First Home Buyer's Guide to the Australian Property Market: Grants, Schemes, and What to Expect in 2026

The deposit requirement is often the first major hurdle for first home buyers:

• Standard requirement: Most lenders require a 20% deposit to avoid Lenders Mortgage Insurance (LMI). On a $700,000 property, that is $140,000 - a significant savings target for most buyers.
• LMI and lower deposits: You can borrow with a deposit as low as 5%, but lenders will charge LMI - insurance that protects the lender (not you) if you default. LMI on a $700,000 purchase with a 5% deposit can exceed $25,000, typically capitalised into the loan. This adds to your debt but can allow you to enter the market sooner.
• Government guarantee schemes: The First Home Guarantee (previously First Home Loan Deposit Scheme) allows eligible first home buyers to purchase with as little as a 5% deposit without paying LMI - the government guarantees the remaining 15% to the lender. 35,000 places are available per financial year. Income caps apply ($125,000 for singles, $200,000 for couples in 2024-25).
• Family Home Guarantee: For single parents (including single legal guardians) with at least one dependent - allows purchase with as little as 2% deposit with no LMI, backed by a government guarantee. 5,000 places per year.
• Genuine savings: Most lenders require evidence that your deposit includes 'genuine savings' - funds you have saved yourself over at least 3 months. Gifts from family, grants, and sale proceeds may not fully satisfy this requirement. Check with your lender or broker early.

Several layers of government assistance are available - federal and state - many of which can be stacked:

• First Home Owner Grant (FHOG): A one-off cash grant from state and territory governments for eligible first home buyers purchasing or building a new home. Amounts vary by state - $10,000 in NSW, VIC, and QLD for new builds; up to $30,000 in some regional areas of other states. Check your state revenue office for current amounts and eligibility conditions.
• First Home Guarantee: 35,000 federal scheme places per year allowing 5% deposit purchase without LMI. Apply through participating lenders - not directly with the government. Check the Housing Australia website for participating lenders and current availability.
• Regional First Home Buyer Guarantee: 10,000 additional places for buyers purchasing outside capital cities. Same terms as the First Home Guarantee but targeted at regional areas.
• Help to Buy (shared equity, pending implementation): A federal shared equity scheme where the government co-purchases up to 40% of a new home (30% for existing) for eligible buyers, reducing the deposit and mortgage size required. Status and timing - check the Housing Australia website for current availability.
• Stamp duty concessions: Each state and territory offers stamp duty (transfer duty) exemptions or concessions for first home buyers. In NSW, full exemption for properties under $800,000 and a concession up to $1,000,000. In VIC, exemption for properties under $600,000 and a reduction up to $750,000. Check your state revenue office - these change and have property value caps.
• First Home Super Saver Scheme (FHSSS): Allows first home buyers to make voluntary super contributions (up to $15,000 per year, $50,000 lifetime) and withdraw them for a home deposit. Contributions are taxed at 15% going in (vs marginal rate), and withdrawals are taxed at marginal rate less 30% offset. The tax advantage can meaningfully accelerate deposit savings for higher-income earners.

Knowing what you can borrow before you start looking is essential to avoid wasted time and heartbreak:

• How lenders calculate it: Lenders assess your income, existing debts (including HECS, car loans, credit cards), living expenses, and a serviceability buffer (currently 3% above the loan interest rate, as required by APRA). This means if the loan rate is 6%, you are assessed on your ability to repay at 9%.
• Credit score: Your credit score affects both approval and the rate you are offered. Check your credit report for free at Equifax, Experian, or illion before applying. Errors are common and can be disputed.
• Mortgage broker vs direct lender: A mortgage broker accesses multiple lenders' products and can find the most appropriate loan structure. Brokers are paid by the lender (not by you) and are legally required to act in your best interests. Comparing at least 2-3 brokers or lenders is worthwhile for a loan of this size.
• Pre-approval: Obtaining conditional pre-approval from a lender before you start bidding at auction or making offers gives you a clear budget ceiling and demonstrates seriousness to vendors. Pre-approvals are typically valid for 3-6 months.

Auctions are the dominant sale method in Sydney and Melbourne. You cannot include a cooling-off period when buying at auction - once the hammer falls and you sign, you are unconditionally committed. Have your finance pre-approved and your building and pest inspection done before auction day (many vendors allow pre-auction inspections). Private treaty sales (price negotiation rather than auction) are more common in other cities and regional areas and typically include a cooling-off period of 5 business days in most states.

Budget for purchase costs beyond the deposit: Stamp duty (if applicable), conveyancing fees ($800 to $2,500), building and pest inspection ($400 to $800), loan application fees, lender's legal fees, and mortgage registration costs. These typically total $5,000 to $15,000 above stamp duty - factor this into your total savings target.

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