And How to Avoid Them
Buying your first home can feel huge. There’s a lot of noise, a lot of opinions, and it’s easy to get lost on realestate.com.au before you’ve actually worked out what you can comfortably afford.
This guide is here to calm that down. I’ll walk you through the key things to get sorted before you start making offers – so you’re not guessing, and you’re not relying on what a random online calculator says.
To keep it real, I’ll use a simple $700,000 property example in a few spots. If your budget is higher or lower, you can still follow the same steps – just adjust the numbers up or down.
A big early mistake first home buyers make is to focus only on what a bank might lend them. That’s useful, but it’s only half the story. There are really two budgets to think about:
The sweet spot is where those two meet. Just because a calculator says you can borrow, say, $800,000, doesn’t mean that’s going to feel good in your day-to-day life.
You don’t need a perfect spreadsheet. Just a rough range is enough for a first chat.
That “comfort number” becomes a really helpful anchor when we later talk about how much you can borrow and what price range makes sense.
Most people focus on the deposit – which is important – but there’s another piece that matters just as much: your funds to complete. They’re not the same thing.
When you buy a home, you’re really dealing with three buckets of money:
Funds to complete is just a fancy way of saying: the total amount of cash you need to have available by settlement to actually get the keys.
In plain English, it looks something like this:
What’s left is the cash you need to contribute – your funds to complete.
Example (rounded and simple): Imagine you’re buying a $700,000 place with a 10% deposit. You’ve saved $70,000. Your upfront costs (for illustration only) might be around $20,000 once you add up stamp duty (if payable), legal fees, inspections and other bits. So you might need something in the ballpark of $90,000 in total funds to complete.
Sometimes, once you’ve done the sums, you realise you’re close but not quite there yet. That’s really common, and there are a few ways to bridge the gap.
If you’re an Australian citizen or permanent resident, you may be able to use the FHSS scheme to help boost your deposit. In very simple terms, you can make extra contributions into your super fund (subject to caps and rules), then later apply to withdraw eligible amounts to put towards buying your first home.
The exact rules around who can use it, how much you can withdraw and when do change over time. Before relying on FHSS, check the current ATO guidelines and talk to your super fund.
If you’re a New Zealander who’s moved to Australia, you might have money sitting in KiwiSaver back in NZ. In some cases, you may be able to transfer your KiwiSaver balance into an eligible Australian super fund and then look at using a portion towards your first home via FHSS.
When a lender works out how much you can borrow, they don’t just look at your income. They also look closely at your existing debts and credit limits.
Quick example: Two people earn the same income. One has a $15,000 credit card limit and no personal loans. The other has a $30,000 card limit and a $20,000 car loan. Even if both manage their money well, the second person may have a lower borrowing capacity because more of their income is already spoken for.
You don’t need to know the fine print of every lender’s rules, but it helps to know that how you’re paid can affect how your income is treated in a loan assessment.
The main thing is to have a clear picture of how you earn your money so we can translate that into how banks are likely to see it.
A very common question at a first meeting is: “Do banks really go through all my bank statements?” The short answer is: they do look, and both your real spending and a benchmark called HEM (Household Expenditure Measure) can come into play.
Example: Two couples on the same income. Couple A has modest discretionary spending close to the benchmark. Couple B regularly spends an extra $1,000 a month on dining out, subscriptions, Uber, BNPL and travel. Even with identical incomes, Couple B may be able to borrow less.
You don’t have to stop having a life. But it can help to tidy things up in the few months before you apply – keep one-off big spends separate, watch multiple BNPL arrangements, and cancel subscriptions you don’t use.
Getting organised up front makes everything easier. You don’t need a giant folder, but having key documents handy speeds things up.
Different lenders and situations can require different documents. Think of this as a solid base we can build on.
Now we blend the numbers with the real world. Before you hit open homes every weekend, it helps to be clear on a few basics:
Property type can also affect your loan in subtle ways. For example, off-the-plan properties carry extra timing and valuation considerations because you sign a contract now but don’t settle until later.
The best time to talk to a broker isn’t after you’ve found “the one”. It’s before you start making serious offers.
An early, no-pressure conversation can:
This isn’t a commitment to go ahead with anything. It’s just about going into your first home journey with eyes open and a plan.
Not always. A 20% deposit can help you avoid Lenders Mortgage Insurance (LMI) with many lenders, but plenty of first home buyers purchase with less than 20%. That can mean paying LMI or using certain schemes, and there are pros and cons either way.
Lenders do look at bank statements, but they’re not usually judging every coffee. They’re mainly looking for your overall patterns – regular commitments, consistent spending levels, and anything that doesn’t match what’s been disclosed.
It depends. A recent job change isn’t automatically a problem, especially if you’ve stayed in the same industry or moved to a more stable role. Some lenders like to see a certain amount of time in your current job, others are more flexible.
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