First Home Buyer Guide
Buying your first home is one of the biggest financial decisions you'll make. The Australian Government 5% Deposit Scheme (formerly the First Home Guarantee) lets eligible first home buyers buy with a 5% deposit and no lenders mortgage insurance, and every state adds grants or stamp duty relief. This guide covers your deposit, borrowing, schemes, loan types and the mistakes to avoid.
By Better Rate Mate Editorial Team · Last reviewed
1Key financial priorities
Save a deposit
Through the 5% Deposit Scheme you need 5% of the property value, as long as the home is under the local price cap and you use a participating lender. Without a scheme, a 20% deposit avoids lenders mortgage insurance (LMI), which is otherwise usually added to your loan. See low deposit home loans.
Understand your borrowing capacity
Lenders assess your income, expenses, debts and credit history, and banks test whether you could afford the repayments at your loan rate plus a buffer of at least 3 percentage points, as APRA expects. Check your repayments at a higher rate with our stress test calculator. For a rough idea of how much you could borrow, try the borrowing power calculator.
Check your eligibility for grants and schemes
The federal schemes (the 5% Deposit Scheme, Help to Buy and the First Home Super Saver Scheme) sit alongside each state's first home owner grant and stamp duty relief, and most can be combined. Our guide to first home buyer schemes and grants has the rules, price caps, how to apply and a state-by-state table. Our stamp duty calculator works out the duty and any first home buyer relief in your state: NSW stamp duty calculator, VIC stamp duty calculator, QLD stamp duty calculator, WA stamp duty calculator, SA stamp duty calculator, TAS stamp duty calculator, ACT stamp duty calculator and NT stamp duty calculator. The home deposit and upfront costs calculator adds the deposit, duty and fees.
Get pre-approval before you shop
Pre-approval gives you a budget ceiling and shows vendors you're serious. If you're using the 5% Deposit Scheme, you have 90 days from pre-approval to find a home and sign a contract of sale.
2Loan types to consider at this stage
Variable rate home loan
A flexible starting pointVariable loans usually allow unlimited extra repayments, redraw and an offset account, and your rate falls if your lender cuts it. Your repayments rise if your lender raises its rates.
Fixed rate home loan
For repayment certaintyLock your rate for one to five years so your repayments don't change. Most fixed loans limit extra repayments and rarely include an offset, and break costs can apply if you leave early. See fixed vs variable.
Split loan
Some of eachFix part of the loan for certainty and keep the rest variable for extra repayments and an offset account.
5% deposit loan (95% LVR)
Through the 5% Deposit SchemeWith the 5% Deposit Scheme you can borrow up to 95% of the property value without paying LMI, at a participating lender. Outside the scheme, a 95% loan means paying LMI, which is usually added to the loan.
3Insurance needs at this stage
- ✓Building and contents insurance from settlement day, or sooner if your contract puts the home at your risk earlier: see building insurance
- ✓Income protection insurance to cover your repayments if you can't work
- ✓Life insurance, especially if you have dependants
- ✓Mortgage protection insurance is optional; compare it with income protection before you buy it
4Common mistakes to avoid
- ✗Borrowing the most a lender will approve, which leaves no buffer for rate rises
- ✗Not budgeting for stamp duty (unless you're exempt), conveyancing, inspections and moving costs
- ✗Skipping the building and pest inspection to save money
- ✗Applying for new credit in the months before your home loan application
- ✗Forgetting ongoing costs: council rates, strata fees, insurance and maintenance
5Tips for getting a better rate
- 1Compare several lenders' key facts sheets, including participating lenders if you're using the 5% Deposit Scheme
- 2Ask your lender to match a better offer from another lender
- 3Consider an offset account if you'll keep savings in it
- 4Weigh any cashback against the extra interest a higher rate would cost: see how to judge a cashback
- 5Review your rate each year, since lenders often reserve their sharpest rates for new customers
Common questions
How much deposit do I need for my first home?
5% of the property value through the 5% Deposit Scheme (2% for single parents and legal guardians), if the home is under the price cap and you use a participating lender. Without a scheme, 20% avoids lenders mortgage insurance. Stamp duty and purchase costs come on top.
Can I combine the 5% Deposit Scheme with a first home owner grant?
Yes. Housing Australia says the scheme doesn't stop you using other federal or state programs, so you can also claim your state's grant and stamp duty relief if you qualify. You can't use it together with Help to Buy.
What is the First Home Guarantee called now?
The Australian Government 5% Deposit Scheme. The Home Guarantee Scheme, which included the First Home Guarantee, was rebranded on 1 October 2025, when income caps and the limit on places were removed.
