Compare a range of the best first home buyer loans

The best home loan for any first home buyer combines a low rate with features you can use to repay the loan faster.

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The table below contains a range of home loans that are suitable for most first home buyers. This means the loans have competitive interest rates, and many are available with deposits under 20%, making them ideal for borrowers with small deposits.
Name Interest Rate p.a. Comparison Rate p.a. Fees Monthly Payment
Principal & Interest5% min. depositOwner-occupierOffset accountSpecial Offer
Interest Rate
5.34%
Comparison Rate
5.37%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
$3,351
Go to siteMore Info
Finder AwardPrincipal & Interest10% min. depositOwner-occupier
Interest Rate
5.49%
Comparison Rate
5.50%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
$3,407
Go to siteMore Info
Principal & Interest-10% min. depositOwner-occupierNSW, QLD & ACT only
Interest Rate
5.39%
Comparison Rate
5.40%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
$3,370
Go to siteMore Info
$3,000+ cashback offer
Customers borrowing at least $250,000 can get between $3,000 and $4,000 in cashback (purchase and refinance). Terms and conditions apply
Principal & Interest20% min. depositOwner-occupierOffset account
Interest Rate
5.64%
Comparison Rate
5.99%
Fees
Application: $0
Ongoing: $395 p.a.
Monthly Payment
$3,464
Go to siteMore Info
Get up to $3,000 refinance cashback when your LVR is 90% or lower ($2,000 cashback for loan amounts of $250K+ and above, $3,000 for $500K+). Other conditions apply.
Principal & Interest 2Y Fixed20% min. depositOwner-occupier
Interest Rate
5.24%
Comparison Rate
5.80%
Fees
Application: $449
Ongoing: $6 per month
Monthly Payment
$3,314
Go to siteMore Info
Up to $4,000 cashback offer
Eligible refinancers can get $2,000 cashback for loans $250k to $500k, or $4,000 for loans $500k+. Terms and conditions apply.
Principal & Interest20% min. depositOwner-occupierOffset account
Interest Rate
5.49%
Comparison Rate
5.53%
Fees
Application: $595
Ongoing: $0 p.a.
Monthly Payment
$3,407
Go to siteMore Info
Get up to $3,000 refinance cashback when your LVR is 90% or lower ($2,000 cashback for loan amounts of $250K+ and above, $3,000 for $500K+). Other conditions apply.
Principal & Interest20% min. depositOwner-occupier
Interest Rate
5.44%
Comparison Rate
5.45%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
$3,388
Go to siteMore Info
Up to $4,000 cashback offer
Eligible refinancers can get $2,000 cashback for loans $250k to $500k, or $4,000 for loans $500k+. Terms and conditions apply.
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*The loans in the table above may also be available for non-first home buyers. But first home buyers may find these loans useful because many have low interest rates or max insured LVRs above 80%, meaning you can get them with a smaller deposit.

How to find the right home loan as a first home buyer

First home buyers, like all other borrowers, are trying to get approved for a home loan that suits their needs, without paying more than they need to.

Here's how to find the best loan for you:

  • Review current interest rates. The lower your interest rate, the lower your repayments. After being at record lows during the pandemic, interest rates began rising in 2022. Currently, home loans between 4.50% and 5% are available for first home buyers.
  • Decide on fixed versus variable.Variable rate loans typically offer more features and flexibility, as you can refinance without fees and access features like an offset account (more on that in a moment). With a fixed rate loan, you have the certainty of knowing your repayments will never move up (or down) during the fixed period, but it's hard to make changes if you need to.
  • Work out your deposit size. Having a bigger deposit means your monthly repayments will be lower, and it also makes it easier to get a home loan approved. Most banks want to see a deposit between 10-20%, although it's possible to buy a home with the First Home Loan Deposit Scheme with just a 5% deposit.
  • Consider your repayment type. Most first home buyers will choose a loan with principal and interest repayments, where you repay the principal and the interest together. It may be possible to get an interest-only loan, where the interest rate is typically higher, but your repayments will be lower (as you're not repaying any principal). Banks are reluctant to give first home buyers an interest only loan, because they want to see you make headway with the debt.
  • Think about the features that matter to you. First home buyer loans are often basic home loans, without extra features like an offset account. This is fine if you're keen to get a low deposit loan with a low interest rate. But if you have extra savings to put into an offset account, consider a home loan with more features.

Working out your costs and borrowing power

Before you can get your first home loan or even try to buy a home, you need to know how much it will all cost you. Your deposit is usually the biggest cost, and the size of your deposit affects which home loans you can get (we'll cover deposit saving in the next section).

But there are many other costs to consider beyond the deposit:

home loan graphic

  • Stamp duty. Every property purchase attracts stamp duty, a tax charged by state and territory governments. Stamp duty can add thousands or tens of thousands of dollars to your purchase costs. Luckily, many first home buyers can get a discount or exemption if they're buying their first home.
  • Lenders mortgage insurance. This hefty premium (often worth thousands) is usually payable when you have a deposit worth less than 20% of the purchase price (we'll deep dive this in a moment).
  • Inspections. While not compulsory, getting a professional building and pest inspection before buying a property is always a good idea.
  • Conveyancing. You need a legal expert to review your contract of sale (for the property purchase), check the property title is correct and represent you at settlement. The services of a conveyancer or lawyer can cost $1,000–$2,000.
  • Bank and government fees. There's a government fee to register your mortgage and your lender may charge other upfront fees, like an application fee or valuation fee.
  • Council rates and strata. When you take ownership of a property, you have to pay council and water rates. If you're buying a property on a strata title, like an apartment or unit, there will be strata costs too.
  • Insurance. You need to take out a home insurance policy on your home before settlement occurs and you take ownership of the property. If you're buying a strata property (an apartment or townhouse), strata insurance is usually included in the strata fees and covers the building.

How much can you borrow?

You can use a borrowing power calculator to get a clear idea of how much a bank will lend you.

You will need to enter your income (and your partner's income if making a joint application), plus the number of dependents and any debts you have. The calculator will then estimate your expenses using a standard cost of living index. The end result will only be an estimate but it gives you a better idea of how much you can borrow.

You can also check out our guide on how to increase your maximum borrowing capacity.

Keen to learn more about what's involved in buying your first home? Get tips, advice and insights from the experts to help you buy your first home sooner than later with our free first home buyer masterclass.

How to save your property deposit

Once you have a good understanding of your property buying costs and how much you can borrow, it's time to think about the deposit.

Loan to value ratio (LVR) is a fancy mortgage term for your deposit size in relation to your property's value. For example:

  • If you bought a $500,000 property
  • Sith a $100,000 deposit
  • That would be a 20% deposit, or 80% LVR.

Having a 20% deposit means you can avoid paying lenders mortgage insurance.

Max Phelps, money coach and author

Max Phelps, founder of Golden Eggs and creator of the Five 2 Money Diet, says first home buyers also need to prepare themselves for the financial responsibilities that come with owning a home, which goes much further than just saving the deposit.

"How good are you at managing your expenses and building up savings? If you've gotten into bad spending habits and money feels a little out of control, imagine how much worse it would feel with a giant mortgage hanging over your head," Phelps says.

"People spend an average of 30% of their income on a mortgage, but to get ahead, you should plan to still save 20% of your income as well – this will set you apart in the long run."

For those who are considering asking their parents for help with a home loan deposit, Phelps is cautious.

"My advice to parents thinking about putting their property on the line for their kids would be to make sure the kids are good savers first," he says.

"We find that having a few bank accounts spread across at least 2 banks dramatically increases savings and improves confidence in buying a first home."

Saving a deposit for your first home is tough, especially if you're renting, but there are a few ways you can build your deposit:

  • Get lucky: With a parental gift or inheritance. If you're fortunate enough to have parents willing to lend you a hand financially, this can give your deposit savings balance a big leg up.
  • Sell assets: Things like a car, bike, sporting goods, gaming consoles and designer clothing can fetch a decent price on second-hand markets.
  • Find a guarantor: If your parents don't want to part with cash, they could use their property as security to guarantee part of your deposit. This reduces the amount you have to save and might help you avoid LMI costs too.
  • Save using the FHSSS: This scheme helps you save more towards your deposit, as any money saved is taxed at a lower rate, and earns a return in your super fund.
  • Go on a spendings diet: It's like Dry July, but for your wallet. Commit to stop spending on takeaways, shopping, gifts or experiences for just one month and see how much you can save?

Lenders mortgage insurance (LMI)

If your deposit is smaller than 20% of the property's value (so, your LVR is 81% or higher), your lender will charge you lenders mortgage insurance. This can cost you thousands or tens of thousands on top of all your other expenses (although you can often borrow it alongside your loan amount).

LMI costs vary depending on your loan amount and deposit size. If your LVR is 85% (a 15% deposit) then your LMI will be less than if you have an LVR of 95% with a 5% deposit.

Here are some examples:

Property priceDepositLMI
$600,00010% ($60,000)$11,772
$500,0005% ($30,000)$22,788
$700,00010% ($70,000)$14,912
$700,0005% ($35,000)$30,676
$900,00010% ($90,000)$20,379
$900,0005% ($45,000)$39,355

The LMI amounts above are taken from Finder's LMI premium estimate calculator and are examples only.

Access government support for first home buyers

First home buyers in Australia have access to a large (and sometimes confusing) range of state and federal grants, concessions and other schemes.

Eligibility for these programs depends on things like the property value, your location and whether it's newly built or already exists. Every state and territory has different rules and policies.

Here is a list of the various first home buyer grants and concessions:

First home owner grants

Some first-time buyers are eligible for a cash grant. These grants can run up to $10,000 or even more in some cases. To qualify, you often need to be purchasing a new or off-the-plan property, with a limit on the overall value of the property. These grants differ in every state and territory.

Check your eligibility with our state-by-state first home owner guide

Stamp duty exemptions and concessions

Stamp duty is one of the biggest costs associated with buying a property. Luckily, many first-time buyers can avoid stamp duty completely or get a discount on this tax. In NSW, for example, first home buyers don't have to pay stamp duty on properties valued below $650,000, saving them up to $22,000.

Learn more about the stamp duty exemptions and concessions in each state and territory.

The First Home Loan Deposit Scheme

If you only have a 5% deposit saved and you're a first home buyer, you could be eligible for the First Home Loan Deposit Scheme. Under this scheme, eligible borrowers can borrow 95% of their property value with a 5% deposit and have the government guarantee the remaining 15% of the deposit, allowing them to avoid LMI costs.

This is a federal government scheme.

The First Home Super Saver Scheme

Another federal scheme, the First Home Super Saver Scheme allows first home buyers to make extra payments into their superannuation and then withdraw them to use for a home deposit. This ends up saving you in tax while helping you build your deposit.

Family Home Guarantee

Up to 10,000 single parents (2,500 per year for 4 years) are eligible to buy a home with a deposit of just 2%, under the government's Family Home Guarantee, announced as part of the 2021 Federal Budget in May. This means for the purchase of a property worth $700,000, the homebuyer will need to save a deposit of just $14,000.

Regional Home Guarantee

The Regional Home Guarantee lets you buy or build a new home in regional Australia with a 5% deposit while avoiding LMI costs.

Stamp duty discounts

As part of the Victorian state budget update in November 2020, it was announced that all homebuyers, including first timers, now have access to a stamp duty discount of up to 50% of the purchase price of residential property in Victoria.

For those purchasing property in Victoria, a full 50% stamp duty discount will apply to all buyers of newly built homes valued at up to $1 million. For those buying existing homes, a 25% stamp duty discount will apply on properties priced up to $1 million.

This discount on stamp duty in Victoria was available for those who entered a purchase contract between 25 November 2020 and 30 June 2021. Importantly for first home buyers, this discount applied in addition to any other waivers or concessions that you may be eligible for. This discount was only valid on contracts that were signed prior to 1 July 2021.

Get expert help

You don't have to find your first home loan all by yourself. Mortgage brokers are experts who have access to home loans from a panel of lenders. They can suggest suitable options for you and help you with the whole application process. Their services are usually free. While most people are perfectly capable of getting their own home loan, a broker can be a useful guide.

Find a mortgage broker today

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    48 Responses

      Default Gravatar
      RSSLMarch 13, 2023

      My parents have offered to help us in getting into the house market by being guarantors for my husband & I. Would this be possible if they still have a small mortgage to pay and currently on the pension & unemployment benefit?

        Avatarfinder Customer Care
        RichardMarch 16, 2023Staff

        It might be harder for them to act as guarantors but if the mortgage is small it might be possible. It really depends on the lender and its lending criteria.

      Default Gravatar
      BriOctober 2, 2017

      Hi team,

      My fiance and I are looking to go into partnership to buy a property with a family friend. The family friend has good borrowing capacity and will be getting a loan to buy the property, so the title will be in his name, but we are wondering if it is possible to enter into a vendor finance agreement with our family friend to buy a portion of the property while he is still paying off the loan to the bank?

      Ideally, we would like to buy a portion of the property and also be on the title without having to subdivide. Is this possible?

      We are also wondering if my fiance and I will qualify for the First Home Owners grant and the exception for stamp duty if we go into a vendor finance agreement? We do intend to build our first home.

      Thank you!

        Avatarfinder Customer Care
        JoanneOctober 3, 2017Staff

        Hi Bri,

        Thanks for reaching out to Finder.

        With regard to the option of entering into a vendor finance agreement, it would help you buy a property without having to apply for a bank loan, but there are some major risks involved, including the big risk of losing your home.

        The same fees and taxes are payable with vendor finance as they would be with a standard home loan. So the amount of stamp duty payable will vary depending on which state you live in and the value of the property.

        To sum it up, if you’re thinking of purchasing a property through vendor finance, you should seek a solicitor to run you through the process and legal considerations so that you may be guided accordingly.

        Cheers,
        Joanne

      Default Gravatar
      JoelJune 19, 2017

      Hi, I was wondering if I buy an investment property, whether or not i can claim the fist
      home buyers on my second home that I will live in? I live in Victoria.

        Default Gravatar
        JonathanJune 20, 2017

        Hi Joel!

        Thanks for the comment.

        These are the guidelines for those who wish to claim FHOG on an investment property in Victoria:

        Victoria’s State Revenue Office is responsible for offering the $10,000 grant to applicants buying or building their first new home. To be eligible for the grant, you must not have:

        – Received a First Home Owner Grant in Australia
        – Owned a home in Australia, either jointly or separately, prior to 1 July 2000
        – Occupied an Australian home in which either of you acquired a relevant interest on or after 1 July 2000 for at least six continuous months
        So if you purchased your investment property on or after 1 July 2000 and you didn’t live in it for a period of six consecutive months, you may be eligible for the FHOG.

        You may check the other eligibility criteria for more information.

        Alternatively, you may also contact your local state revenue office for clarification.

        Hope this helps.

        Cheers,
        Jonathan

      Default Gravatar
      KatheyApril 19, 2017

      What is the best search engine in the world?

        Avatarfinder Customer Care
        HaroldApril 19, 2017Staff

        Hi Kathey,

        Thank you for your inquiry.

        Unfortunately, we cannot recommend what is best for you. Our company finder.com.au is a financial comparison website and general information service designed to help consumers to make a better decision. Please note we do not represent any company we feature on our pages.

        However, at the time of this writing, there are three major search engines on the web today. That would be Google, Yahoo, and Bing. I would recommend you check each of them and see which would best meet your needs and preference.

        Regards,
        Harold

      Default Gravatar
      GlendaFebruary 5, 2016

      As a first home buyer, can I buy an investment property, and then when time is right buy a personal living home and qualify for the first buyers home loan on this property?

        Avatarfinder Customer Care
        MarcFebruary 5, 2016Staff

        Hi Glenda,
        thanks for the question.

        The exact requirements and eligibility will depend on what state you’re buying in. Some states do not allow this, such as NSW and QLD, but others, such as WA, TAS, SA, NT and ACT allow this in some circumstances.

        I hope this helps,
        Marc.

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