Are You a First Home Buyer? Read This Guide

Purchasing a new home for the first time can be an exciting time. Buying your first home can be a thrill, from painting walls and hanging pictures to creating your own style and sanctuary. However, even with the excitement at the prospect of homeownership, the process can be stressful. With so many steps, tasks, and requirements, many purchasing their first home may become anxious. With some time and planning, you can demystify the process to make the experience smoother and easier.

With all-time low-interest rates and government programs for first-time homebuyers, now is a good time to jump in if you are considering purchasing your first home. In Australia, a first-home buyer has access to special loan programs, down payment qualifications, grants, and considerations that can serve as great incentives. Understanding the home buying process and the steps required will help you become a successful homeowner. Let’s take a look at some considerations for first-time homebuyers.

How much can you afford?

The first step to buying your first home is to figure out how much you can afford. You will need to think about your monthly budget and consider how a mortgage payment can fit into the picture. If you already have some personal debts and other obligations, it might be best to sort those out before taking on a home loan. You can consider consolidating debts and reducing expenses to make room for your mortgage. With home prices rising, it will be important that you can handle mortgage loan financing.

Are you eligible for a home loan?

Once you have figured out your budget, the next step is to determine if you qualify for a home loan. As a borrower, you will need to qualify for a loan based on your income, debts, and credit score. You can contact several lenders to inquire about first-time homebuyer mortgage programs and loan qualifications. The mortgage market can be complex and competitive, so comparing loan products and interest rates from various lenders will be good. Once you are pre-approved, you will have more power as a potential homebuyer.

How much of a down payment will you have?

In general, the bigger the down payment you deposit, the more you may be able to borrow. In general, lenders prefer that homebuyers deposit a down payment of 20 percent. Additional mortgage insurance was required when homebuyers qualified for a loan with lower down payment requirements.

However, the government-sponsored first home loan deposit scheme allows buyers to purchase a home with a five percent deposit. Additionally, this program waives the requirement for mortgage insurance. For a $400,000 home, a five percent deposit would be $20,000. Depending on the purchase price of your home, you will need to plan for a down payment deposit of at least five percent.

What incentives are available for first-time buyers?

Eligible buyers can take advantage of several government grants, discounts, and schemes to help with the costs of a first-time home purchase. Depending on your state or territory, you may qualify for a concession or exemption to the required stamp duty. This could mean savings of several thousands of dollars. Additionally, the First home owners grant is available to a first-time buyer as a cash payment towards the home’s purchase price. Depending on where you live, you could qualify for a grant ranging from $10,000 up to $30,000.

Once you have determined your budget and loan options, you’ll want to check for eligibility for first-time buyer incentives and begin applying. Armed with information and assurances, you’ll be ready to start your home search. A qualified realtor will help through the entire process and ensure that it is as easy as possible. With some time and research, you will be in your first house in no time.