Where Do You Even Start? A First Home Buyer's Guide to Getting Going
It's okay to feel overwhelmed
If you're a first home buyer and you feel like you have no idea where to start, you're not alone. It's genuinely complicated, and it's not just you missing something obvious.
There are so many moving parts to buying your first home. What you're eligible for. What you should be doing right now Vs later. Who you should even be talking to.
And then there's the internet. You'd think Googling your questions would help, but half the time it makes things worse. There are so many different voices out there, all saying slightly different things, and most of it isn't written in a way that's actually easy to follow. You end up more confused than when you started.
So let's fix that. Here's where you actually start, and what's genuinely worth knowing before you go any further.
When should you actually start planning?
Here's the truth most people don't hear early enough: saving a deposit isn't a one or two month job for most buyers. It takes time, and the earlier you start planning, the more control you have over how it plays out.
The right time to start is as soon as you and your partner (or solo) have made the decision and have a goal in mind for what you'd like to achieve. You don't need a deposit sitting in the bank to start planning. You need clarity on what you're working toward.
From there, it's about understanding three things: how much you need to save, what your budget actually looks like, and how you might need to adjust it.
For this, I always recommend using Money Smart, the government's own budgeting website. It has a genuinely useful budget calculator that covers every part of your financial life. You put in your income and expenses, and it shows you exactly where you stand and what's realistic from there.
Where do you actually start?
Once you've got a rough handle on your budget, the next step is sitting down with your mortgage broker to go through your plan properly and figure out what's realistic.
When we have this conversation, there are two key areas we go through together.
1. Your ideal situation
First, we talk about what you actually want. Where you want to buy, what the property looks like, how big the land is, how many bedrooms and bathrooms you're after. It's important to visualise what you're working toward, because that's what lets us figure out how to actually make it happen and what it's realistically going to cost.
2. Your borrowing capacity
Next, we look at your current income and where that puts you. But we don't stop there.
If you're expecting a pay increase, we factor that into how your borrowing capacity might change down the track. If your partner is returning from maternity or paternity leave, we talk through how your household income could shift, sometimes significantly, once that happens.
This is about having honest, real conversations about where your life is actually heading, not just where it sits today. It's a shared goal, and I want you to feel like I'm part of your team, someone you can come to with any question along the way.
Then it's about getting a plan, not saving blindly
Once you understand what you can borrow and what you're eligible for, the next step is simple: get a plan, rather than just saving blindly.
This matters more than people expect. Once you stop flying blind and you actually have a goal in front of you, something changes. You start focusing. Maybe that means picking up a few extra shifts to bring your goal forward. Maybe it means cutting back on other things so you get there faster.
Either way, a goal gives you something to aim at. Blind saving doesn't.
The government guarantor scheme, explained properly
You've probably heard this called the First Home Loan Deposit Scheme. Honestly, that name is a mouthful, and it doesn't really tell you what's happening. I call it the government guarantor scheme, because that's exactly what it is.
Here's the simplest way to think about it. Normally, when you don't have a large enough deposit, the bank asks you to pay Lenders Mortgage Insurance. With this scheme, the government steps in and acts as your guarantor instead, much like a parent would.
So what does a guarantor, whether that's the government or your parents, actually do?
It's a common misunderstanding that LMI or a guarantor is there to cover your repayments if you lose your job or get sick. That's not it at all. Their role only comes into play if you default on your loan and the bank has to sell your house at a loss.
Say you had a loan of $450,000 and the bank ends up selling your property for $420,000. That's a $30,000 shortfall. If you had LMI, the insurer covers that gap. If you had a guarantor, whether that's the government or your parents, they're the ones covering it.
That's the entire purpose. It's protection for the bank against a loss, not protection for you against hardship.
Why skipping LMI actually increases your borrowing power
Here's the part most people don't realise. LMI doesn't sit on top of your borrowing capacity. It comes out of it.
Say your borrowing capacity is $550,000, and LMI on your loan would cost $15,000. That $15,000 doesn't get added on. It gets deducted from what you have to spend, leaving you with $535,000 to actually put toward a property.
So when you qualify for the government guarantor scheme and avoid paying LMI altogether, you're not just saving money. You're keeping your full borrowing capacity available to put toward the property itself.
There's a flow-on benefit too: better interest rates
This is where Loan to Value Ratio, or LVR, comes in. Your LVR is simply the size of your loan compared to the value of your property.
Banks generally want to see an LVR of 80% or lower. That gives them a 20% buffer, so if they ever needed to sell your house because you'd defaulted, they've got room to still cover the loan.
When you're within that 80% buffer, whether that's through the government guarantor scheme, a personal guarantor, or an industry-specific policy that waives LMI closer to a 90% deposit, the bank sees your loan as lower risk. And lower risk usually means a better interest rate.
A better rate doesn't just save you money each month. It directly improves your affordability and how much you can borrow in the first place.
Why your actual rate isn't the number that matters
Here's something most people don't know until they're mid-application. Say interest rates are currently sitting at 6%. Most banks won't assess your loan at 6%. They'll add a buffer, usually around 3%, and check whether you could still afford your repayments at 9%.
This exists so the bank isn't approving loans that only work while rates stay low. But it means what you can technically afford at 9% might look quite different to what you can comfortably afford at 6%, and that gap plays out differently depending on how you actually live your life and manage money.
This is one of the biggest reasons two people with similar incomes can walk away from the same bank with very different borrowing outcomes.
The stamp duty trick most people miss
Here's one we've used a lot lately, and it's worth knowing about.
In Victoria, you don't pay stamp duty on land purchases under $600,000. Separately, if you're building, you can still access the government guarantor scheme on builds up to $950,000.
Put those two together and you get a genuinely strong outcome. If your land purchase comes in under $600,000, you pay no stamp duty on it. If your total build cost stays under $950,000, you can still use the government guarantor scheme, meaning you only need a 5% deposit and no LMI, as long as your income supports the loan.
That's a meaningful amount of money saved on two fronts at once, and it's the kind of thing that doesn't get talked about enough because it needs someone to actually connect the two rules for you.
Guarantor loans: it's not just about the deposit
Going guarantor with mum and dad gets talked about a lot, but most people only understand half of it.
The part people know: if your parents go guarantor, you may not need a deposit at all.
The part people miss: you still need to prove you have the ability to save one. That usually means showing a track record, whether that's paying rent consistently over time, or making regular repayments on something like a car loan.
The bank isn't just handing this over because your parents are backing you. They want to see that you're someone who manages money responsibly and doesn't let it slip through your fingers. The guarantor covers the deposit gap, but you still need to show you'd have been capable of getting there yourself.
Why don't all banks lend the same amount?
If you've been to a bank and been told you can't borrow anything, or only a fraction of what you expected, it doesn't mean that's the final word. It means that one bank's policies didn't work in your favour.
Every bank has different lending policies and a different appetite for different situations. Some won't lend in certain postcodes at all. Some pull back from lending in parts of a city where they already have too much exposure to high-rise apartments. None of this is about you personally. It's about how each bank manages its own risk across its whole loan book.
This is exactly where a mortgage broker earns their keep. My job isn't just to find you a loan, it's to find you the loan whose policies actually fit your situation, whether that's self-employment, avoiding LMI, or something more specific to how you earn or manage money.
The cheapest loan isn't always the right loan
A low interest rate matters, but it's not the only thing that matters. Often, the loan that's genuinely best for someone isn't the cheapest one on paper. It's the one built around the policies that actually work for their circumstances.
Sometimes, being able to borrow the amount you actually need is more valuable than shaving a small amount off your interest rate. And the good news is, a rate isn't locked in forever. We can review your loan in 18 or 24 months and look at refinancing to a better rate once your situation has settled or improved. But if the choice is between a slightly higher rate that gets you the property, or a lower rate that doesn't, getting the property usually wins.
Self-employed and told you can't borrow?
This is one of the most common situations I see, and it's rarely as bleak as that first "no" makes it feel.
A lot of self-employed people structure their finances to legitimately pay as little tax as possible, and that makes complete sense. That's exactly what a good accountant is there for.
The catch is that when it comes time to borrow, the bank is only looking at the income you've declared. And as a self-employed person, you generally only get one real shot at presenting that income in a way that supports what you want to achieve.
That's why it's worth working as a team. You, your accountant, and your mortgage broker, all on the same page about what your goals actually are. Minimising tax and maximising borrowing capacity can pull in different directions, so it helps to have everyone involved working toward the same outcome, rather than each person optimising for a different goal in isolation.
It's a collective effort. When everyone on your team is working together, you end up with a far better result than trying to piece it together on your own.
Where to from here
If any of this sounds familiar, whether it's the confusion, a knockback from a bank, or just not knowing where to start, that's exactly what I'm here for.
Every situation is different, and the right plan for you depends on your income, your goals, and where you're at right now. So rather than trying to figure it all out on your own, get in touch and let's sit down and go through it together.
Book a time to chat and we'll start putting a real plan in place.
