Buying your first home in Australia is complicated. It doesn't have to be confusing. Here's everything you need to know before speaking to a bank — the schemes, the real costs, and the process.
I'm Sam, a finance broker based in Melbourne. I've spent years helping Australians buy their first home, and the same things trip people up every time: not knowing which government schemes they qualify for, getting blindsided by hidden costs, or being told "no" by a bank when the right lender would have said "yes."
This guide won't make you a finance expert. It's not meant to. It's meant to give you the lay of the land — so when you sit down with a broker (me, or anyone else), you know what to ask, what to look out for, and what to do next.
Three things to know before you read on. One — the schemes and numbers in this guide are current as of 2026. They change. Always confirm with a broker before relying on them. Two — what the bank says you can borrow and what you should borrow are not the same number. The 90-day plan near the end explains why. Three — if anything here raises a question, the bottom of this page tells you how to book a free 15-minute chat. No pitch, no pressure.
The 7 Government Schemes You May Qualify For
Most first home buyers don't realise how much help is on the table. Here are the seven you should check — at least one of them probably applies to you.
Most people qualify for two or three of these schemes simultaneously — but you have to apply, you have to know the rules, and the capped places run out. The scheme stack you choose can mean the difference between needing a $40,000 deposit or an $80,000 one. This is one of the biggest levers in the whole process.
Borrowing Capacity 101: What Banks Actually Check
Banks don't just look at your income. They run you through a model that simulates your life. Here's what they're really doing — and the levers you can pull before applying.
When a bank assesses your borrowing capacity, they're answering one question: if rates went up 3% tomorrow, could you still afford the loan, the bills, and life? To answer it, they run your numbers through a formula that includes:
1. Your income (and how stable it is)
Full-time PAYG income is taken at face value. Casual, part-time, contract, and overtime income are usually discounted by 20–40% depending on the lender and how long you've been earning it. Self-employed income needs two years of tax returns.
2. The HEM (Household Expenditure Measure)
Banks assume you have minimum living costs based on your family size, postcode, and income — even if you actually spend less. Think of it as a "you can't claim to live on $200/week" floor. The HEM number alone can be the difference between a $600k loan and an $800k loan.
3. Your existing debts (this is the silent killer)
This trips more first home buyers up than anything else. Banks count credit card limits, not balances. A $10,000 credit card you never use still reduces your borrowing capacity by roughly $40–50k. HECS / HELP debts now count fully. Buy-now-pay-later, car loans, personal loans — all reduce capacity.
4. The buffer rate (the stress test)
The bank doesn't assess you at the actual rate they'd give you. They assess you at roughly 3% above that rate. So if rates are 6%, they're asking "could you afford this loan at 9%?" If you can't, they say no.
Three months before you apply, cancel unused credit cards or reduce their limits. A $10k card you never use is dropping your borrowing capacity by ~$40–50k. The bank doesn't care that the balance is zero — they care that you could spend that money. This one move has unlocked life-changing amounts of borrowing capacity for clients of mine.
Want a real estimate, not a guess?
Run your income and debts through the same borrowing power calculator I use with clients — free, no email required.
Try the Borrowing Power CalculatorThe 5 Hidden Costs No One Tells You About
Saving for the deposit is the easy bit to plan for. The other costs are what break first home buyer budgets. Build them into your number from day one.
Beyond your deposit and stamp duty, budget another 1–2% of the property price for everything else (legal, inspections, fees, moving, basic furniture). On a $700k property, that's $7k–$14k. Plan for it now and you avoid scrambling at settlement.
Your 90-Day Action Plan
If you're serious about buying in the next 6–12 months, here's what the next 90 days look like. Work through it in order — the rest of the journey gets a lot easier.
- Pull your credit report (free at equifax.com.au or illion.com.au)
- Cancel any unused credit cards. Reduce limits on cards you keep.
- Pay down personal loans, BNPL, car loans where possible
- Stop discretionary spending — banks look at your last 3 months of statements
- Start (or accelerate) a regular savings deposit — banks like to see "genuine savings"
- Talk to a broker about your real borrowing capacity (not just an online calculator)
- Identify which government schemes you qualify for, and stack them
- Compare 5+ lenders' rates, fees, and policies — not just the headline rate
- Apply for pre-approval (typically valid 3–6 months)
- Decide your maximum purchase price — what you should borrow, not what you could
- Inspect properties strictly within budget
- Get building & pest inspections on serious contenders
- Engage a conveyancer / solicitor before making offers
- Make offers or attend auctions with your pre-approval in hand
- When an offer is accepted: full loan application → unconditional approval → settlement
Want to know exactly what you can borrow?
Based on your income, your debts, and the schemes you actually qualify for. Free 15-minute call. No pitch, no pressure — just clarity on your number, and how to structure it properly.
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