Top 5 Financial Tips for First Home Buyers

Looking to buy your first home sometime soon? Maybe you are out there looking now or maybe it’s on the wish list for 2025. To help you on that path we have compiled the top 5 financial tips for first home buyers. With the right planning, preparation, and advice, you can feel confident throughout the process and get a great outcome, quicker and with less stress.  

1. Create a Realistic Budget

Before diving into the property hunt, it’s essential to work out your budget. Knowing what you can realistically afford will prevent future financial stress. Here’s how to set your budget: 

• Evaluate what you have – Calculate what savings, government grants or gifts from family do you have to put towards a purchase 

• Determine the maximum loan amount you can/want to borrow – look at the loan repayments at current rates and if they go up and check that you can afford these. Remember you also need to allow for other ongoing costs such as council rates, home insurance and possibly Body Corporate fees 

Add the above 2 amounts together and you have the total amount you can spend on the purchase. This pool of funds needs to cover all costs of the purchase, including; stamp duty, government fees, legal fees, building inspections and moving costs. 

If the result is a budget that does not allow you to buy the type of property you are seeking, then now is the time to re-evaluate your options.  How far off are you? Will saving for 6 months get you there? Do you need to revisit your criteria? Perhaps look for a smaller property or change suburbs to be able to afford to buy now? 

Stay realistic with your calculations and (if possible) leave room in your budget for unexpected expenses—life is unpredictable! 

A practical tip is to book a time with a mortgage broker who can help you estimate your borrowing power and expected loan repayments.  

2. Build Your Deposit

While you can often buy with as little as a 5% deposit, saving a larger deposit—ideally 20%—can bring many benefits. 

• Avoid or Lower Lender’s Mortgage Insurance (LMI): If your deposit is below 20%, you’ll need to pay LMI, which can add thousands to your overall loan cost. 

• Lower repayments: A larger deposit can mean borrowing less, which translates to reduced monthly repayments…or it can allow you to reach to a higher purchase price which gives you more options. It may mean the property you buy will suit you for longer or needs less work done on it or is in an area you prefer more 

It’s never too late to start saving. Start a savings plan, automate deposits into a separate savings account, and if you are planning a purchase that is 6+ months away then you might find the First Home Super Saver Scheme may be helpful as you look to maximise your savings 

 

3. Explore Government Grants and Schemes

Australia offers several programs to help first home buyers, so take advantage of them! 

• First Home Owner Grant (FHOG): A one-off payment available in most states for eligible buyers. 

• First Home Guarantee (FHG): Helps buyers avoid LMI with only a 5% deposit. 

• Stamp Duty Concessions: Some states offer reduced or waived stamp duty for first-time buyers. 

 

4. Maximise your Credit Score 

A good credit score is vital to getting a loan and can help you secure better interest rates. So, you should take the time to find out what your Credit Score is and that it is strong. 

An Equifax Credit Score above 700 is good. A score above 900 is excellent. A score below 500 will be an issue with many lenders. 

If you are looking to improve your credit score here are a few simple tips: 

• Pay your bills on time 

• Reduce your credit card limits 

• correct any errors on your credit report.  

Your broker can run your credit report for you without impacting it so that is a good starting point. 

 

5. Get Pre-Approval Before House Hunting

A common mistake is starting your property search before securing a loan pre-approval. Pre-approval not only gives you a clearer idea of what you can borrow but also demonstrates to sellers that you’re a serious buyer. 

• Faster process: It streamlines the loan approval process when you find the right home. 

• More negotiation power: Sellers tend to favour buyers who already have pre-approval in place. 

Speak with your mortgage broker to ensure you have the necessary documents and an accurate pre-approval. 

 

Bonus Tip: Consider using a Mortgage Broker  

Working with a mortgage broker will save you time, stress, and potentially money. Brokers have access to a wide range of lenders and deep knowledge of lender policy so can help you find the right lender/loan for your specific situation.  

Brokers will guide you through the entire process of buying your first home and are a great resource. Good brokers can not only answer your finance questions but can offer insight and guidance with all aspects of buying a home. 

In conclusion, taking the first step toward homeownership can feel overwhelming, but with the right planning and support, it doesn’t have to be. By following these top financial tips for first home buyers—from budgeting and building a deposit to exploring grants, boosting your credit score, and securing pre-approval—you’re setting yourself up for a smoother, less stressful journey. Working with a knowledgeable mortgage broker can further streamline the process, helping you find the best options and guiding you through each stage. Remember, every small step brings you closer to the door of your new home. With preparation and persistence, your dream of homeownership can become a reality.