First home buyer loans in Australia. The plain-English guide.

What you can actually borrow

Lenders don't assess you at the advertised rate. Under APRA requirements they add a serviceability buffer of at least 3 percentage points and test whether you could still meet repayments at that higher rate. For most borrowers this reduces capacity by roughly 15–20% compared with an unbuffered calculation.

They also compare your declared living expenses against a benchmark and generally use the higher figure, and they assess credit cards on the limit rather than the balance, even one you clear every month.

• Income, assessed differently depending on whether it's PAYG, casual, contract or self-employed
• Living expenses, floored at a benchmark most households sit above anyway
• Existing debts, including HECS and credit card limits
• The buffered assessment rate, not the rate you'll actually pay

Deposit, LMI and the schemes

Below a 20% deposit, most lenders require Lenders Mortgage Insurance, a one-off premium that protects the lender, not you, and is usually added to the loan. On a 95% purchase it can run into tens of thousands.

Government guarantee schemes can remove that cost entirely for eligible buyers with as little as 5% (and 2% for eligible single parents), because the government guarantees the portion the LMI would otherwise cover. Eligibility rules, price caps and place availability change, so they need checking at the time you buy rather than from last year's article.

Stamp duty, and why it depends on where you buy

Stamp duty, or transfer duty, is set by each state and territory rather than nationally. The scale differs, the first home concession differs, and the threshold at which it phases out differs. The same purchase price can carry a very different duty bill in Sydney, Melbourne, Brisbane or Perth, and the ACT runs a different model again.

Our stamp duty calculator applies the current rules for all eight states and territories, so start there rather than with a national average. Because thresholds change, treat any figure you read, including ours, as indicative and confirm with your state revenue office or your solicitor before you rely on it.

The costs nobody mentions until settlement week

Deposit and duty get all the attention. The rest still has to be paid: conveyancing, building and pest inspections, lender and government registration fees, and rate adjustments at settlement.

• Conveyancing or solicitor fees
• Building and pest inspection
• Lender application, valuation and settlement fees
• Government registration and transfer fees
• Council and water adjustments payable to the seller

Pre-approval that actually holds

There is a real difference between a system-generated pre-approval and one where a credit assessor has reviewed your documents. The first can evaporate at the worst moment; the second gives you something to bid on.

Ask what kind you have. If nobody has looked at your payslips, you don't have the strong version.