First Home Buyer's Financial Checklist: Everything You Need Before Buying
IntuitiveCalc Team
Financial Content Specialist
Buying your first home in Australia is one of the most significant financial decisions you'll ever make. With median house prices in Sydney exceeding $1.4 million and Melbourne around $900,000, proper financial preparation is essential. This comprehensive guide walks you through every financial step you need to take before purchasing your first property.
1. Calculate Your Deposit Requirements
The deposit is typically the biggest barrier for first home buyers. Understanding exactly how much you need and the timeline to save it is crucial for success.
Minimum Deposit Options
| Deposit Size | LVR | LMI Required? | Monthly Savings (3 years) |
|---|---|---|---|
| $40,000 (5%) | 95% | Yes (~$25,000) | $1,111/month |
| $80,000 (10%) | 90% | Yes (~$18,000) | $2,222/month |
| $120,000 (15%) | 85% | Yes (~$10,000) | $3,333/month |
| $160,000 (20%) | 80% | No | $4,444/month |
Based on $800,000 property purchase
💡 First Home Super Saver Scheme (FHSSS)
Use the FHSSS to save up to $50,000 ($15,000/year) inside your super with tax benefits. Combined with salary sacrifice, you could build your deposit 30% faster than saving in a regular bank account.
Genuine Savings Requirement
Most lenders require at least 5% of your deposit to be "genuine savings" - money you've saved over at least 3 months. Acceptable sources include:
- Bank savings accounts - Regular deposits over 3+ months
- Term deposits - Fixed investments held for 3+ months
- Shares and managed funds - Held for 3+ months
- Superannuation - Via FHSSS withdrawal
Not considered genuine savings:
- Gifts from parents/family (can be used for non-genuine portion)
- Tax refunds or bonuses (recent, not accumulated)
- Sale of assets
- Inheritance (recent)
2. Understand All Upfront Costs
The purchase price is just the beginning. First home buyers are often shocked by the additional costs required at settlement. Here's the complete breakdown:
Complete Cost Breakdown for $750,000 Property (NSW)
| Cost Item | Amount | When Paid |
|---|---|---|
| Deposit (20%) | $150,000 | Exchange |
| Stamp Duty | $0 (FHB concession) | Settlement |
| Conveyancing/Legal Fees | $1,500-$2,500 | Settlement |
| Building & Pest Inspection | $500-$800 | Before exchange |
| Loan Application Fee | $0-$600 | Application |
| Lender's Valuation Fee | $200-$400 | Application |
| LMI (if <20% deposit) | $0 (20% deposit) | Settlement |
| Council/Strata Adjustments | $500-$1,500 | Settlement |
| Transfer/Registration Fees | $150-$300 | Settlement |
| TOTAL UPFRONT COSTS | ~$153,250-$156,100 | - |
⚠️ Don't Forget Moving Costs
Budget an additional $5,000-$15,000 for removalists, new furniture, immediate repairs, utilities connection, and first month's expenses. Many first home buyers underestimate these costs.
3. Government Grants and Concessions by State
First home buyers in Australia have access to various government incentives. Eligibility and amounts vary significantly by state. Here's what's available in 2024-25:
First Home Buyer Grants & Stamp Duty Concessions (2024-25)
| State | Grant Amount | Stamp Duty Concession | Property Price Cap |
|---|---|---|---|
| NSW | $10,000 (new only) | Full exemption <$800k | ≤$800,000 |
| VIC | $10,000 (new only) | Full exemption <$600k | ≤$750,000 |
| QLD | $30,000 (regional new) | Concession ≤$700k | ≤$700,000 |
| WA | $10,000 (new only) | Transfer fee relief | ≤$750,000 |
| SA | $15,000 (new only) | Full exemption ≤$650k | ≤$650,000 |
| TAS | $30,000 (new only) | 50% concession ≤$600k | ≤$600,000 |
Check current eligibility criteria as these frequently change
Federal Government Schemes
First Home Guarantee (FHG)
- Buy with just 5% deposit
- No LMI required
- 35,000 places per year
- Property cap: $950,000 (Sydney)
- Income cap: $125,000 (single), $200,000 (couple)
Regional First Home Buyer Guarantee
- Buy with just 5% deposit
- No LMI required
- 10,000 places per year
- Regional areas only
- Same income caps as FHG
4. Get Loan Pre-Approval
Pre-approval is essential before you start seriously house hunting. It tells you exactly how much you can borrow and shows sellers you're a serious buyer.
Pre-Approval Process Step-by-Step
Step 1: Check Your Credit Score (1 week before)
- Get free credit report from Equifax, Experian, or illion
- Review for errors and dispute inaccuracies
- Pay off small debts to improve score
- Ideal score: 700+ (Good to Excellent)
Step 2: Gather Required Documents
- Last 3 months payslips
- Last 2 years tax returns (if self-employed)
- Last 3-6 months bank statements (all accounts)
- Proof of deposit savings
- ID documents (driver's license, passport)
- Details of all debts (credit cards, car loans, HECS)
Step 3: Calculate Your Borrowing Capacity
Lenders use these serviceability ratios:
- Living expenses: HEM benchmark (~$2,500/month single)
- Assessment rate: 3% above actual rate (buffer)
- Debt-to-income: Maximum 6x gross income
- Existing debts: Full credit card limits count (even if $0 balance)
Step 4: Apply Through Broker or Direct
Mortgage Broker Benefits:
- Access to 30+ lenders (vs 1 direct)
- No cost to you (lender pays commission)
- Expert policy knowledge
- Higher approval rates
Borrowing Capacity Example: $90,000 Income
| Gross annual income | $90,000 |
| Net monthly income (after tax) | $5,865 |
| Living expenses (HEM) | -$2,500 |
| Car loan repayment | -$450 |
| Credit card limit ($10k @ 3%) | -$300 |
| Available for mortgage | $2,615/month |
| Maximum borrowing capacity | ~$550,000 |
Assessed at 6.5% rate (3% buffer above 3.5% actual rate)
🚫 Common Pre-Approval Mistakes
- Not cancelling unused credit cards: A $20k limit counts as -$600/month repayment capacity even with $0 balance
- Job hopping: Need 3-6 months continuous employment (2 years if self-employed)
- Excessive spending before application: 3 months of bank statements will show lifestyle spending
- Applying to multiple lenders: Each credit inquiry lowers your score
5. Budget for Ongoing Costs
Many first home buyers focus solely on the mortgage repayment but forget about the numerous ongoing costs of homeownership. Here's the realistic monthly budget:
Monthly Homeownership Costs: $750,000 Property
| Expense | Monthly Cost | Annual Cost |
|---|---|---|
| Mortgage repayment (P&I) | $3,745 | $44,940 |
| Council rates | $250 | $3,000 |
| Water rates | $80 | $960 |
| Strata fees (if apartment) | $500 | $6,000 |
| Home & contents insurance | $150 | $1,800 |
| Utilities (electricity, gas, internet) | $350 | $4,200 |
| Maintenance & repairs (1% property value) | $625 | $7,500 |
| TOTAL MONTHLY | $5,700 | $68,400 |
Based on $600k loan @ 6.24% over 30 years
💡 Emergency Fund Essential
Keep 3-6 months of expenses ($17,000-$34,000) in emergency savings after purchase. Unexpected repairs like hot water system ($1,500), air conditioning ($5,000), or roof repairs ($8,000) can happen anytime.
6. Choose the Right Property Type
Your first property doesn't need to be your forever home. Understanding the pros and cons of each property type helps you make a strategic decision.
🏠 House & Land
Pros:
- Land appreciates (building depreciates)
- No strata fees ($500/month saving)
- Full control over property
- Renovation flexibility
- Better for families long-term
Cons:
- Higher purchase price
- More maintenance responsibility
- Usually further from CBD
- Higher council rates
🏢 Apartment/Unit
Pros:
- Lower entry price point
- Closer to CBD/amenities
- Less maintenance (strata manages)
- Shared facilities (pool, gym)
- Better rental yields
Cons:
- Strata fees ($6,000/year avg)
- Slower capital growth
- Less privacy & control
- Strata by-laws restrictions
- Harder to add value
🏘️ Townhouse
Pros:
- Middle ground pricing
- Some land component
- Lower strata than apartments
- More space than apartments
- Good for young families
Cons:
- Still have strata fees
- Shared walls (noise)
- Limited outdoor space
- Renovation restrictions
🌄 Regional Property
Pros:
- Much lower prices
- Larger properties
- Quality of life
- Government incentives
- Higher rental yields
Cons:
- Slower capital growth
- Limited employment
- Harder to sell
- Less amenities
- Potential for price decline
7. Settlement Checklist
The final 30 days before settlement are critical. Use this checklist to ensure everything is ready:
4 Weeks Before Settlement
- Confirm settlement date with conveyancer
- Arrange final loan approval (if conditional)
- Book removalist and set moving date
- Arrange building insurance from settlement date
- Notify employer of address change (for tax)
2 Weeks Before Settlement
- Do final walk-through inspection
- Check all fixtures/fittings included are present
- Verify property condition matches contract
- Arrange utilities connection (electricity, gas, water, internet)
- Update address with bank, Medicare, electoral roll
- Transfer remaining deposit funds to conveyancer
Settlement Day
- Conveyancer completes settlement electronically
- Remaining funds transferred to vendor
- Property title transferred to your name
- Receive keys from real estate agent
- Building insurance activates
- You can move in!
After Settlement
- Change locks immediately (security)
- Set up direct debit for mortgage repayments
- Organize mail redirection ($50 for 12 months)
- Keep all settlement documents (6+ years for tax)
- Consider energy efficiency upgrades (solar, insulation)
- Register for council rates and utilities in your name
8. First Home Buyer Mistakes to Avoid
❌ Borrowing Maximum Capacity
Just because you can borrow $600k doesn't mean you should. Interest rates can rise 2-3%, increasing your repayment by $800-$1,200/month. Borrow based on your comfort level, not bank maximum.
❌ Skipping Building Inspection
A $600 building inspection can save you from $50,000+ in structural repairs. Never skip this step, even for new properties. Termites, foundation issues, and asbestos aren't visible to untrained eyes.
❌ Buying Too Far Out
Outer suburbs might be cheaper, but 2-hour commutes cost you 20 hours/week. Calculate the true cost: fuel ($200/week), car maintenance ($150/month), toll roads ($50/week) = $15,000+/year lost income and expenses.
❌ Interest-Only Loans
Interest-only might save $800/month now, but you're not paying down debt. After 5 years IO, you'll owe the same $600k AND have higher repayments when P&I kicks in. Only suitable for investors with clear strategy.
❌ Emotional Purchasing
Falling in love with a property at open home leads to overbidding. Always stick to your maximum price based on bank valuation, comparable sales, and your budget - not emotions.
9. Action Plan Timeline
Your 12-Month First Home Buyer Journey
| Timeline | Action Items | Goal |
|---|---|---|
| Months 1-3 | Check credit score, create budget, start saving aggressively, research suburbs | $10k-$15k saved |
| Months 4-6 | Set up FHSS, salary sacrifice, continue saving, attend open homes, research lenders | $25k-$35k saved |
| Months 7-9 | Meet mortgage brokers, get pre-approval, intensify property search | $40k-$50k saved + pre-approval |
| Months 10-11 | Make offers, arrange building inspection, engage conveyancer | Contract signed |
| Month 12 | Final loan approval, arrange insurance, utilities, settlement | Keys in hand! |
Related Tools
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Stamp Duty Calculator
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Loan Calculator
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Ready to Buy Your First Home?
With proper planning, disciplined saving, and the right financial strategy, homeownership is achievable. Start with our calculators to understand your numbers, create a realistic timeline, and take the first step toward your own home.
Remember: Your first home doesn't need to be your forever home. Focus on getting into the market, building equity, and upgrading when the time is right.