First home buyers

How much deposit do you actually need

The number most people carry around is 20%. It is a real threshold, but it is not the minimum, and treating it as the entry price stops a lot of people who could already be buying.

What 20% actually gets you is the avoidance of lenders mortgage insurance. LMI is a one-off cost that protects the lender, not you, and it applies when you borrow more than 80% of a property's value. On a typical purchase it can run to five figures.

Below 20%, three things matter:

• Most lenders will consider 5% to 10% deposits, with LMI applying
• The First Home Guarantee can remove LMI entirely with a deposit as low as 5%, if you qualify
• The gap between your current deposit and the next lending threshold is often smaller than people assume, and crossing it can change your costs noticeably

Lenders will also want to see genuine savings in most cases, meaning funds you have accumulated over time rather than a lump sum that appeared last week. How that is assessed varies, and a gift from family is treated differently by different lenders.

The costs nobody warns you about

Your deposit is not the only cash you need at settlement. Budget for:

• Stamp duty, unless an exemption or concession applies
• Conveyancing or legal fees
• Building and pest inspections, which you pay for whether or not you end up buying that property
• Loan application, valuation and settlement fees, which vary by lender
• Lenders mortgage insurance, if applicable
• Council and water rates adjustments at settlement
• Moving costs, and anything the house needs immediately

People often arrive at settlement having budgeted precisely for the deposit and not for the rest. Working out your total funds to complete, rather than just your deposit, is one of the first things worth doing.

Victorian grants and concessions

These are Victorian and federal rules, and they change. Everything below was correct when this page was last reviewed, but check the current position with the State Revenue Office, Housing Australia, or with me before relying on it.

Stamp duty

For eligible first home buyers in Victoria buying a home to live in:

• Full exemption where the dutiable value is $600,000 or less
• Sliding concession between $600,001 and $750,000
• Above $750,000, no first home buyer concession applies

This applies to both new and established homes. At $600,000 the saving is substantial, which is why the threshold has a real influence on what people look at.

First Home Owner Grant

A $10,000 payment for eligible first home buyers buying or building a new home, where the total value including land does not exceed $750,000. Established homes do not qualify.

You must live in the property as your principal place of residence for 12 continuous months, starting within 12 months of completion or settlement.

First Home Guarantee

A federal scheme allowing eligible first home buyers to borrow with a deposit as low as 5% without paying lenders mortgage insurance. The government guarantees part of the loan. It is not a payment to you.

From 1 October 2025 there are no income caps and no limit on places.

The price cap is the part that matters most locally. It is $950,000 for Melbourne and Geelong, and $650,000 for the rest of Victoria, which includes Ballarat. National articles usually quote the metropolitan figure. For a Ballarat purchase, $650,000 is the number to work to.

Using them together

These are separate schemes and can generally be combined. A first home buyer in Ballarat purchasing an established home under $600,000 could potentially pay no stamp duty and avoid LMI through the First Home Guarantee. Building a new home under $750,000 could add the $10,000 grant.

Whether you qualify for all of them depends on details these general rules do not cover, and on choosing a lender that participates in the scheme. Worth checking before you commit to a property, not after.

Established or build

Both work. They are different propositions financially.

Buying established means one contract, one settlement, and you know what you are getting. Building can access the First Home Owner Grant, and stamp duty is generally assessed on the land rather than land plus build, which usually works in your favour. It also takes longer, costs more to carry while you wait, and works differently as a loan.

If building is on your list, the construction guide covers how those loans actually work.

What lenders will look at

• Your income and how stable it is. Time in your job matters, and lenders differ on probation periods
• Your deposit and where it came from
• Existing debts and credit card limits. Limits count against you even when the balance is nil
• Your living expenses, which lenders assess against benchmarks as well as your actual spending
• Your credit file
• Dependants, which affect the expense figure you are assessed against

Why starting early actually helps

Most of what determines your outcome is settled before you find a property. How your deposit is made up. How long you have been in your job. Whether a credit card you never use is quietly reducing what you can borrow.

None of that is fixable in the week before you make an offer. All of it is fixable with a bit of notice. If you are six or twelve months away, that is a good time to have a conversation, not a premature one.

What I would want to look at

• Your savings position and how it has built up
• Your income and how long you have been in your role
• Any existing debts and card limits
• Your rough timeline and the area you are looking in