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First Home Buyer Loans: From Renting to Owning

Buying your first home is a big step, and it can feel like there’s a lot to get your head around: deposits, government schemes, stamp duty, pre-approval. The good news is that first home buyers have more help available now than at almost any time in the last decade.

I’m Albert Waldron from Awesome Lending Solutions. I’ve been helping first home buyers since 2002, and my job is to make the process simple: work out what you can afford, find every scheme and concession you qualify for, and get you to settlement without surprises.

Talk to Albert about your first home

How much deposit do you really need?

The old rule was a 20% deposit. That’s still the cheapest way to borrow, because you avoid Lenders Mortgage Insurance (LMI). But it’s no longer the only way in.

  • 5% deposit, no LMI: through the Australian Government 5% Deposit Scheme. There are no income caps and no limit on places, as long as the property is under the price cap for your area.
  • 2% deposit for single parents: eligible single parents and legal guardians can buy with as little as 2%. See home loans for single parents.
  • Family guarantee: a parent can use equity in their home to guarantee part of your loan. Read about guarantor home loans.
  • Low deposit with LMI: some lenders will lend up to 95% with LMI added. Sometimes that still makes sense. Read about low deposit home loans.

More detail: how much deposit do I need to buy a house?

Government help for first home buyers

There are three main types of help, and you can often use more than one at the same time.

  • The 5% Deposit Scheme (federal). The government guarantees part of your loan, so you can buy with 5% and pay no LMI. Price caps apply. For example, the cap is $1.5 million in Sydney and NSW regional centres, and $800,000 in the rest of NSW. Read our guide to government guarantee home loans.
  • First Home Owner Grants (state). A one-off payment for buying or building a new home. It ranges from $10,000 in NSW to $50,000 in the Northern Territory. See our First Home Owner Grant guide by state.
  • Stamp duty concessions (state). Often the biggest saving of all. In NSW, eligible first home buyers pay no stamp duty on homes up to $800,000. See our stamp duty concessions guide by state.

Rules, caps and amounts change often, so we check the current rules for your situation before you buy.

How we help

Every first home buyer’s situation is a little different, so we start with a conversation, not a form.

  • Strategy first. A quick call to size up your budget, map out your deposit options and talk through realistic timelines.
  • Deposit options explained. Low deposit options, government schemes and ways to avoid or reduce LMI, all in plain English.
  • Right lender, first time. We compare lender policies, not just rates, so your application fits the lender’s rules before it’s lodged.
  • Scheme and grant paperwork done right. The government forms confuse a lot of people. We help you complete and submit your 5% Deposit Scheme and First Home Owner Grant applications through your lender, and Myra from our team reviews every form before it’s sent, to avoid delays and rejections.
  • All the way to settlement. We keep the lender, the scheme, your conveyancer and the timeline on track.

Real example: Sally and Peter, Inner West

Sally and Peter (not their real names) had rented the same Inner West unit for 10 years. When the owner decided to sell, they wanted to buy it, but they didn’t have a 20% deposit and Peter was only in his second year of running his own business.

  • Sally: PAYG employee with a large Australian company, earning $90,000
  • Peter: self-employed, two years in business, earning $120,000
  • Purchase: the unit they were renting, for $750,000
  • How: the 5% Deposit Scheme, so a 5% deposit and no Lenders Mortgage Insurance

The key was finding a participating lender that would properly assess Peter’s self-employed income with two years of financials, and packaging the application so the lender saw the whole picture. They now own the home they’d been paying someone else’s mortgage on for a decade.

Self-employed and buying your first home? Read about self-employed home loans.

See what's possible for you

The steps to buying your first home

  1. Work out what you can borrow. Read how lenders work out what you can borrow.
  2. Check which schemes you qualify for. Federal and state, so nothing is left on the table.
  3. Get pre-approved. So you can make offers with confidence.
  4. Find the property and make an offer. Check it sits under any scheme price caps first.
  5. Formal approval and settlement. We manage the lender, the scheme paperwork and the timeline.

For the full walk-through, read our complete guide to buying your first home, or follow the first home buyer roadmap.

Get credit ready before you apply

The rate you’re offered depends on four things lenders call the 4Cs of credit: your credit history, your capacity to repay, your deposit and the property, and current market conditions. A few small changes before you apply, like closing unused credit cards, can make a real difference. Read how to get the cheapest home loan.

First home buyer FAQs

Can I use the 5% Deposit Scheme and a First Home Owner Grant together?

Often, yes. If you’re buying or building a new home under your state’s grant cap, you may be able to use the scheme, the grant and a stamp duty concession together.

Do I need to be a first home buyer for the 5% Deposit Scheme?

Generally yes, or you must not have owned property in Australia in the last 10 years. There are other eligibility rules too, so we check them with you.

I’m self-employed. Can I still buy my first home?

Yes. Sally and Peter’s story above is a good example. The key is choosing a lender that assesses self-employed income properly.

Does it cost anything to use a mortgage broker?

No. Our service is free to you. Lenders pay us when a loan settles.

More first home buyer guides

Albert Waldron is a Credit Representative (407514) of Australian Finance Group Ltd, Australian Credit Licence 389087. This is general information only and does not take into account your personal circumstances. Please seek advice before acting. Government scheme, grant and stamp duty rules change often; eligibility is confirmed by the relevant government agency.