First Home Buyers — Start Here
A reference page for people buying their first home
Welcome — and How to Use This Page
Buying your first home usually comes with a lot of information, opinions, and pressure — often before you even know what questions to ask.
First home buyers are assessed under the same lending system as all borrowers — but the pressure points are different.
While income, property, and structure all matter, outcomes at the entry stage are most often shaped by:
• how entry risk is managed
• whether regulatory concessions apply
This page explains how the lending system behaves for first home buyers, why approvals can vary dramatically for similar applicants, and where misunderstandings commonly arise.
General information only. This page explains lending assessment principles, not personal advice.
Most people:
- skim what’s relevant
- ignore the rest
- come back later
- then speak to a broker when they’re ready
There’s no “right order” to read this page.
How This Fits Into Model Mortgages
Model Mortgages is a reference library.
It explains how lending decisions are made — so outcomes make sense when you encounter them.
First home buyers typically use this system in three ways:
• Fact sheets to understand definitions (LMI, guarantors, deposits)
• Assessment explanations to understand how lenders evaluate entry risk
• Structure exploration to see how early decisions affect future borrowing
Execution and personal advice sit outside this reference layer.
Primary Assessment Pressure Points
For first home buyers, the dominant system components are:
Equity & Deposit Framework
Regulatory & Transaction Context
These two elements typically outweigh all others at the entry stage.
Income matters — but it is rarely the binding constraint for first-time buyers unless borrowing capacity is clearly stretched.
Entry Risk and High LVR Lending
Most first home buyers enter the market at higher loan-to-value ratios.
At higher LVRs, lenders focus heavily on:
• how the deposit is sourced
• whether genuine savings rules are met
• how risk above 80% LVR is mitigated
This is why first home buyers often experience:
• more conditions
• fewer lender options
• stricter documentation requirements
These are system controls — not discretionary obstacles.
Government Schemes and Risk Substitution
Government initiatives reduce entry barriers — but they do not remove system rules.
They substitute risk.
From a system perspective:
• Lenders Mortgage Insurance transfers risk to an insurer
• Government guarantees transfer risk to the state
In both cases:
• the borrower remains fully responsible for repayments
• serviceability rules still apply
• property eligibility is restricted
Scheme participation changes who carries the risk — not whether risk exists.
Genuine Savings as a Gatekeeper
At high LVRs, lenders use genuine savings as a proxy for financial discipline.
This is why:
• gifted deposits may be restricted
• recently transferred funds may be excluded
• funds may need to be held for a defined period
A borrower may have sufficient funds to complete a purchase — but still fail entry assessment due to savings classification.
This rule disproportionately affects first home buyers and is a frequent source of confusion.
Transaction Timing Risk
First home buyers are often exposed to transaction risk because:
• they underestimate approval lead times
• they rely on cooling-off periods that may not apply
• they misunderstand auction conditions
• they sign contracts before finance is aligned
State-based differences — particularly between auction and private treaty — can materially affect approval outcomes.
Timing errors are one of the most common causes of late-stage failure.
Property Constraints at Entry Level
Certain property types are more likely to be restricted for first home buyers, including:
• small apartments
• properties under minimum size thresholds
• high-density or high-defect strata
• properties outside scheme price caps
These constraints often arise after a contract is signed — rather than during early planning.
Understanding property acceptability upfront is critical.
Why Outcomes Differ for Similar Buyers
Two first home buyers with similar incomes may receive different approvals because:
• one meets genuine savings rules and the other does not
• one purchases within scheme caps while the other exceeds them
• one buys in a low-risk location and the other does not
• one aligns finance and legal timing correctly and the other does not
These differences are structural — not personal.
Questions First Home Buyers Actually Ask
Common questions include:
• How much can I realistically borrow — not just on a calculator?
• What counts as a deposit?
• What is Lenders Mortgage Insurance (LMI), and when does it apply?
• Fixed vs variable — what actually matters at this stage?
• Can my parents help as guarantors?
• What order should I do things in so I don’t get stuck later?
If these are your questions, you’re in the right place.
Optional: Exploring Structure (Return Later If You Want)
Some first home buyers explore how today’s decisions affect future borrowing:
• upgrading to a second property
• buying an investment property later
• sequencing purchases
• restructuring after settlement
Exploring structure:
• does not start an application
• does not require documents
• does not commit you to anything
Explore possible scenarios.
This is not a loan application.
Core Home Loan Fact Sheets (Definitions)
If you prefer definitions first:
Loan Types & Features
• Fixed rate loans
• Variable rate loans
• Split loans
• Offset accounts
Deposits & Costs
• Lenders Mortgage Insurance (LMI)
• Deposits and equity
• Guarantor structures
All home loan fact sheets (PDF).
Learn From Real Explanations (Optional)
Some people prefer hearing how these issues play out in real situations.
Selected episodes from Property & Mortgage Insights Australia explore:
• first home buyer decision points
• borrowing capacity surprises
• timing and sequencing mistakes
You can explore these if and when you want.
Prefer to Talk It Through?
Most first home buyers use this page to get their bearings — and then speak to a broker when they’re ready to move forward confidently.
Talk to a broker.
Model Mortgages is a reference library.
Execution and personal advice are handled separately.