How to Buy Your First House

Buying your first house is an exciting milestone that comes with a mix of anticipation, dreams, and nervousness. Whether you’ve been saving diligently or just started considering the idea, embarking on this journey requires careful planning and a solid understanding of the home-buying process. 

The home-buying process is a multi-step journey that begins with getting pre-approved for a mortgage and ends with closing on the property. As a first-time home buyer, you’ll encounter numerous decisions, paperwork, and financial considerations along the way. 

This guide will equip you with the essential knowledge and tools you need to buy your first home.

Are You Financially Ready To Buy Your First Home?

Buying your first home is a big decision, and it’s important to ensure you’re financially ready before starting the process. Here are some factors to consider when assessing your financial readiness:

  • Your income: How much money do you bring in each month? This will help you determine how much you can afford to spend on a mortgage.
  • Your debt: How much debt do you have? This includes student loans, credit card debt, and car loans. You’ll need to make sure you can afford to make your monthly payments on your debt as well as your mortgage payments.
  • Your savings: How much money do you have saved for a down payment? A down payment of at least 20% is ideal, but even a smaller down payment can help you get a lower interest rate on your mortgage.
  • Your credit score: Your credit score will affect the interest rate you qualify for on your mortgage. A good credit score will help you get a lower interest rate, which can save you money in the long run.

In addition to these factors, you’ll also need to consider your long-term financial goals

Are you planning to have children in the next few years? If so, you’ll need to make sure you can afford the additional expenses that come with having a family. Are you planning to stay in the same house for the long term? If so, you’ll need to make sure you can afford the property taxes and maintenance costs.

Taking the time to assess your financial readiness before starting the home-buying process will help you avoid any surprises. By understanding your finances and long-term goals, you can make sure you’re making the right decision for your future.

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

5 Tips to Assess Your Financial Readiness to Buy a Home

Here are some additional tips for assessing your financial readiness to buy a home:

  • Get a copy of your credit report and review it for any errors.
  • Calculate your debt-to-income ratio: This is the percentage of your monthly income that goes towards debt payments. A healthy debt-to-income ratio is below 36%.
  • Estimate how much you can afford to spend on a mortgage: A good rule of thumb is to keep your monthly mortgage payment below 28% of your monthly income.
  • Set a budget for your home-buying expenses, including down payment, closing costs, and moving expenses.
  • Start saving for your down payment and closing costs as soon as possible.

By following these tips, you can be sure you’re financially ready to buy your first home.

A person buying their first house

Getting Pre-approved for a Loan

Getting pre-approved for a loan is an important step in the home-buying process, especially for first-time home buyers. It shows sellers that you are serious about buying a home and that you have the financial means to do so. It also gives you an idea of how much you can afford to spend on a home.

There are two types of pre-approvals: pre-qualification and pre-approval.

  • Pre-qualification is a less formal process that does not involve a hard credit check. It is a way for you to get an idea of how much you might be able to borrow.
  • Pre-approval is a more formal process that involves a hard credit check. It is a guarantee from the lender that you will be approved for a loan up to a certain amount.

To get pre-approved for a loan, you will need to provide the lender with some information about your finances, such as your income, debts, and assets. You will also need to provide the lender with a copy of your credit report.

The lender will then use this information to determine how much you can afford to borrow. They will also consider your credit score, debt-to-income ratio, and employment history.

Once the lender has reviewed your information, they will give you a pre-approval letter. This letter will state how much you can afford to borrow and the terms of the loan, such as the interest rate and the down payment.

Having a pre-approval letter can give you a competitive edge when you are making an offer on a home. It shows sellers that you are serious about buying a home and that you have the financial means to do so.

Get pre-approved with Odin Mortgage. Contact us to learn more.

Benefits of Getting Pre-approved for a Loan as a First-Time Home Buyer

Getting pre-approved for a loan can be especially beneficial for first-time home buyers. Here are some of the reasons why.

It Can Give You A Competitive Edge

When you make an offer on a home, sellers are more likely to accept your offer if you have a pre-approval letter. This is because it shows that you are serious about buying the home and that you have the financial means to do so.

It Can Help You Budget

Once you have a pre-approval letter, you will know how much you can afford to spend on a home. This will help you to budget for your home-buying expenses, such as the down payment, closing costs, and monthly mortgage payments.

It Can Give You Peace Of Mind

A pre-approval letter can give you peace of mind knowing you have been approved for a loan. This can be especially helpful if you are in a competitive bidding war for a home.

Tips for Getting Pre-approved for a Loan as a First-Time Home Buyer

If you are a first-time home buyer, here are some tips for getting pre-approved for a loan:

  • Start early: The pre-approval process can take a few weeks, so it is important to start early. This will give you time to gather all the necessary documentation and shop around for the best interest rate.
  • Be prepared to provide documentation: The lender will need to see some documentation, such as your income, debts, and assets. Be sure to have this documentation ready when you apply for pre-approval.
  • Shop around for a lender: There are many different lenders out there, so it is important to shop around and compare rates before you choose a lender.

Understand Your Options: Best First Home Buyer Loans

Several first-time home buyers loans are available to help you buy your first home. Here are some of them:

  • NHG First Home Loan Deposit Scheme: This scheme allows you to purchase a home with a 5% deposit rather than the usual 20%. The government will guarantee the remaining 15% of your loan, which means you won’t have to pay Lenders Mortgage Insurance (LMI), which protects the lender should the borrower default on their home loan.
  • First Home Loan Deposit Assistance (FHLDA): This scheme is similar to the NHG scheme, but it’s for first home buyers who have a savings deposit of at least 2% of the purchase price. The government will guarantee the remaining 13% of your loan, which means you won’t have to pay LMI.
  • HomeBuilder: The HomeBuilder scheme grants $25,000 to first-home buyers who build a new home or substantially renovate an existing one. This can be used towards the home’s purchase price or the cost of renovations.
  • First Home Super Saver Scheme: This allows you to save money in your superannuation account for your first home deposit. The government will match your contributions up to $15,000, which means you could save up to $30,000 for your deposit.
  • Affordable Housing Loans: Some lenders offer affordable housing loans with lower interest rates and fees than standard home loans. These loans are typically available to first-home buyers who meet certain criteria, such as having a low income or a disability.

It’s important to compare different loans before you choose one to find the best deal for your needs.

Choosing the Right Real Estate Agent

Choosing the right real estate agent is important for any home buyer, but it can be especially important for first-time home buyers. 

First-time home buyers often lack experience and knowledge of the home-buying process and may not know what they are looking for in a home. A good real estate agent can help first-time homebuyers through the process and make sure they are making informed decisions.

Here are some things to consider when choosing a real estate agent for first-time home buyers:

  • The agent’s experience in the area: First-time home buyers should choose an agent who is familiar with the area they are interested in buying in.
  • The agent’s communication style: First-time home buyers should choose an agent who communicates well and who is easy to get along with.
  • The agent’s willingness to work with first-time home buyers: Not all real estate agents are experienced in working with first-time home buyers. First-time home buyers should choose an agent who is willing to work with them and who understands their needs.

First-time home buyers can make home-buying easier and more enjoyable by choosing the right real estate agent.

How to House Hunt

House hunting as a first-time home buyer can be daunting, but it doesn’t have to be. By following these tips, you can make the process easier and more enjoyable:

  • Set a budget: This is the most important step in house-hunting. Before you start looking, you need to know how much you can afford to spend on a home.
  • Do your research: Once you know your budget, you need to do some research on the housing market in the area you are interested in. This will help you understand the prices of homes in the area and what you can expect for your money.
  • Find a real estate agent: A good real estate agent can be a valuable asset when you are house hunting. They can help you to find the right home for your needs and budget, and they can also negotiate on your behalf.
  • Start looking at homes: Once you have found a real estate agent, you can start looking at homes. Be sure to visit several homes before you make an offer. This will help you to compare different homes and find the one that is right for you.
  • Make an offer: Once you have found a home you love, you need to make an offer on it. The offer should include the price you are willing to pay, the down payment you are willing to make, and the terms of the loan.
  • Negotiate: The seller may not accept your first offer. This is why it is important to be prepared to negotiate. Be prepared to go back and forth with the seller until you reach an agreement that is acceptable to both of you.
  • Close on the home: Once you have reached an agreement with the seller, you will need to close on the home. This is the final step in the house-buying process.

Why You Need to Conduct a Home Inspection Before Buying Your First Home

A home inspection is important for first-time home buyers to avoid costly surprises.

This is because first-time home buyers may not be familiar with the ins and outs of home buying and may not be aware of potential problems. A home inspection can help first-time home buyers identify any potential problems with the home before buying it, saving them a lot of money in the long run.

A home inspection examines a home’s major systems and components. The inspector will look for any defects or problems that could affect the value of the home or the buyer’s ability to enjoy it. The inspection typically covers the following areas:

  • Foundation: The inspector will look for cracks, settling, or other signs of foundation problems.
  • Roof: The inspector will look for leaks, missing shingles, or other signs of roof damage.
  • HVAC: The inspector will look for leaks, malfunctioning appliances, or other signs of HVAC problems.
  • Plumbing: The inspector will look for leaks, clogged pipes, or other signs of plumbing problems.
  • Electrical: The inspector will look for faulty wiring, outlets, or other signs of electrical problems.
  • Other systems: The inspector may also look at the home’s windows, doors, siding, and other systems.

The home inspection is typically conducted by a licensed home inspector. The inspection report will detail the inspector’s findings and recommendations. The buyer should review the report carefully and ask the inspector any questions they have.

Using a Real Estate Agent to Make an Offer on Your Behalf

A real estate agent can be a valuable asset when it comes to negotiating the purchase of a home. They can help you understand the home’s market value, present your offer to the seller, and negotiate on your behalf.

Here are some specific things a real estate agent can do to help you negotiate:

  • Provide market data: Your agent can provide you with information about the current market value of the home you’re interested in. This will help you make a fair offer and understand the seller’s position.
  • Present your offer: Your agent can present your offer to the seller in a professional and persuasive way. They can also explain the terms of your offer and answer any questions the seller may have.
  • Negotiate on your behalf: Once your offer has been presented, your agent can negotiate on your behalf. They will work with the seller’s agent to reach an agreement that is mutually beneficial.
  • Advise you on the best course of action: Your agent can advise you on the best course of action throughout the negotiation process. They can help you decide whether to accept or reject an offer and help you navigate any unexpected challenges.

As a first-time home buyer, having a reliable real estate agent can take off half the burden and mistakes you might make whilst buying your first home. 

The Final Process: Closing the Sale

The closing process is the final step in the home-buying process in Australia. This is when you will sign all of the paperwork and transfer ownership of the home to you. The closing process typically takes place at a settlement office.

At the closing, you will need to bring the following documents:

  • Your driver’s licence or other government-issued ID
  • Your Tax File Number (TFN)
  • Your proof of income
  • Your proof of funds
  • Your mortgage documents
  • The deed to the home

Once you have signed all of the paperwork, you will be given the keys to your new home.

Understanding Your Mortgage

Once you have closed on your home, you will be responsible for making mortgage payments. Your mortgage payment will include the principal, interest, taxes, and insurance (LMI).

It is important to understand your mortgage so that you can make sure you can afford the payments. You should also understand the terms of your mortgage, such as the interest rate, the length of the loan, and any prepayment penalties.

Moving In and Settling Down

Once you have closed on your home and made your first mortgage payment, you can start moving in and settling down. This is an exciting time, but it can also be overwhelming.

Here are a few tips for moving in and settling down in Australia:

  • Start planning early: This will give you time to pack your belongings, find a removalist, and schedule the move.
  • Label your boxes: This will make it easier to unpack your belongings when you arrive at your new home.
  • Take inventory of your belongings: This will help you keep track of your belongings and make sure that nothing is lost or damaged during the move.
  • Set up your utilities: This includes your water, electricity, gas, and internet.
  • Change your address: This includes your driver’s license, car registration, Medicare card, and any other important documents.

Moving in and settling down can be a lot of work, but it is also a lot of fun. Enjoy this new chapter in your life!

How to Buy Your First House

Secure your First Home Loan with Odin Mortgage

Odin Mortgage is a great option if you are looking to secure a home loan in Australia. 

We are experts in helping expats and foreign investors secure home loans in Australia. We offer a wide range of loans, including fixed-rate, variable-rate, and interest-only loans.

Our team of experienced mortgage brokers can help you find the right home loan for your needs and budget. We will work with you to understand your financial situation and goals and match you with a loan that meets your needs.

We also offer a free home loan assessment, so you can see how much you can borrow and what your monthly repayments will be.

Contact us today to start your home-buying journey!

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

Frequently asked questions

The amount of deposit you need to buy a home in Australia as a first home buyer depends on the property price and the type of loan you are applying for. The minimum deposit requirements for first-home buyers in Australia are generally:

  • 5% deposit
  • 20% deposit to avoid paying Lenders Mortgage Insurance (LMI)

There are also special schemes like:

  • NHG First Home Loan Deposit Scheme: You can purchase a home with a 5% deposit if you are eligible for the NHG First Home Loan Deposit Scheme (FHLDS).
  • First Home Loan Deposit Assistance (FHLDA): You can purchase a home with a 7% deposit if you are eligible for the First Home Loan Deposit Assistance (FHLDA).
  • HomeBuilder: You can purchase a home with a 5% deposit if you are eligible for the HomeBuilder scheme.

There is no one-size-fits-all answer to this question, as the amount of salary you need to buy a house in Australia will depend on a number of factors, including the property price, the size of your deposit, and your other financial commitments.

However, as a general rule of thumb, you should aim to have a gross income of at least 3 times your monthly mortgage repayments. For example, if your monthly mortgage repayments are $2,000, you should have a gross income of at least $6,000 per month.

Having a good credit score and a history of making regular payments on your debts is also important.

Here are the steps on how to buy a house in Australia for the first time:

  • Get pre-approved for a home loan: This will give you an idea of how much you can borrow and your monthly repayments.
  • Start saving for a deposit: The more deposit you have, the lower your monthly repayments will be.
  • Find a property you like: You can use online real estate websites or work with a real estate agent to find a property that meets your needs.
  • Make an offer on the property: Your offer should include the purchase price, the deposit amount, and the terms of the sale.
  • Negotiate the offer: The seller may come back with a counteroffer, and you will need to decide whether to accept it or make a new offer.
  • Sign the contract of sale: Once you have agreed on a price and terms, you will need to sign the contract of sale.
  • Pay the deposit: You will need to pay the deposit to the seller’s solicitor or conveyancer.
  • Complete the settlement: This is when you will officially become the owner of the property.

The average age for first home buyers in Australia has reached a new high of 33 years old, according to the most recent 2023 data from the Australian Bureau of Statistics.

This number continues an upward trend over the past decade, up from 30 in 2012 and 32 just two years ago in 2021.

Driving factors behind the rising average age include:

  • Ongoing housing affordability challenges, especially in Sydney and Melbourne where prices remain high
  • Persistently high levels of student debt delaying Australians’ ability to save for a deposit
  • An increase in the number of Australians renting for longer periods before buying their first home

While 33 is the current national average, there are some differences across the counties:

  • In Adelaide, the average age remains lower at 30
  • In Melbourne and Sydney, the average age has risen to 35

For Australians hoping to enter the housing market sooner, experts emphasise starting to save early, getting pre-approved for a home loan, and being flexible on location or property type. Making some compromises can help first home buyers purchase at a younger age.

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