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What is a first mortgage?

Your first mortgage is simply the first home loan you successfully apply for, whether you’re buying your principal place of residence or an investment property. 

Much like other home loans, you'll usually need to be an Australian citizen or permanent resident to successfully apply for your first mortgage.

While your first mortgage should be affordable and suited to your needs, you may not be able to get the lowest interest rates or the most flexible features as a first time home buyer. Once you’ve taken some time to pay your mortgage and build up some equity in your new home, you may be in a position to refinance and get a home loan that better suits your needs.

What is the difference between a first mortgage and second mortgage?

Most first mortgages are similar to other standard home loans, though some banks and mortgage lenders offer home loan deals specifically for first time home buyers. These mortgages may offer features and benefits that are useful to first time buyers, such as discounted introductory rates (aka “honeymoon rates”), or the option to borrow with a lower deposit. They may also offer eligibility requirements that are easier for first time home buyers to fulfil.

If you take out your second mortgage because you’re refinancing your current home loan, or have sold your first home and are moving to a second home, the process is likely broadly similar to when you applied for your first home loan:

  • Work out what you can afford;
  • Compare mortgage options from different lenders, and;
  • Choose both a home loan that you can comfortably afford and offers useful features and benefits. 

If you’re taking out a second mortgage to buy a second property as an investment, there may be extra considerations involved. Investment mortgages typically have different features and benefits than owner occupier home loans, and may charge higher interest rates. You may be able to use the equity in your first property to apply for your second mortgage, though there are risks involved in this strategy. Consider contacting a mortgage broker for personalised advice.

How do you buy your first home?

There are two main methods for buying property – at auction, and via private treaty.

An auction is typically a public event, where potential buyers bid to purchase a property from a vendor. The bidder with the highest offer when the auctioneer’s hammer falls is the winner, and gets to purchase the property. If the bidding doesn’t reach the vendor’s preferred minimum selling price (the ‘reserve’), the highest bidder gets to exclusively negotiate with the vendor.

Auctions can be fast-paced and exciting, but sometimes stressful too. It’s important to remember that if you’re the winner at an auction, the deal is final – there’s no cooling-off period, and you’ll need to pay a deposit on the property (often 10 per cent) right then and there. Be prepared, check the contract, keep your maximum budget in mind when bidding, find out if the vendors prefer cheques, banks transfers, or other options for the deposit, and make sure your first mortgage is pre-approved and ready to go!

A private treaty is a negotiation between a buyer and a vendor to purchase the vendor’s property. Private treaties are often conducted through real estate agents, and mortgage brokers, solicitors and/or conveyancers are often also involved to help organise the paperwork.

Buying your first home via private treaty may take longer than buying at auction, and you risk being ‘gazumped’ by other interested buyers that may also be negotiating with the vendor behind the scenes. However, you may also be able to make a conditional offer while you’re still getting your home loan sorted out, and you may have the option to back out of the deal by exercising a cooling-off period in the contract.  

Can I build my first home?

Sometimes it’s more affordable to buy a vacant block of land to build a house, or to buy a unit or townhouse off the plan, than to buy an established property as your first home.

However, borrowing money to build a home may require a specialist mortgage, such as a construction loan. Unlike a standard home loan, where you receive your money in one lump sum, a construction loan involves drawing down money in stages as each phase of construction is completed.

If you choose to build your first home, you may be eligible for extra government support, on top of the usual first home owner grant (FHOG) in your state or territory. 

What is the best first home loan?

Because everyone’s financial situation is different, the best first home loan for you may not be the best option for somebody else. It’s important to compare different home loans and look at all the options, including:

  • Interest rate: The lower the rate, the lower your mortgage payments. Some banks offer special discounted interest rates for first home buyers, but once the introductory “honeymoon” period ends, you’ll revert to a higher rate, which could put pressure on your budget.
  • Fees: Home loans may have annual fees that are charged each year, as well as fees that are charged when you use certain loan features.
  • Comparison rate: Combines a loan’s interest rate and standard fees and charges. This can give you a better idea of its overall cost, such as when a mortgage offers a low interest rate but charges high fees that may cost more in total.

It's also worth comparing the features and benefits of different home loans, to work out which ones may help you better manage your repayments and enjoy extra value.

Some popular home loan features and benefits include:

  • Extra repayments: Pay off your loan faster, so you’re charged less interest.
  • Redraw facility: Take extra repayments back out of your loan if you need the cash.
  • Offset account: A separate savings or transaction account linked to your home loan, included when calculating your home loan’s interest charges to help you save some money. For example, if you have a $350,000 mortgage and $10,000 in your offset account, you’ll be charged interest as if you only owed $340,000.

How much can I afford to borrow for my first home loan?

To estimate if you can afford your first home loan, you can use a mortgage repayment calculator. Try entering different borrowing amounts and loan terms, and see how the repayments would fit into your household budget.

Remember, choosing a longer home loan term means your monthly repayments will be smaller, but you’ll likely pay more interest in total, while a shorter loan term will cost more from month to month, but the loan may cost less overall.

It’s important to work out if your first home loan would likely put your finances under stress, where a change in circumstances could leave you unable to afford your repayments. If a home loan may put you into mortgage stress, a lender may decline your application.

Lenders calculate mortgage stress in different ways. One commonly-accepted benchmark is that if more than one third of your household's income would go towards home loan repayments, the loan may put you into mortgage stress. You can use our mortgage stress calculator to estimate your risk.

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How much do you need to save for a deposit?

Before you can buy your first property, you’ll need to pay a percentage of its value as an upfront deposit to secure your home loan. The more you can afford to pay as a deposit, the more comfortable the lender will feel about lending you money. This may let you enjoy lower interest rates or fees, or more useful home loan features and benefits.

Most lenders prefer that you pay a home loan deposit of at least 20 per cent of the property’s value. That’s a lot of money, especially if you’re buying in an Australian capital city. It can take years of dedicated saving to get a 20 per cent deposit together, and during this time the purchase price for property may rise higher!

Some lenders will let you apply for a home loan with a smaller deposit of 10, 5 or even 2 per cent of the property’s value. However, this means the lender will need to take out a Lender’s Mortgage Insurance (LMI) policy to cover the risk that you’ll default on your loan. LMI protects the bank, not the borrower, and most lenders pass on the cost of LMI to you. The lower your deposit, the more the LMI may cost, which can reach tens of thousands of dollars. Our LMI Calculator can help you plan your budget in advance.

What if my deposit is a gift?

Generous friends or family may offer to help you with your home loan deposit. However, many lenders will want your deposit to be made up of “genuine savings” – that is, income earned from your job – to show that you’re a financially responsible borrower.

If part or all of your deposit will be a gift, consider holding the money for 6 months or more in a savings account to demonstrate your financial discipline, or organise a plan to pay back the gifted money in the future. Contact your lender to learn more about its requirements.

What other upfront costs are involved when buying property?

As well as budgeting for paying your first home loan’s deposit and LMI, there are other upfront costs you may need to consider:

  • Stamp duty (or transfer duty): A state or territory government tax on the sale of land. As a first home buyer, you may qualify for a duty exemption or discount on stamp duty. Our stamp duty calculator can help you estimate the cost.
  • Conveyancing fees: Hiring a solicitor to manage the legal transfer of a property’s ownership.
  • Application fees: Covers the admin cost of processing your home loan application and setting up your mortgage.
  • Valuation fee: Covers the cost of confirming the value of the property you’re buying, as part of the home loan application process.

How the government helps: first home owner grants (FHOG), schemes, and other concessions

General FHOG information

First home owner grants began in 2000 but are increasingly hard to come by due the continued tightening of eligibility criteria.

To start with, you need to be over 18 and an Australian citizen or a permanent resident. The grants are only for newly-built or substantially renovated properties, or properties that have never been occupied before. You can’t have owned a property prior to 2000 or applied for a first home owners grant previously, and you need to live in it for a minimum of six months, within the first 12 months of owning it.

The size of the grant varies from state-to-state, as does the cap on how much the property costs. It’s worth reading your state-specific grant information carefully.

Australian Capital Territory: N/A

The ACT FHOG is no longer valid as of 30 June 2019, and has been replaced by the Home Buyer Concession Scheme. This scheme allows ACT first home owners to claim an exemption on stamp duty, and applies to vacant residential land and both new and established homes, anywhere in the ACT, at any price.

New South Wales: Up to $10,000

First home buyers in NSW can apply for both the First Home Owner Grant and the First Home Buyer Assistance Scheme (FHBAS). The FHBAS applies to new homes, existing homes and vacant land on which you intend to build a home – and can provide a concessional rate or an exemption on your transfer duty (previously known as stamp duty).

Northern Territory: Up to $10,000

As well as the $10,000 FHOG, Territorians may be able to claim a Household Goods Grant (up to $2,000 to buy household goods). HomeBuild Access may also be an option to consider for those wanting to purchase a new home or land on which to build a new home, as it may offer access to low deposit home loan options.

Queensland: Up to $15,000

The QLD government provides a range of transfer duty concessions for people buying either their first home, their principal place of residence or a vacant block on which they intend to build. The first home concession only applies to a home valued under $550,000 and can save you up to $15,925. If you do not meet the first home concession eligibility criteria, you may still be entitled to a concession, via the home concession which could save you up to $7,175.

South Australia: Up to $15,000

Concessions are not available to first home buyers in South Australia, they can only apply for the First Home Owners Grant. The previously available concession allowing home owners to claim a concession for off-the-plan apartments ended on 30th June 2018.

Tasmania: Up to $20,000

First home buyers of established homes and pensioners downsizing to new homes may be eligible for concessions, depending on their settlement dates and other factors. The Tasmanian government has a handy tool online called PropertyBuyer, where you can check your eligibility for any concession or grant that may apply to your intended purchase of property.

Victoria: Up to $20,000

First home buyers in Victoria may be eligible for a duty exemption (for properties with a dutiable value of $600,000 or less) or a duty concession on stamp duty based on a sliding scale according to property value, provided buyers meet the eligibility criteria.

Western Australia: Up to $10,000

When a home buyer is eligible for the First Home Owner Grant, a concessional rate of transfer duty WA will apply if the value of the dutiable property is below certain thresholds.

How do you get help with your first mortgage

Finding, applying, and paying for your first home loan can sound intimidating, but you don’t have to go it alone.

You may be able to get help from the following:

Mortgage brokers

If you’re not sure which bank offers the best first home loan deal for you, you could consider getting in touch with a mortgage broker.

These home loan experts can:

  • recommend specific home loans to you, based on your financial situation;
  • negotiate with banks on your behalf to help you secure better deals, and;
  • tell you about special mortgage offers that aren’t typically advertised.

Using a mortgage broker to apply for mortgage pre-approval is usually free, as the broker is paid a commission by the bank or lender if the loan application is successful.


These solicitors, lawyers and/or legal specialists can manage the process of transferring the title of your first property from the seller to the buyer. 

Because property sale contracts can be complex, and may include special terms and conditions depending on your state or territory, a conveyancer can help to minimise your risk of legal problems when buying your first home. 


If you’re having trouble saving a home loan deposit, or if you’d like a home loan with no deposit, you may be able to get help from a guarantor. This is a close family member (usually a parent or grandparent) that uses the value of their own property to guarantee part or all of your home loan deposit. If you default on your home loan, your guarantor will become responsible for your mortgage payments.

Becoming a guarantor is a big commitment, so it’s important for everyone involved to be aware of the risks. However, once you’ve spent some time paying off your mortgage, it may be possible to refinance to a loan without a guarantor.

First Home Loan Deposit Scheme

First introduced in 2020, this Australian government initiative allows you to apply for a mortgage from selected lenders with a deposit of just 5 per cent, with the government guaranteeing the rest so you don’t need to pay LMI.  

Only 10,000 spots are available in the scheme each financial year, and to be eligible your income must be under the maximum threshold ($125,000 per annum for singles, or $200,000 per annum for couples).

Special offers

Lenders regularly include special deals and incentives with their mortgages to help attract new home loan customers.

You may be offered:

  • Discounted interest rates for a limited time (sometimes called “honeymoon rates”)
  • Waived fees
  • Bundled credit cards or other financial products
  • Discounted or waived LMI fees
  • Cashback

Keep in mind that you’ll need to fulfil the lender’s eligibility criteria for its special offers. While some incentives are meant for first home buyers, others are intended for refinancers or investors. Be sure to read the terms and conditions before you apply.

How do you apply for a mortgage as a first time buyer?

  1. Save your deposit: The more you can pay as a deposit on your home loan, the more home loan options may become available to you.
  2. Look into first home owner grants, incentives, and the like: Depending on your situation, you may be eligible for support.
  3. Work out if you’ll need LMI or a guarantor: If you have less than a 20% deposit, you may need to budget extra for LMI, or get a family member to guarantee your home loan.
  4. Consider contacting a broker: A mortgage expert may be able to help you on every step of your home loan journey, and help you access options you may not have ben aware of.
  5. Get your documents together: You’ll likely need proof of your identity and residency, proof of income, and details of any credit cards or other outstanding loans.
  6. Apply for pre-approval: If you haven’t found a property yet, this means that when you do you can quickly complete the financing process.
  7. Get unconditional approval: Once you’ve found a property to buy, the lender will need to conduct a valuation and confirm the details of your application before they can approve your home loan.
  8. Sign on the dotted line: If everything checks out, you can officially sign up for a mortgage and become a home owner!

Can first home buyers apply for an ING home loan?

First home buyers can apply for an ING home loan, but first, they need to select the most suitable home loan product and calculate the initial deposit on their home loan. 

First-time buyers can also use ING’s online tool to estimate the amount they can borrow. ING offers home loan applicants a free property report to look up property value estimates. 

First home loan applicants struggling to understand the terms used may consider looking up ING’s first home buyer guide. Once the home buyer is ready to apply for the loan, they can complete an online application or call ING at 1800 100 258 during regular business hours.

How can I apply for a first home buyers loan with Commonwealth Bank?

Getting a home loan requires planning and research. If you are considering a home loan with the Commonwealth Bank, you can find the information you need in the buying your first home section of the bank’s website.

You can see the steps you should take before applying for the loan and use the calculators to work out how much you can borrow, what your monthly repayments would be and the upfront costs you’d likely pay.

You can also book a time with a Commonwealth first home loan specialist by calling 13 2221.

CommBank publishes a property report that may help you understand the real estate market. The bank has also created a CommBank Property App that you can use to search for property.  The link to download this app is available on the same webpage.

If you are eligible for the First Home Loan Deposit Scheme, CommBank will help you process your application. The scheme helps first home buyers to purchase a home with a low deposit. You can read details about this scheme here and speak with a CommBank home lending specialist to understand your options.

Can I get a NAB first home loan?

The First Home Loan Deposit Scheme of NAB helps first home buyers purchase a property sooner by reducing the upfront costs required. This scheme is offered based on a Government-backed initiative, with10,000 available places announced in October 2020.

Suppose your application for the NAB first home buyer loan is successful. In that case, you’ll only need to pay a low deposit, between 5 and 20 per cent of the property value and won’t be asked to pay lender's mortgage insurance (LMI). You’ll also receive a limited guarantee from the Australian government to purchase the property.

If you’re applying for the NAB first home buyer home loan as an individual, you need to have earned less than $125,000 in the last financial year. Couples applying for the NAB first home loan need to have earned less than $200,000 to be eligible. To be considered a couple, you need to be married or in a de facto relationship. A parent and child, siblings or friends are not considered a couple when applying for a NAB first home loan.

The NAB First Home Loan Deposit Scheme is currently offered only to purchase a brand new property, rather than an established property.

Where can I get all the information about an ANZ first home buyer’s loan?

As a first home buyer, you may require help and hand-holding, and as such ANZ has the buying your first home section on its website full of important information. ANZ also has a form in this section you can fill out to get a free consultation from an ANZ First Home Coach and create your own plan for buying your first home. This coach will help you understand where your current income is being spent and plan for your home loan repayments. You’ll get a clear picture of the costs involved in purchasing a property and how to budget or save for these costs. The coach will help you understand different deposit options and manage your accounts to enhance your savings.

There are three types of ANZ first home loans - Standard Variable, Fixed, and Equity Manager. The features, interest rates, and terms for each are different, and you can compare them here.

When they apply for an ANZ home loan, first home buyers can also get guidance on applying for the First Home Owner Grant (FHOG). This is a one-off government grant that may be available to you when you’re buying your first home. The eligibility criteria for FHOG differs between the different states and territories, which is why it’s helpful to have expert advice when applying.

How do I apply for Westpac’s first home buyer loan?

If you’re a first home buyer looking to apply for a home loan with Westpac, they offer an online home loan application. They suggest the application can be completed in about 20 minutes. Based on the information you provide, Westpac will advise you the amount you can borrow and the costs associated with any possible home loan. 

You can use Westpac’s online mortgage calculators to estimate your borrowing power. You can also work out the time it might take to save up for the deposit, and the size of your home loan repayments

When applying for a home loan with Westpac, you’re assigned a home finance manager who can address your concerns and provide information. The manager will also offer guidance on any government grants you may be eligible for. 

This article was reviewed by Head of Content Leigh Stark before it was published as part of RateCity's Fact Check process.