Buying a home: your home loan guide
Buying a home with a loan comes down to five steps: save a deposit, work out how much you can borrow, choose a loan type, compare lenders on the full cost, and get pre-approval before you make an offer. Most lenders want a 20% deposit to avoid lenders mortgage insurance, but first home buyers can buy with 5% under the Home Guarantee Scheme or 2% under Help to Buy. With the average owner-occupier variable rate at 6.63% (Canstar, 2 October 2026), every 0.25% you save on a $600,000 loan is worth about $99 a month.
Step 1: How much deposit do you need?
| Deposit | On a $750,000 home | What it means |
|---|---|---|
| 20% | $150,000 | No lenders mortgage insurance (LMI) and access to the best rates |
| 10% | $75,000 | LMI usually applies |
| 5% | $37,500 | Possible without LMI under the Home Guarantee Scheme |
| 2% | $15,000 | Possible under Help to Buy, with the government taking an equity share |
Since 1 October 2025 the Home Guarantee Scheme has no income caps and no limit on places, though property price caps apply. Help to Buy has income caps of $100,000 for singles and $160,000 for couples, and the government can own up to 40% of a new home or 30% of an existing one. See first home buyer rates and how deposit size affects your rate.
Budget for stamp duty, legal fees, inspections and moving costs on top of the deposit.
Step 2: How much can you borrow?
Lenders test your income against your expenses and debts at your interest rate plus APRA’s 3 percentage point buffer, so a 6.63% loan is assessed at 9.63%. Loans at six times your income or more are now limited across the industry. Start with how much can you borrow and check repayments with our mortgage calculator.
Step 3: Which loan type suits you?
- Variable or fixed? Variable gives flexibility, fixed gives certainty. See variable rate home loans, fixed rate home loans and fixed vs variable.
- Both? A split loan fixes part and keeps part variable.
- Offset or redraw? See offset vs redraw.
- Building? See construction loans.
- Buying before you sell? See bridging loans.
- Self-employed? See low doc home loans.
- Living in it? Owner-occupiers get lower rates. See owner-occupier rates.
Step 4: How do you compare lenders properly?
Compare the comparison rate, not just the advertised rate, because it includes most fees. Then check features, fees and how the lender treats existing customers. Our guide to how to compare home loans walks through it. You can go direct to a lender or use a broker. See mortgage broker or bank.
Step 5: Get pre-approval, then buy
Pre-approval tells you roughly how much a lender will lend, usually for 90 days. It is not a guarantee: full approval still depends on the property valuation and final checks. Once your offer is accepted, the lender values the property, issues formal approval and settles the loan, usually 30 to 90 days later.
Frequently asked questions
How much deposit do I need to buy a home?
Usually 20% to avoid lenders mortgage insurance. Eligible first home buyers can buy with 5% under the Home Guarantee Scheme or 2% under Help to Buy.
Should I get pre-approval before house hunting?
Yes. It shows you a realistic price range and makes your offer stronger. Pre-approval usually lasts around 90 days.
What costs are there on top of the deposit?
Stamp duty (with concessions for many first home buyers), conveyancing or legal fees, building and pest inspections, loan fees, LMI if your deposit is under 20%, and moving costs.
Sources
- Housing Australia, Support to buy a home: Home Guarantee Scheme and Help to Buy
- APRA, Strengthening residential mortgage lending assessments
- ASIC Moneysmart, Home loans
- Canstar, Average home loan interest rates, as at 2 October 2026
General information only. It does not consider your objectives, financial situation or needs and is not credit advice.