First Home Buyer Prep Guide: What To Do Before You Start House Hunting

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.

Step 1 – Get Clear on Your Real Budget (Not Just What the Bank Says)

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:

• Your bank budget – what a lender’s calculator might say you can borrow based on your income, debts and a minimum level of living expenses.
• Your life budget – what you’re actually comfortable paying each month once you factor in your real lifestyle, hobbies, travel, kids and savings goals.

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.

Mini exercise – find your monthly comfort number

You don’t need a perfect spreadsheet. Just a rough range is enough for a first chat.

• Look at what you currently pay in rent and how that feels each month.
• Think about what might change after you buy (for example, higher utilities, strata, commuting costs, kids).
• Decide on a ballpark range that would feel comfortable for home loan repayments – for example, “I’d like to be somewhere around $2,500–$3,000 per month on repayments, not $4,000.”

That “comfort number” becomes a really helpful anchor when we later talk about how much you can borrow and what price range makes sense.

Step 2 – Understand Deposit vs Funds to Complete

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.

The three money buckets

When you buy a home, you’re really dealing with three buckets of money:

1. Deposit – the money you put towards the purchase price. For a $700,000 place, a 10% deposit would be $70,000. A 20% deposit would be $140,000.
2. Upfront costs – things like stamp duty (if payable), conveyancing/solicitor fees, building and pest inspections, and bank/government fees.
3. Buffer – the money you have left after settlement so you’re not sitting at $0. This is for things like furniture, small repairs, and just breathing room.

What “funds to complete” actually means

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:

• Start with the purchase price of the property.
• Add your estimated upfront costs (stamp duty if payable, legal fees, inspections, government and bank fees).
• Subtract the loan amount you’re approved for (including any LMI that’s added onto the loan).
• Subtract any grants or concessions that reduce what you pay at settlement.

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.

Step 3 – What If I Need to Boost My Deposit?

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.

Tightening up savings outside super

• Look at your last few months of spending and see what’s habit versus what’s actually important to you.
• For 6–12 months, redirect some lifestyle spend into a separate “first home” savings account.
• Any pay rises, bonuses or tax refunds during that time can go straight into that account.

First Home Super Saver Scheme (FHSS)

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.

KiwiSaver for Kiwis buying in Australia

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.

Step 4 – Check Your Current Debts and Credit Limits

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.

• Credit cards and limits – lenders often assess you based on the limit, not just the balance.
• Personal and car loans – they’ll factor in the regular repayments.
• Buy now, pay later – ongoing BNPL use can be seen as a regular commitment.
• HECS/HELP – the repayment amounts that come out of your income.

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.

Quick tidy-up wins before you apply

• Consider closing genuinely unused credit cards, rather than keeping them “just in case”.
• Where it makes sense, look at reducing very high card limits down to something more realistic.
• Avoid taking on new personal loans or BNPL arrangements just before you apply for a home loan.

Step 5 – Understand How Your Income Might Be Viewed

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.

• Full-time or part-time salary – usually based on your base income, as long as it looks stable.
• Casual work – often needs a track record, and income may be averaged over a period.
• Overtime, bonuses and commissions – can be used, but often averaged and may not all be counted at 100%.
• Self-employed income – typically based on tax returns and financials, not just recent invoices.

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.

Step 6 – Real Spending vs HEM

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.

• Lenders often use a minimum living expense benchmark based on your family size and location.
• They will also look at your actual transaction history from bank statements.
• If your real, consistent spending is higher than the benchmark, the higher number may be used.

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.

Step 7 – Get Your Documents in One Place

Getting organised up front makes everything easier. You don’t need a giant folder, but having key documents handy speeds things up.

• Income documents – recent payslips, and for some people, income statements or tax returns.
• Bank statements – recent transaction and savings account statements.
• Loan and credit statements – for any credit cards, personal loans, car loans or other debts.
• Savings and deposit evidence – statements for savings accounts, term deposits or other funds.
• ID – usually photo ID such as a driver licence or passport.

Different lenders and situations can require different documents. Think of this as a solid base we can build on.

Step 8 – Decide Where and What You Want to Buy

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:

• Your preferred suburbs or areas – and a couple of nearby options if those become too expensive.
• Your property type – unit, townhouse or house; older established place or off-the-plan.
• Your non-negotiables – the things you really need (parking, commute time, bedrooms).
• Your “nice to haves” – things that would be great but aren’t deal-breakers.

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.

Step 9 – Have a Pre-Chat Before You Fall in Love With a Property

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:

• Give you a realistic price range based on your income, debts, deposit and spending.
• Highlight any speed bumps early while there’s still time to tidy things up.
• Set expectations around timing – pre-approval, searching, making offers and settlement.
• Help you avoid committing to a property that doesn’t actually fit your situation.

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.

Quick First Home Buyer Prep Checklist

• Work out roughly what you’re comfortable paying per month on home loan repayments.
• List your current savings, debts and credit card limits in one place.
• Estimate your deposit and start to get a feel for your total funds to complete.
• If you’re a citizen, PR or Kiwi, check whether FHSS or KiwiSaver might be relevant.
• Look over the last few months of bank statements and notice your spending patterns.
• Clean up any genuinely unused credit cards or very high limits if that makes sense.
• Gather key documents like payslips, bank statements, loan statements and ID.
• Write down your preferred and backup suburbs, plus non-negotiables and nice-to-haves.
• Book a first conversation so we can turn all of this into a clear, personalised borrowing plan.

FAQ – Real Questions First Home Buyers Ask Me

Do I need a 20% deposit to buy my first home?

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.

Will banks go through all my bank statements line by line?

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.

Is it bad if I’ve changed jobs recently?

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.