a deposit using a combination of their own savings and a $15,000 contribution from a parent. That gift is allowed under most lender policies as long as it comes with a signed declaration that it's not a loan. They're targeting an established unit because it fits their budget and lets them stay in the area where they work. With the First Home Guarantee, they can buy with a 10% deposit and avoid paying thousands in LMI. Their loan gets approved, and they're in.

That scenario plays out regularly, but it's not the only path. Some buyers save faster using the First Home Super Saver Scheme, which lets you contribute up to $15,000 per year into super at a 15% tax rate instead of your marginal rate, then withdraw up to $50,000 for a deposit. Others rely entirely on their own savings and go for a larger deposit to reduce what they borrow. The strategy depends on how quickly you want to buy, where you're buying, and what kind of property fits your budget.

How the First Home Guarantee Changed the Deposit Question

The First Home Guarantee was expanded in October 2025 and now allows eligible buyers to purchase with a 5% deposit without paying LMI, with no income caps or place limits. That removed two of the biggest barriers that used to keep people renting for years longer than they wanted to.

Before the expansion, you either needed a 20% deposit to avoid LMI, or you paid several thousand dollars in insurance premiums to borrow with less. Now, if you meet the eligibility criteria, the government guarantees part of your loan and the lender waives the LMI. You still need to prove you can service the loan, and your deposit still needs to be genuine savings or an acceptable gift, but the upfront cost drops significantly.

In our experience, this scheme works particularly well for people who've been saving consistently but don't have family help and can't get to 20% without another few years of renting. It also suits buyers in regional areas where the Regional First Home Buyer Guarantee previously applied, as the expanded scheme now covers a much wider range of properties and locations.

One thing to keep in mind: the First Home Guarantee has annual place limits, and they fill up. If you're planning to use it, getting your pre-approval sorted early in the financial year gives you a better chance of securing one of those spots before they're allocated.

State Grants and Stamp Duty Concessions You Can Stack

Most states offer a combination of grants and stamp duty concessions, and many of these can be used alongside the First Home Guarantee. The grants generally apply to new homes only, while stamp duty concessions often cover both new and established properties, depending on where you're buying.

In New South Wales, eligible buyers can get a $10,000 grant for a new home valued up to $600,000, plus a stamp duty exemption on properties under $800,000 or vacant land under $350,000 through the First Home Buyers Assistance Scheme. Queensland currently offers up to $30,000 for new homes under $750,000, though that grant is set to expire on 30 June 2026 unless it's extended. Victoria provides a $10,000 grant for new homes up to $750,000 and no stamp duty up to $600,000, tapering to $750,000.

The Northern Territory has the largest grant in the country at $50,000 for new homes, with no cap on purchase price, running until 30 September 2026. It also offers $10,000 for established homes. South Australia abolished stamp duty for first home buyers purchasing new homes from June 2024 onwards, regardless of property value, which can save tens of thousands on higher-priced properties. Western Australia recently increased its First Home Owner Grant cap to $800,000 and lifted stamp duty concession thresholds by $100,000.

Tasmania offers no stamp duty on established homes with a dutiable value of $750,000 or less for eligible buyers, currently running until 30 June 2026, plus a $10,000 grant for new homes. The ACT focuses on stamp duty concessions rather than cash grants, with thresholds updated regularly.

If you're buying in a state with a large grant or full stamp duty exemption, the combined saving can cover most or all of your upfront costs beyond the deposit itself. That's worth factoring into your budget early, especially if you're deciding between a new build and an established property.

Fixed or Variable: What Suits a First Purchase

A variable rate gives you flexibility and access to an offset account, which can save you interest if you keep extra cash in the account. A fixed rate locks in your repayment amount for a set period, usually one to five years, which makes budgeting easier but limits your ability to make extra repayments without penalties.

Most first home buyers go with a variable rate or a split, where part of the loan is fixed and part is variable. The split approach gives you some certainty on repayments while still allowing you to put extra money towards the loan when you can. If you're buying at the top of your budget and want to know exactly what you'll be paying each month, a larger fixed portion makes sense. If you expect your income to increase or you want the option to pay down the loan faster, keeping more on variable works better.

One detail that often gets missed: if you fix your rate and then want to refinance or sell before the fixed period ends, you may be charged break costs. Those costs can run into thousands of dollars depending on how much rates have moved since you fixed. It's not a reason to avoid fixing, but it's worth knowing before you lock in a five-year term.

What Lenders Actually Look at in Your Application

Lenders assess your income, your existing debts, your living expenses, and your deposit source. They calculate your borrowing capacity using a serviceability buffer, which means they test whether you could still afford the loan if interest rates increased. Most lenders add around 3% to the current rate when they run that test.

Your income needs to be stable and verifiable. If you're a casual employee, some lenders will only count your base hours, not overtime or occasional shifts. If you're self-employed, most lenders want two years of tax returns, though some will accept one year if your accountant provides a letter confirming your income. If you've recently changed jobs but stayed in the same industry, that's usually fine. If you've changed industries or gone from full-time to contract work, it can make the application harder.

Debts include anything with a limit or a regular repayment: credit cards, personal loans, car loans, Buy Now Pay Later accounts, and HECS debt. Even if you pay your credit card off in full every month, the lender will assume you could draw the full limit and factor that into your expenses. Closing accounts you don't use or reducing credit limits before you apply can increase what you're able to borrow.

Living expenses are assessed using either your actual declared expenses or a benchmark figure called the Household Expenditure Measure, whichever is higher. If you tell the lender you spend $1,200 a month on everything and the benchmark for someone in your situation is $2,000, they'll use $2,000. You can't talk your way into a bigger loan by understating your costs.

How Pre-Approval Helps You Move Quickly

Pre-approval tells you how much a lender is willing to lend before you start looking at properties. It's conditional, meaning the lender can still withdraw it if your circumstances change or if the property you choose doesn't meet their criteria, but it gives you a clear budget and shows sellers you're in a position to proceed.

Most pre-approvals last three to six months. If you don't find a property in that time, you can usually extend it or reapply without much hassle. The process involves providing payslips, bank statements, tax returns if you're self-employed, and a list of your debts and expenses. The lender runs a credit check and assesses your borrowing capacity the same way they would for a full application, but without a property attached.

In our experience, buyers with pre-approval move faster at auction and have more negotiating power in private sales. Sellers and agents take you more seriously when they know you've already been assessed by a lender. It also gives you time to fix any issues that come up during the assessment, like closing an old credit card or paying down a personal loan, without the pressure of a contract deadline.

What Happens After You Sign the Contract

Once you've signed a contract to purchase, the lender needs to value the property and complete a final credit check before they'll release the funds. The valuation is done by an independent valuer, not the lender, and it can come back lower than the purchase price. If that happens, the lender will only lend based on the valuation figure, which means you either need to make up the difference with extra deposit or renegotiate the price with the seller.

Your solicitor or conveyancer handles the legal side: checking the contract, arranging pest and building inspections if they weren't done before you made an offer, and organising settlement. Settlement is when the property officially changes hands. Your lender transfers the loan funds to the seller's solicitor, you pay any remaining deposit and costs, and you get the keys.

Between contract and settlement, your lender will ask for updated payslips and bank statements to confirm nothing has changed. If you take on new debt, change jobs, or miss a credit card payment during that period, it can delay or even derail the loan. Keep everything stable until settlement is done.

Using an Offset or Redraw to Reduce Interest

An offset account is a transaction account linked to your loan. The balance in the offset is subtracted from your loan balance when the lender calculates interest, so if you have a loan of $400,000 and $10,000 in your offset, you only pay interest on $390,000. You can access the money in the offset anytime, and it reduces the interest you pay without locking the funds away.

Redraw lets you take back extra repayments you've made on the loan. If your minimum monthly repayment is $2,000 and you pay $2,500, you can usually redraw that extra $500 later if you need it. Some lenders charge a fee for redraw or limit how often you can access it, and it's not available on all loan types.

Offset accounts are more common on variable rate loans. If you're holding savings for renovations, a holiday, or an emergency fund, keeping that money in an offset instead of a separate savings account means it's working to reduce your interest while staying accessible. Redraw works in a similar way, but it's slightly less flexible because the money is technically part of your loan repayment rather than sitting in a separate account.

When to Talk to a Broker Instead of Going Direct

A mortgage broker compares loans from multiple lenders and helps you find one that fits your situation. If your application is straightforward, going direct to a lender can work, but if you're self-employed, buying with a small deposit, using a gifted deposit, or your income is a mix of base salary and commissions, a broker can place you with a lender more likely to approve your application.

Brokers also handle the paperwork, follow up with the lender, and push things along when delays happen. That's particularly useful if you're buying at auction or working to a tight settlement timeline. If you're not sure which home loan options suit your situation, or if you've been declined by a lender and don't know why, a broker can explain what went wrong and where to go next.

There's no cost to you for using a broker in most cases. The lender pays the broker a commission once your loan settles, and you get access to a wider range of products than you'd see by walking into a single bank branch.

Getting into the property market takes planning, but it's more accessible now than it has been in years, especially with the expanded First Home Guarantee and the range of state-based concessions available. If you're ready to move forward or just want to know what you can borrow and what your options are, call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions