Home Loans for First Home Buyers: Your Guide to Getting Started

Finding the right home loan for first home buyers is one of the most critical stages on your way to owning your very first property in Australia 2025’s rapidly changing market. Whether you’re weighing up the prospect of low deposits or looking for assistance through government schemes, this guide will cover the basics, provide examples, and answer your questions. 

Why Home Loans are Important for First Home Buyers 

Starting your property journey will usually mean navigating home loans that are aimed at first home buyers. These loans have specific benefits such as; government grants, low deposit loans and flexible repayment types. (There are a lot of government incentives over the past couple of years, thus, making homeownership more possible)

Key Concepts Explained

1. Types of Home Loans Available

• Basic Home Loans: No-frills options ideal for budget-conscious buyers; these usually come with lower fees but fewer features.
• Package Loans: Include benefits like offset accounts or bundled insurance.
• Principal and Interest Loans: The majority option, with repayments covering both the amount borrowed and interest.
• Interest-Only Loans: You pay just the interest temporarily — less common for first home buyers.

2. Deposit Requirements

Traditionally, lenders have required a 10-20% deposit. However, with schemes like the Australian Government’s First Home Guarantee, eligible buyers can secure a property with just a 5% deposit — without paying Lenders Mortgage Insurance (LMI). This drastically lowers the barrier to entering the market.

Eligibility Criteria

To secure home loans for first home buyers, applicants generally need to:

• Be at least 18 years old and an Australian citizen or permanent resident.
• Have not owned property before, either alone or jointly, in the last 10 years.
• Be buying to live in the home (owner-occupiers only).
• Show stable income and responsible savings habits.
• Meet lender’s income limits and serviceability tests.

Income caps currently sit at $125,000 for individuals and $200,000 for couples, but these limits are being lifted for some schemes, with higher property price caps coming into effect from October 2025.

Government Support & Grants

First Home Guarantee

A flagship initiative allowing first home buyers to purchase with a small deposit (5%), and no LMI, thanks to a government-backed guarantee. This scheme is expanding, with unlimited guarantees and higher property price caps for many regions across Australia.

First Home Owner Grant (FHOG)

Most states offer grants for buyers purchasing new homes, giving a substantial financial boost towards buying or building your first property.

Shared Equity Schemes

In 2025, the Help to Buy program is helping buyers purchase homes with government equity of up to 40%, lowering both deposit and mortgage costs.

How Much Can You Borrow?

Banks assess your borrowing power by looking at regular income, savings history, and existing debts. Lenders run “serviceability” tests to ensure repayments remain manageable and government schemes can help stretch your deposit further.

Actionable Tips for First Home Buyers

• Start early: Build a regular savings habit and check eligibility for government schemes.
• Compare loan products: Examine interest rates, fees, and features like offset/redraw facilities.
• Apply for pre-approval: Knowing your borrowing power streamlines house hunting.
• Check grant deadlines: Some government grant offers have strict timeframes.

Summary

Home loans for first home buyers in Australia create endless possibilities due to strong support from the government, lower deposit options and targeted state grants. By knowing your eligibility, preparing yourself financially and taking advantage of the most up-to-date schemes, buying your first home is now more accessible. Access government policy resources and seek advice from experts in the field to ensure you take that first step confidently.

Take the first step towards owning your dream home. Book a free consultation with a SGS mortgage expert today and get personalised guidance on home loans for first home buyers no obligations, just clear advice.

FAQs

Do I need perfect credit?

A good credit score helps but is not absolutely required. Lenders may be flexible if you show consistent savings and a stable income.

Can I buy with a smaller deposit than 5%?

Some buyers can access home loans with less than 5% if a guarantor supports them (like a parent), but most government schemes have a 5% minimum.

Is it only for new homes?

Most grants apply to new or recently built homes, but the First Home Guarantee and shared equity programs can also apply for established properties (check local eligibility).