First Home Buyers – Your Questions Answered!

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20 Frequently Asked Questions About Buying Your First Home

Buying your first home? We’re here to help you every step of the way!

Purchasing your first home is one of life’s most exciting milestones. But with so many questions about deposits, government assistance, home loans and the buying process, it’s completely understandable to feel a little overwhelmed.

At Cornerstone Home Loans, we believe buying your first home should be an exciting experience, not a stressful one.

With over 20 years of helping Australians achieve their home ownership dreams, our experienced team is here to guide you through the process, explain your options and help you make informed decisions with confidence.

We’ve answered 20 of the most common questions first home buyers ask us.

  1. How Much Deposit Do I Need to Save?

This is usually the very first question we hear!

Traditionally, lenders prefer a deposit of around 20% of the property’s purchase price. However, you may be able to purchase your first home with as little as a 5% deposit, depending on your circumstances and eligibility.

For example, if you’re purchasing a property for $700,000:

  • 5% deposit: $35,000
  • 10% deposit: $70,000
  • 20% deposit: $140,000

Some eligible buyers may qualify for government assistance or family guarantee arrangements that reduce the amount they need to save.

Remember, you’ll also need to consider additional purchasing costs, such as conveyancing, inspections and government charges.

Our advice: Don’t assume you need a 20% deposit before speaking with us. You might be closer to home ownership than you think!

  1. Does the Government Provide Grants or Schemes to Help First Home Buyers?

Yes! And you may be surprised by the assistance available.

There are several government initiatives designed to help eligible Australians purchase their first home.

Australian Government 5% Deposit Scheme

The Australian Government’s 5% Deposit Scheme allows eligible first home buyers to purchase a home with a minimum 5% deposit without paying Lenders Mortgage Insurance (LMI).

Eligible single parents and legal guardians may be able to purchase with as little as a 2% deposit under the scheme’s relevant pathway.

Property price caps, participating lender requirements and other eligibility conditions apply.

First Home Owner Grant

Depending on which state or territory you’re purchasing in, you may qualify for a First Home Owner Grant, particularly when purchasing or building a new home.

For example, Queensland currently offers eligible buyers a grant of up to $30,000 for qualifying new homes, subject to the applicable eligibility rules and contract dates.

Stamp Duty Concessions

Some first home buyers may also qualify for reduced or waived transfer duty, commonly called stamp duty, depending on the property, purchase price and location.

Help to Buy Scheme

The Australian Government’s Help to Buy shared equity scheme may also assist eligible buyers by contributing towards the purchase price in exchange for an equity share in the property.

At Cornerstone Home Loans, we can help you explore which programs may be relevant to your circumstances.

  1. How Much Can I Borrow for My First Home?

Your borrowing capacity depends on several factors, including:

  • Your income and employment circumstances.
  • Your regular living expenses.
  • Existing loans, credit cards and other financial commitments.
  • Your deposit and savings history.
  • Your credit history.
  • The lender’s assessment criteria and interest rates.

Different lenders assess borrowing capacity differently, which means the amount you can borrow may vary.

We can help you understand your borrowing capacity before you start house hunting, so you know what price range may be realistic.

  1. What Is Home Loan Pre-Approval, and Do I Need It?

Pre-approval is when a lender provides an indication of how much they may be willing to lend you, based on an initial assessment of your financial circumstances.

Although pre-approval isn’t compulsory, we strongly recommend exploring it before you start seriously looking for property.

It can help you:

  • Understand your approximate borrowing limit.
  • Establish a realistic property budget.
  • Search for homes with greater confidence.
  • Be better prepared when making an offer.

Remember, pre-approval is conditional and is not a guarantee of final loan approval.

  1. What Is Lenders Mortgage Insurance (LMI)?

Lenders Mortgage Insurance is generally required by lenders when you’re borrowing more than 80% of a property’s value.

It’s important to understand that LMI protects the lender, not you, if you default on your loan.

Depending on your loan amount and circumstances, LMI can cost thousands of dollars.

The good news is that some first home buyers may qualify for an LMI exemption or waiver through government schemes, professional occupation policies or other lender-specific arrangements.

  1. Can My Parents Help Me Buy My First Home?

Absolutely! There are several ways parents may be able to assist.

These can include:

  • Gifting money towards your deposit.
  • Providing a family guarantee using equity in their property.
  • Helping with certain purchasing costs.
  • Purchasing a property jointly, where appropriate.

A family guarantee may allow you to purchase with a smaller deposit and potentially avoid LMI.

However, guarantees involve significant financial risks for parents, so everyone should fully understand the arrangement and obtain appropriate independent advice before proceeding.

  1. Do I Need to Have Been in My Job for a Certain Period?

Not necessarily.

While lenders generally like to see stable employment and consistent income, you don’t always need to have been in your current job for six or twelve months.

Some lenders may consider applicants who have recently started a new job, changed employers within the same industry or are working under probation.

Your employment history, income type and lender policy will all play a role.

Don’t assume a recent job change means you can’t qualify for a home loan.

  1. Can I Get a Home Loan If I’m Casual, Part-Time or Self-Employed?

Yes, you may be able to!

You don’t necessarily need to be employed full-time to qualify for a home loan.

Lenders may consider income from:

  • Part-time employment.
  • Casual employment.
  • Contract work.
  • Self-employment.
  • Multiple jobs.
  • Certain other acceptable income sources.

The documentation required will depend on the lender and your employment circumstances.

For self-employed applicants, lenders commonly request financial statements, tax returns or other evidence of income, although requirements can vary.

  1. What If I Have a HECS or HELP Debt?

Having a HECS or HELP debt doesn’t automatically prevent you from buying your first home.

However, lenders generally take your compulsory student loan repayments into account when assessing your borrowing capacity.

This may reduce the amount you’re eligible to borrow.

The impact will depend on your income, outstanding debt, applicable repayment rules and the lender’s assessment.

We can help you understand how your student debt may affect your home loan application.

  1. Will My Credit Cards or Personal Loans Affect My Borrowing Capacity?

Yes, they certainly can.

Existing financial commitments such as credit cards, personal loans, car loans and buy now, pay later facilities can affect your borrowing capacity.

Importantly, lenders may assess your credit card commitments based on your approved credit limit, not simply the outstanding balance.

For example, even if you owe nothing on a credit card with a $10,000 limit, that available credit may still affect your borrowing assessment.

Reducing unnecessary debt or unused credit limits may improve your borrowing position, depending on your circumstances.

  1. What Credit Score Do I Need to Get a Home Loan?

There isn’t one universal credit score that guarantees home loan approval.

Different lenders have different credit policies, and your overall financial circumstances are just as important as your score.

Lenders may review your repayment history, existing debts, credit enquiries and any previous defaults.

If you’re concerned about your credit history, speak with us before submitting multiple loan applications.

We can help you understand your options and identify potential issues early.

  1. What Is the Difference Between a Fixed and Variable Interest Rate?

A fixed interest rate generally stays the same for an agreed period, often between one and five years.

This can provide repayment certainty during the fixed-rate period.

A variable interest rate can move up or down over time, meaning your repayments may change.

Variable loans may offer greater flexibility, including access to offset accounts, additional repayments and redraw facilities, depending on the product.

Some borrowers also choose to split their loan between fixed and variable portions.

The right option depends on your circumstances, financial goals and preferences.

  1. What Is an Offset Account, and How Does It Work?

An offset account is a transaction account linked to an eligible home loan.

The money held in the account is generally offset against your outstanding loan balance when the lender calculates interest.

For example:

Home loan balance: $500,000

Money in your offset account: $20,000

Interest may be calculated on: $480,000

An offset account may help reduce interest costs over time while keeping your savings accessible.

However, offset features can involve additional fees or different interest rates, so it’s important to compare the overall loan costs.

  1. How Much Will My Home Loan Repayments Be?

Your repayments will depend on the amount you borrow, the interest rate, the loan term and whether your loan is principal and interest or interest-only.

For example, on a $600,000 principal and interest loan over 30 years, at an illustrative interest rate of 6% per annum, repayments would be approximately $3,597 per month.

This is an example only, not a current lender rate or quote.

We can help you calculate repayments based on different loan amounts and interest rates, so you can determine what may comfortably fit within your budget.

  1. What Other Costs Should I Budget for When Buying My First Home?

Your deposit isn’t necessarily the only money you’ll need.

Depending on the property and your circumstances, additional costs may include:

  • Stamp duty or transfer duty, if applicable.
  • Conveyancing or solicitor fees.
  • Building and pest inspections.
  • Loan establishment or valuation fees.
  • Moving expenses.
  • Home and contents insurance.
  • Council rates, water charges and strata fees, where applicable.

Some first home buyers may qualify for government concessions that reduce certain costs.

We can help you estimate your upfront expenses so there are fewer surprises along the way.

  1. Should I Buy an Established Home or Build a New One?

Both options have advantages.

Buying an established home may allow you to move in sooner, purchase in an established neighbourhood and see exactly what you’re buying.

Building a new home gives you the opportunity to customise your property and may provide access to certain government grants or concessions.

However, construction projects can involve additional costs, delays and more complex lending arrangements.

The best choice depends on your budget, lifestyle, location preferences and long-term plans.

  1. Can I Buy My First Home with My Partner or a Friend?

Yes!

You may be able to purchase a property jointly with your partner, sibling, friend or another eligible person.

Buying together can potentially increase your combined borrowing capacity and allow you to share the deposit and ongoing expenses.

However, it’s important to understand that joint borrowers are generally responsible for the entire loan, not just their individual share.

You should also consider what happens if one person wants to sell, move out or end the arrangement.

We recommend obtaining independent legal advice before purchasing property jointly.

  1. How Long Does It Take to Get a Home Loan Approved?

Approval timeframes vary depending on the lender, application complexity, documentation and whether a property valuation is required.

Some straightforward applications may progress quickly, while others can take several weeks or longer.

There are generally several stages:

  1. Initial finance assessment.
  2. Application preparation and submission.
  3. Conditional approval or further information requests.
  4. Property valuation and final assessment.
  5. Formal loan approval.
  6. Loan documents and settlement preparation.

Our team will guide you through each stage and keep you informed throughout the process.

  1. What Happens After My Offer on a Property Is Accepted?

Congratulations! This is where things start getting exciting.

Once your offer is accepted and the contract is signed, several important steps may follow.

These can include arranging building and pest inspections, obtaining formal finance approval, satisfying contract conditions, organising insurance and preparing for settlement.

Your solicitor or conveyancer will help manage the legal aspects of the transaction.

It’s important to understand your contract deadlines and conditions, particularly finance and inspection dates.

We work alongside your solicitor or conveyancer and lender to help keep your finance progressing towards settlement.

  1. Why Should I Use a Mortgage Broker Instead of Going Directly to a Bank?

Because buying your first home is a big decision, and having an experienced professional in your corner can make a real difference.

When you approach a bank directly, you’re generally limited to that bank’s lending products and policies.

At Cornerstone Home Loans, we can explore suitable options from our panel of lenders and help you understand which products may be appropriate for your circumstances.

We assist with:

  • Understanding your borrowing capacity.
  • Exploring first home buyer government assistance.
  • Comparing suitable lenders and loan products.
  • Explaining loan features, interest rates and fees.
  • Preparing and submitting your application.
  • Coordinating the finance process through to settlement.
  • Providing ongoing support after you’ve moved into your new home.

And the best part?

For many standard residential home loans, our mortgage broking service is provided at no direct cost to you, as we’re generally paid a commission by the lender. Any applicable fees and remuneration will be disclosed to you.

At Cornerstone Home Loans, we’re passionate about helping first home buyers achieve their dream of home ownership.

Your First Home Journey Starts Here!

You don’t need to have everything figured out before speaking with us. That’s what we’re here for!

Whether you’ve only just started saving, are wondering if you qualify for government assistance, or are ready to start looking for your dream home, we’d love to help.

Our friendly and experienced team will take the time to understand your circumstances, explain your options and guide you through the process with confidence.

Let’s turn your dream of owning your first home into a reality! 💙

Contact Cornerstone Home Loans today.

📞 07 3264 7100

📧 tracie@cornerstonehomeloans.com.au

🌐 www.cornerstonehomeloans.com.au

Cornerstone Home Loans – Helping Australians Achieve Their Dream of Home Ownership.

Important Disclaimer

The information contained in this guide is general in nature and does not take into account your personal financial circumstances, objectives or needs. You should consider whether the information is appropriate for your situation and seek independent professional advice where necessary.

All home loan applications are subject to lender eligibility criteria, credit assessment, approval and applicable terms and conditions. Interest rates, fees, product features and lending policies may change without notice.

Government grants, deposit schemes, shared equity programs and stamp duty concessions are subject to eligibility requirements, property price limits, funding arrangements, legislative changes and state or territory rules. Availability and benefits should be confirmed with the relevant government authority and participating lender before making financial commitments.

Examples and calculations are illustrative only and do not constitute a loan offer or guarantee of approval.

Credit Representative Details:

Tracie Palmer is a Credit Representative 387282 of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237).