What is a first home buyer home loan?
A first home buyer loan is a home loan product designed for or available to first home buyers.
Many lenders even offer special deals like cashback, reduced or waived ongoing or annual fees, or discounted interest rates to attract first home buyers.
How to compare first home buyer home loans
You can use the comparison table at the top of this page to compare first home buyer home loans, weighing up each loan’s interest and comparison rate, estimated monthly repayment amount, features, and whether they’re a Canstar Award Winner.
Here’s a breakdown of what to consider when comparing home loans:
- Interest rate, which determines how much interest you pay on your loan balance each repayment cycle.
- Comparison rate, which is included alongside a lender’s advertised rate, taking into account both the interest rate and most upfront and ongoing fees. It’s designed to give you a better idea of the total cost of the loan.
- Fees and charges like application or establishment, monthly or annual, missed payment, and early repayment fees.
- Loan term is the amount of time you’ll spend paying back the loaned amount. A longer term may come with lower repayments, but also means you’ll likely pay more in interest over the life of the loan compared to a shorter term.
- Loan-to-value ratio (LVR), which compares the amount you’re borrowing against the value of the property you’re looking to buy. For example, if the home you’re buying costs $1,000,000 and you have a deposit of $200,000, you would need to borrow $800,000, making your LVR 80%. If your LVR is higher than 80%, you might be charged Lenders Mortgage Insurance (LMI).
- Features like offset accounts or redraw facilities, which can help you pay less in interest or pay back your mortgage faster.
- Eligibility criteria should be checked before applying. This can help you get an idea of how likely you are to be approved by the lender.
What are the best first home buyer home loans?
There’s no one ‘best’ first home buyer home loan, as the best one for you will depend on your needs and budget. That said, if you’re comparing first home buyer home loans, Canstar’s First Home Buyer Awards recognise the financial institutions offering outstanding value to first home buyers. Our most recent award winners were:
2026 First Home Buyers - Bank of the Year Award: CommBank
2026 Customer Owned Bank of the Year - NSW, VIC, and WA Award: Unity Bank
2026 Customer Owned Bank of the Year - NT Award: People First Bank
2026 Customer Owned Bank of the Year - QLD Award: Queensland Country Bank
2026 Customer Owned Bank of the Year - SA Award: Beyond Bank
What different types of home loans can you get as a first home buyer?
There are a number of different ‘types’ of home loans available, usually differing by how interest is charged and how you pay down the borrowed funds:
Variable rate home loans
A home loan with a variable interest rate is one where the amount of interest you pay can go up or down over time, often due to economic factors like changes to your lender’s operating costs or the cash rate set by the Reserve Bank of Australia (RBA).
If your rate varies, so will the size of your repayments. Though, variable rate loans generally allow for greater flexibility and more features than fixed rate loans.
Fixed rate home loans
A fixed rate home loan allows you to lock in an interest rate for a particular period of time, typically between one and five years. The interest rate charged on your loan and your repayments will remain the same during that period, regardless of any rises or falls in the cash rate or your lender’s variable rates.
Your rate will revert to a variable one at the end of the fixed period, unless you agree with your lender to roll it over for another fixed term.
Split rate home loans
A split home loan refers to a loan where you pay a fixed rate on part of your home loan balance and a variable rate on the rest. This can allow you to access certain benefits of a variable rate loan, while also offering the certainty that comes with a fixed rate.
Principal and interest home loans
If you’re making principal and interest repayments on your loan, you’re paying back the original loan amount (the principal) alongside interest.
Interest-only home loans
An interest-only home loan sees you only paying interest on the loan balance for an amount of time, before the loan reverts to principal and interest repayments.
This may suit some borrowers as it can lead to lower repayments in the short-term, but interest-only loans tend to work out more expensive in the long run.
Construction loans
If you’re planning to build your first home, you may be interested in a construction loan. This type of home loan works a bit differently, in that your loaned funds are generally paid out in instalments at various stages of the build, rather than all at once at the start.
You also typically only pay interest on the amount that’s been drawn down at a given time, as opposed to the whole future loan balance. Some lenders may also offer interest-only repayments during construction, which may help with your cashflow if you’re still paying rent while waiting for your new home to be built.
How much can you borrow for a first home loan?
When you apply for a home loan, lenders will consider your ‘borrowing power’ when determining how much to lend you. Your borrowing power is how much you might be able to borrow, based on factors like your income and expenses, how much you’ve saved as a deposit, and any debts you already have. Lenders will also apply a 3% serviceability buffer to the potential loan’s interest rate to determine if you could still manage the repayments if rates increased.
If you’re curious about your borrowing power, Canstar’s borrowing power calculator might be able to help.
Another option you could consider is applying for conditional approval (pre-approval) with your chosen lender. If successful, your lender will let you know how much it's willing to lend you before you’ve even found a place to buy.
Being conditionally approved is not a guarantee you’ll be fully approved for a loan, but can help you set a budget when looking at homes to buy and bolster your confidence. You might want to avoid making changes to your financial situation, like changing jobs, making large purchases, or taking on other forms of finance, during your conditional approval.
Importantly, bidding at auction without unconditional approval can be risky, as subject to finance clauses (which allow you to pull out of a sale if you can’t get a mortgage) typically don’t apply in such sales.
How much should you save for a first home deposit?
The ‘best’ amount to save for a deposit on your first home will depend on a number of things like where you want to buy, how much you’re prepared to pay in fees, and if you have access to any government schemes (or a guarantor) to assist you in buying your first home.
Having as large a deposit saved as possible is usually ideal, as the greater your deposit, the less money you’ll need to borrow, and the less interest you’ll end up paying in the long run. Some lenders also reserve their sharpest rates for borrowers with a larger deposit or, in other words, a lower LVR.
Why do people say you need a 20% deposit?
A 20% deposit can help you avoid paying for costly Lenders Mortgage Insurance (LMI). LMI protects the lender if you were to default on your mortgage, the cost of which is paid upfront and typically added to your mortgage balance. Its cost will depend on the details of your loan, but can run into the thousands, and sometimes even tens of thousands of dollars.
Having a 20% deposit (an LVR of 80%) may also give you access to sharper interest rates that might not be offered to borrowers with higher LVRs.
If saving a 20% deposit seems like a daunting task, you may be able to access government schemes that can help eligible buyers with deposits of less than 20% avoid LMI (like the 5% Deposit Scheme).
Certain lenders may also offer LMI discounts to eligible first home buyers or even waive LMI entirely. Additionally, if you’re in a profession that lenders consider more stable, like certain medical, financial, and legal professions, you may be able to access such an LMI waiver.
Can you get a home loan without a 20% deposit?
While home loans traditionally asked for deposits of 20% or higher, these days lenders commonly offer loans to people with deposits as small as 5% (or LVRs as high as 95%).
However, there could be higher fees on these loans, and you may need to provide more information in the approval process, like showing your lender how you saved up your deposit as it may want to determine if it qualifies as 'genuine savings'.
If your deposit is less than 20% of the value of your ideal property, you could consider getting a home loan guarantor. This can help you avoid paying LMI, but requires your guarantor (normally a parent or family member) to agree to take over your repayments if you’re unable to repay the loan. Lenders will often require guarantors to use their own property to secure the loan, meaning such an arrangement can come with serious risk.
What loan features should you look for as a first home buyer?
When taking out your first home loan, you may be interested in some or all of the following features:
- Offset account: A bank account tied to your loan that allows you to reduce or ‘offset’ the amount of interest you pay by effectively lowering the loan’s principal balance by the amount of money within the offset account for the purpose of calculating interest.
- Redraw facility: Allows you to withdraw any additional repayments you’ve made towards your home loan.
- Fee-free repayment options: Some loans will allow you to make lump sum payments towards your home loan without incurring a fee.
- Flexible repayment frequencies: Some lenders will let you make repayments fortnightly or weekly, rather than strictly monthly. This can help reduce how much interest you pay overall.
What fees can apply to first home buyer home loans?
Some of the fees you may encounter as a first home buyer are:
- Application and loan establishment fees when you first take out the loan
- Valuation fees to get the property you intend to buy professionally valued before it’s listed as a security for the loan
- Legal fees for the preparation of your loan documentation
- Solicitor or conveyancer fees, paid to the professionals you employ to represent you legally during the property transaction
- Settlement fees to finalise your mortgage on your settlement day
- Ongoing fees in the form of monthly or annual fees
- LMI, if you don’t have a 20% deposit or aren’t eligible for certain LMI concessions and waivers
- Annual or package fees, which some lenders charge to all borrowers, and others only charge on certain home loan products, if at all.
- Late payment fees, if you miss your repayment
- Redraw fees may apply when making use of your loan’s redraw facility.
What government help is available for first home buyers?
There are a number of ways first home buyers in Australia can get some help to enter the market:
Stamp duty concessions
Stamp duty is a tax that’s payable on the purchase of a property. It can be hefty, but a number of state and territory governments offer concessions and exemptions for first home buyers. The exact terms differ on a state-by-state (or territory) basis, so check your relevant state or territory’s website for more details.
The First Home Super Saver (FHSS) Scheme
The FHSS Scheme allows you to withdraw voluntary contributions made to your super fund to use as a deposit for your first home. These can be either concessional (before tax) or non-concessional (after tax) contributions.
At present, you can withdraw contributions of up to $15,000 made in a given financial year, subject to your normal super contribution caps, up to a total of $50,000 plus earnings. If you’re buying with a partner, you’re generally allowed to pool your savings, so could potentially release $100,000 ($50,000 each) plus associated earnings to purchase the same property.
The main benefits of this scheme are:
- Potential tax savings, as concessional contributions are initially taxed at 15% and then receive a 30% tax offset when being withdrawn
- Your deposit may earn a healthy return over time
- You can ‘hide’ your savings from yourself, as contributions can come directly out of your salary and, once in your super fund, aren't accessible for day-to-day spending or splurges
The Australian Government 5% Deposit Scheme
The 5% Deposit Scheme, formerly the First Home Guarantee, exists to help eligible first home buyers and single parents get a foot on the property ladder. It sees the Australian Government acting as guarantor on a person’s home loan, letting them put down a deposit of as little as a 5% deposit (or 2% for single parents) without paying for LMI.
In order to be eligible for the scheme, buyers must take out a home loan with a participating lender and the property purchased must be an eligible residential property, such as an existing house, townhouse, or apartment; a house and land package; land and a separate contract to build a home; or an off-the-plan apartment or townhouse.
If you make use of this scheme, you may also be eligible for other supports. For example, you can apply for a position in the scheme while utilising the FHSS, and benefiting from any applicable state or territory first home owner grants and stamp duty concessions.
What documents do you need when applying for your first home loan?
When you apply for a home loan, lenders will typically ask to see key documents to prove your identity and learn more about your financial situation.
Here’s a general list of documents and information lenders will likely ask for:
- Proof of identification, like a driver’s licence or passport
- Proof of employment, such payslips or tax returns
- Details on any additional income and other assets
- Expenses, such as those listed in bank statements
- Information on bebts like existing personal and car loan, credit card, HECS-HELP, and BNPL debt
- Details on the property you want to buy or build
- How large your deposit is and where it came from (for example, whether it’s being gifted or if you’ve saved it)
- Information on any relevant stamp duty concession, grant help, or scheme support you’ll be receiving
- Your conveyancer’s or solicitor’s details
Lenders will also check your credit score when you apply for a home loan. This often informs lenders of how trustworthy you are as a borrower.
Don’t have a credit score? This often isn't as much of a sticking point for a home loan, particularly when compared to the weight figure is generally given in a personal or car loan application process. This is because home loan lenders typically undergo a more extensive assessment of your financial situation.
How to apply for your first home loan
In general terms, the process of purchasing a first home, including applying for finance, can be broken down into a number of steps.
These are:
- Save for a deposit, keeping in mind that a 20% deposit can help you avoid paying LMI
- Research available government concessions like stamp duty discounts and first home buyer schemes to see if you’re eligible for any.
- Consider your budget and how much you would like to spend on a first home, as well as the type of home you wish to purchase.
- Gather the documents you’ll need to apply for a home loan.
- Consider applying for pre-approval. This is an optional step, and it’s important to note that having pre-approval doesn’t guarantee you’ll be officially approved for a home loan. Though, it can give you an idea of where you stand financially and how much you’ll be able to borrow.
- Start the hunt for a house or apartment that fits your particular needs and budget, and make an offer on it or bid at auction.
- Once a seller accepts your offer or you win at auction, it’s time to get unconditional approval from your lender to borrow the funds for the purchase of the property.
- Begin repaying your mortgage once your purchase of the property settles.
Tips for first home buyers
Buying your first home can be a nerve wracking experience. After all, your home will typically be your greatest asset, and your home loan your greatest debt.
If you’re considering buying a property for the first time, following these tips might help to make the process smoother and increase your confidence:
- Leverage first home buyer schemes and concessions where possible
Depending on the home you’re looking to buy, you may be able to stack first home owner grants with other concessions like stamp duty exemptions. - Budget for upfront costs
Costs for services like building and pest inspections, conveyancing, and home insurance (which might need to be paid soon after your offer is accepted) can sneak up on a buyer and dent their budget. - Increase your borrowing power
You might be able to boost your maximum homebuying budget by removing unnecessary credit limits, perhaps by closing old credit cards and BNPL accounts. - Avoid making new applications for other forms of credit
Lenders will often re-check your credit score before your home loan is settled and new credit inquiries could make them reconsider your loan. - Tidy up your transaction history
Lenders usually look over the last three months of your bank statements, noting large purchases and spending habits, as part of their approval process. - Avoid changing jobs where possible during an application
Lenders often weigh employment stability highly. - Compare your loan options
Take the time to peruse the comparison table at the top of this page to make sure you’re across the options available to you. - Take advantage of home loan features that can lower the amount you pay in interest
If it suits your situation, you might consider a home loan that doesn’t charge fees if you make extra repayments or that comes with an offset account. - Consider the specific first home buyer home loan offers available
These might advertise lower interest rates or even special cashback deals or introductory rates specifically for first time buyers.
