I'm a First Home Buyer - Where Do I Start?
Buying your first home is exciting, but it can also feel overwhelming. Deposits, borrowing power, pre-approval, government schemes and property prices all seem to compete for your attention.
The best place to start is not scrolling through property listings. It is understanding how much you may be able to borrow, what you can comfortably repay and how much cash you will need to complete the purchase.
Once those numbers are clear, the rest of the process becomes much easier.
Start with your borrowing power
Your borrowing power is an estimate of how much a lender may be prepared to lend you.
It is generally based on factors such as:
Your income and employment
Your regular living expenses
Existing loans and financial commitments
Credit card limits
Buy now, pay later accounts
HELP or HECS debt
The number of people financially dependent on you
Your deposit and savings history
Your credit history
The lender’s current assessment rules
Every lender assesses applications differently. One lender may offer you a very different result from another, even when they are reviewing the same income and expenses.
This is why an online borrowing calculator should only be treated as a rough starting point. It cannot properly assess your complete financial position or compare the policies of different lenders. We have a calculator on our website you can use and then we can assist
How much you can borrow is not the same as how much you can afford.
This is an important distinction. A lender may be prepared to approve a certain amount, but that does not automatically mean you should borrow the maximum available.
Your home loan still needs to leave room in your budget for:
Council rates
Home and contents insurance
Strata fees, where applicable
Repairs and maintenance
Utilities
Changes in interest rates
Holidays, children and lifestyle expenses
Unexpected costs
The right purchase budget is not simply the highest figure a bank will approve. It is the amount that lets you own your home without feeling financially stretched every month.
So we should be having a conversation around these two things;
Your estimated maximum borrowing power
Your preferred comfortable repayment range
What documents will you need?
If you are hoping to buy within the next three months, start gathering your documents now.
Depending on your circumstances, your broker or lender may request:
Recent payslips
Employment details or an employment contract
Recent bank statements
Evidence of your deposit and savings
Statements for personal loans, car loans and credit cards
Details of HELP or HECS debt
Identification documents
Rental history
Tax returns and financial statements if you are self-employed
Having your documents ready can make the pre-approval process faster and help identify any issues before you find a property.
Review your finances before applying
The three months before a home loan application matter.
Lenders may review your account conduct, savings history, expenses and existing debts. Before applying, it may help to:
Pay bills and loan repayments on time
Avoid taking out new personal loans or credit cards
Review unused credit card limits
Reduce buy now, pay later balances
Keep your deposit in an identifiable account
Avoid large unexplained transfers
Maintain a realistic and consistent savings pattern
Do not try to make your spending look artificially low for a few weeks. Your declared living expenses need to be honest and sustainable.
The goal is not to appear perfect. It is to present a clear, accurate and well-managed financial position.
How much deposit do you need?
A 20% deposit can help you avoid Lenders Mortgage Insurance, but it is not the only way to purchase a home.
Some buyers may be able to purchase with a smaller deposit, depending on their circumstances, the property and the lender.
Eligible first home buyers may also be able to access the Australian Government 5% Deposit Scheme. Under the scheme, eligible buyers can purchase with a minimum 5% deposit without paying Lenders Mortgage Insurance. Property price caps and lender approval requirements still apply.
A smaller deposit can help you buy sooner, but it also means borrowing a higher percentage of the property’s value. That may result in larger repayments and less equity at the beginning.
The right deposit strategy should be considered alongside your income, purchase price, savings buffer and longer-term plans.
Remember the other upfront costs
Your deposit is not the only money you will need.
Your purchasing budget may also need to cover:
Transfer duty
Settlement agent or conveyancing fees
Building and pest inspections
Loan or valuation fees
Insurance
Moving costs
Adjustments for council rates or strata fees
An emergency savings buffer
Eligible WA first home buyers may qualify for the first home owner rate of duty. The applicable thresholds and concessions depend on the transaction date and current RevenueWA rules, so the amount should be confirmed before making an offer.
The WA First Home Owner Grant is currently a one-off payment of up to $10,000 for eligible buyers purchasing or building a new home. It is generally not available for an established home. Eligibility requirements and property value caps apply.
Government assistance can be valuable, but it should not be assumed until your eligibility has been properly checked.
Should you get pre-approval?
If you are planning to buy within the next three months, pre-approval may be an appropriate next step once your borrowing position and deposit have been reviewed.
Pre-approval can help you:
Set a realistic property budget
Search in suitable suburbs
Make an offer with more confidence
Identify lending issues early
Understand the conditions that must be met before settlement
However, pre-approval is not an unconditional guarantee that your loan will be approved.
Final approval may still depend on:
The property being acceptable to the lender
A satisfactory valuation
Your financial circumstances remaining unchanged
Updated documents
Verification of information
The lender’s policies at the time of application
Avoid changing jobs, taking out new credit, increasing credit card limits or spending your deposit after receiving pre-approval without first speaking to your broker.
A simple three-month plan
Month One: Understand your position
Speak with a mortgage broker and work through:
Your borrowing power
Your comfortable repayment amount
Your available deposit
Government assistance you may qualify for
Your estimated upfront costs
Any changes needed before applying
Month Two: Arrange pre-approval
Once your documents and finances are ready, your broker can compare suitable lenders and discuss applying for pre-approval.
You can then begin searching for properties within the appropriate price range.
Month Three: Find and secure the property
Before making an offer, speak with your broker about the property and proposed contract conditions.
You should also consider obtaining advice from a settlement agent or conveyancer and arranging any appropriate building, pest or strata inspections.
Once your offer is accepted, the lender will complete its valuation and final assessment before issuing formal approval.
Where should you start today?
Start with a conversation about your numbers.
You do not need to have the entire process figured out, and you do not need to wait until you have found the perfect home.
At Dash Finance Group, we help first home buyers understand their borrowing position, compare lending options and prepare for each stage of the buying process.
Our role is to make finance simple, transparent and empowering, so you can make confident decisions about your first home.
Planning to buy within the next three months? Contact Dash Finance Group to arrange a first home buyer borrowing assessment.
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