Buying your first home is exciting, but it can also feel overwhelming once you start looking into deposits, pre-approval, and all the steps in between. Breaking it down into stages makes the whole process much more manageable.

I’m Albert from Awesome Lending Solutions, and I’ve helped many first home buyers navigate this journey. Here’s a walk-through of the key stages, from working out your budget through to settlement day.

Working out what you can actually afford

Before you start looking at properties, it helps to get a realistic picture of your borrowing power. This depends on your income, expenses, existing debts, and the deposit you have saved. A good starting point is a borrowing power estimate, followed by a conversation about what repayments would actually feel like in your day-to-day budget.

It’s worth remembering that the maximum a lender will offer isn’t necessarily the right amount to borrow – it’s just the ceiling. Comfort matters just as much as approval.

Saving your deposit

Most lenders like to see a deposit of at least 5 to 20 percent of the purchase price, though the exact amount affects the loan options available to you and whether lenders mortgage insurance applies. Some useful ways to build your deposit include:

• Setting up a dedicated high-interest savings account
• Automating regular transfers on payday
• Tracking spending to find areas to cut back
• Looking into first home buyer grants and schemes you may be eligible for
• Considering whether a guarantor arrangement could help you get started sooner

Government schemes worth understanding

Depending on where you live and your circumstances, there may be state or federal schemes available to first home buyers, such as stamp duty concessions, first home owner grants, or low-deposit guarantee schemes. These change over time and vary by state, so it’s worth checking current eligibility and benefits with your broker or the relevant state revenue office rather than relying on outdated figures.

Getting pre-approved

Pre-approval gives you a clearer indication of what a lender is likely to approve, based on a review of your financial position. It’s not a guarantee of final approval, but it does mean you can shop for a property with more confidence, and it signals to real estate agents and vendors that you’re a serious buyer.

Pre-approval usually lasts for a set period, often around three to six months, so timing your application around when you plan to actively start looking is worthwhile.

Finding the right property and making an offer

Once you’re pre-approved, you can start inspecting properties within your budget. When you find the right one, you’ll typically make an offer or bid at auction. It’s worth having your broker on hand during this stage, since the finance side of a purchase needs to move quickly once an offer is accepted.

From offer accepted to settlement

After your offer is accepted, your loan moves to formal approval, which usually involves a valuation of the property and final checks by the lender. From there, contracts are exchanged, and your solicitor or conveyancer will guide you through to settlement day, when the property officially becomes yours.

Get credit ready before you buy

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. Getting these in shape before you apply can mean a sharper rate and a smoother approval. Read how to get the cheapest home loan, and check how your credit score affects your rate.

Short on deposit? See our guides to low deposit home loans and guarantor home loans, or find out how lenders work out what you can borrow.

Frequently Asked Questions

How much deposit do I actually need?
It depends on the lender and loan product, but generally more than 20 percent avoids lenders mortgage insurance, while smaller deposits are still possible with LMI or eligible government schemes.

How long does pre-approval last?
Typically three to six months, though this varies by lender. It’s worth timing your application around your property search.

Can I buy with a smaller deposit?
Yes, many lenders accept deposits smaller than 20 percent, generally with lenders mortgage insurance added to the loan, or through eligible first home buyer schemes.

What costs should I budget for beyond the deposit?
Stamp duty (unless exempt), conveyancing fees, building and pest inspections, loan fees, and moving costs are all worth factoring into your budget.

Do I need a guarantor to buy my first home?
No, a guarantor is optional and simply one way to reduce the deposit you need or avoid lenders mortgage insurance. Many first home buyers purchase without one.

If you’re just starting to think about buying your first home, I’m happy to talk through your borrowing power and what the process looks like for your situation. Get in touch anytime.

Phone: 02 7904 9560