The Real Cost of Buying Your First Home in Australia
Everyone focuses on the purchase price, but the number that actually matters is what you need in the bank on settlement day — and that's almost always bigger than people expect. Here's what most first home buyers don't realise until it's too late.
Upfront costs beyond your deposit
On a $650,000 property in Queensland with a 10% deposit, you're looking at roughly: $65,000 deposit, $10,700 stamp duty (after the first home concession), $1,500 conveyancing, $600 building and pest inspection, $500 mortgage registration, and $400 in bank fees. That's close to $80,000 out of pocket before you touch a key. Use the First Home Buyer Costs calculator above to run your own numbers — every state is different.
How stamp duty works state by state
Stamp duty is the biggest variable. In NSW, a first home buyer buying a $800,000 property pays $0 in stamp duty — full exemption up to $800K, concession above that. In Victoria the exemption applies up to $600K. Queensland offers a $15,925 concession on properties up to $550K. WA, SA, and ACT have their own thresholds. The Stamp Duty All States calculator works through all of them — check where you're buying and what first home buyer concessions apply.
Understanding your LVR and when LMI kicks in
LVR stands for Loan to Value Ratio — it's your loan amount as a percentage of the property's value. Lenders want your LVR at or below 80% because above that, you're in higher-risk territory. If your deposit is less than 20%, you'll generally need to pay Lender's Mortgage Insurance (LMI). LMI protects the bank — not you — but you pay the premium. On a $700,000 property with a 10% deposit, LMI can add $12,000–$18,000 to your loan. The LMI calculator gives you an estimate based on your deposit and loan size.
There are two main ways to avoid LMI: save a full 20% deposit, or use the First Home Guarantee Scheme (formerly FHLDS), which lets eligible buyers purchase with as little as 5% deposit with the government guaranteeing the remaining 15%. There are limited places per year — check the NHFIC website for current availability.
What lenders actually look at when they assess your borrowing power
The number your borrowing power calculator spits out is an estimate — every lender runs their own assessment. They look at: gross income (including overtime, bonuses, and rental income with a haircut), total living expenses (they use HEM benchmarks which may be higher than your actual spend), existing debts and credit card limits (yes, even cards you don't use), and your employment type. Contractors and self-employed applicants often get lower assessments because income isn't guaranteed. Use the Borrowing Power calculator to get a starting estimate, then get a pre-approval from a broker to confirm the real number.
First Home Owner Grant (FHOG) — by state
The FHOG is a cash grant (not a loan) from state governments for first home buyers building or buying a new home. Amounts and conditions differ significantly: NSW offers $10,000 for new builds only; VIC offers $10,000 for regional builds and nothing for metro; QLD offers $30,000 for contracts signed before June 2025 (check current status); WA offers $10,000 for builds under $750K; SA and TAS have their own schemes. The grant does NOT apply to established homes in most states — this surprises a lot of people.
For books to help you through the process, Scott Pape's The Barefoot Investor has a practical chapter on home buying that cuts through the noise.
A practical timeline to settlement
Week 1–4: Get a genuine pre-approval (not just an online estimate). Sort your deposit and confirm your FHOG/FHG eligibility. Week 4–8: Inspect properties, understand the local market. Budget $400–800 for building and pest on any property you're serious about. Week 8–12: Make an offer or bid at auction. Sign contracts — your conveyancer should review before you sign. Week 12–18: Formal approval, valuation, insurance. Final inspection one week out. Settlement day: the bank pays the vendor, you get the keys. Your conveyancer and broker should be guiding you through every step — if they're not, get a better broker.