How to estimate your deposit and costs as a first home buyer

"How much is a first home buyer's loan?" is really three separate sums: the deposit you can raise, the cash you need on settlement day on top of the deposit, and the ongoing cost you can carry once you own the place. Most first home buyers work out the first number and discover the other two late, usually when a contract is already on the table.

This guide gives you a framework for all three. It deliberately avoids quoting current rates, thresholds or grant amounts, because those change by state and over time. What does not change is the arithmetic, and the list of things you have to verify before you commit.

1. Start with a deposit target, not a deposit minimum

MoneySmart's guidance on buying a house suggests a savings goal of 20% of the purchase price, plus enough to cover buying costs. That target does two things at once: it reduces the amount you borrow, and it usually keeps you clear of lenders mortgage insurance (more on that below).

Turn it into a working number in three steps:

1. Pick the price range you are realistically looking at, not the top of your search filter.
2. Calculate 20% of the midpoint of that range.
3. Add the upfront costs from section 2. The total is your actual cash target.

Then work backwards: divide that target by what you can save each month to see how long it takes. If the timeline is unacceptable, the honest levers are a lower price range, a smaller deposit (see section 4), or more time — and you should test each one against section 5 before choosing.

Treat 20% as a savings goal rather than a rule. What matters for your situation is what deposit a lender will accept and what that deposit costs you.

2. Add the costs that sit on top of the deposit

The deposit is not the whole cash requirement. Budget separately for costs that fall due on or around settlement:

Cost item	What to establish	Who confirms it
Stamp duty (transfer duty)	Whether it applies, and whether any first home buyer exemption, rebate or concession applies to you	Your state or territory revenue office
Conveyancing or legal fees	Fixed fee vs hourly, plus searches and disbursements	Your conveyancer or solicitor, in writing
Building and pest inspections	Cost per property, and how many you may need	Inspection providers
Loan establishment, valuation and government registration fees	Whether they are charged, and whether they are added to the loan	Your lender, in writing
Lenders mortgage insurance, if applicable	The premium, and whether it is paid upfront or added to the loan	Your lender, in writing
Moving, immediate repairs, connections and furnishings	A realistic allowance, not a hopeful one	Your own quotes

Two practical notes. First, some of these can be capitalised into the loan rather than paid in cash, which lowers the cash you need at settlement but raises the amount you repay with interest — ask which applies rather than assuming. Second, costs that arrive in the first month of ownership are easy to forget; put them in the same column as stamp duty, not in a vague "later" bucket.

3. Check what you may not have to pay

MoneySmart specifically advises first home buyers to check whether they are exempt from stamp duty or entitled to a rebate or concession. Eligibility, thresholds and amounts differ between states and territories, and they change over time.

Two rules for handling this in your budget:

• Do not bank a concession you have not confirmed. Look up the current position on your state or territory revenue office site and record the date you checked it.
• Re-check it at settlement. A concession that applied when you started looking may not apply in the same form when you sign, and stamp duty is usually one of the largest single line items in your budget.

If you are also relying on any first home buyer support program to make your numbers work, confirm its current status and your eligibility directly with the administering government body before you commit to a price.

4. Understand lenders mortgage insurance and smaller-deposit paths

Lenders mortgage insurance is not the same as building or contents insurance. It generally protects the lender if the loan cannot be repaid, and the cost depends on factors including your loan size and deposit. If your deposit is below a lender's threshold, it may be charged as a premium — sometimes added to your loan, which means you pay interest on it.

MoneySmart also notes that if saving 20% would take too long, you may be able to buy with a much smaller deposit and still avoid lenders mortgage insurance. Whether that applies to you depends on the lender and on your circumstances, so ask directly: what is the smallest deposit you will accept from me, and what does insurance cost at that level? Get the answer in writing before you make an offer.

If you need a home financing structure that does not involve interest, ask lenders what Islamic finance options are available in Australia — these are a distinct product category, and availability and structure vary by provider.

5. Stress-test the repayments before you fall in love with a property

MoneySmart's practical advice is to give yourself breathing room by calculating what your costs would be if interest rates went up by 2%. Do this before you bid, not after. If the higher figure only works by cutting everything discretionary, the loan is tight.

Also weigh the rate itself. MoneySmart notes that small differences in your mortgage interest rate can make a big difference to the long-term cost of a home loan — so compare the total picture across loans: the rate, the comparison rate, ongoing fees, and whether features you will actually use (offset account, redraw, ability to make extra repayments) are included or cost extra.

6. Budget the ongoing costs of owning, not just the mortgage

Owning costs continue after settlement. Alongside your mortgage repayments, MoneySmart points to ongoing costs such as council rates and land tax (where known). Depending on the property, also include:

• water and utility charges
• strata or body corporate fees, if you are buying an apartment or townhouse
• building insurance, and contents insurance
• land tax, if it applies to the property and your circumstances
• routine maintenance and a sinking fund for the big items — roof, hot water system, appliances

Add these to your tested repayment figure. That combined monthly number is what you have to be able to live with.

Your next steps

1. Pick a realistic price range and calculate 20% of the midpoint, per MoneySmart's savings goal.
2. Build the upfront-cost list from the table above and get written estimates from a conveyancer and at least one lender.
3. Look up your current state or territory stamp duty position and first home buyer concessions, and record the date you checked.
4. Ask lenders what deposit they will accept, what insurance applies at that level, and how fees are charged.
5. Run the repayments at 2% above the current rate using a loan calculator, then add council rates, insurance, strata and maintenance to see the real monthly figure.
6. Only set your maximum purchase price once steps 1 to 5 agree.

For a structured walkthrough of loan types, deposit paths and the questions to ask lenders, see Australian Cash's home loans guide at /money/home-loans/ — or use /match/ to see options that fit the budget you have just worked out.

General information only

This article is general information, not legal, tax, credit or financial advice, and not a recommendation of any lender, loan or product. Your eligibility, costs and repayment capacity depend on your personal circumstances, the property and the lender's policies. Stamp duty, concessions and first home buyer support are set by state and territory governments and change over time — confirm current figures with the relevant revenue office and the administering agency before you commit. Check any loan contract and disclosure documents carefully, and consider speaking to a licensed broker, financial counsellor or solicitor before signing. Australian Cash is an independent information publisher; it is not a lender, broker, government body or regulator, and it does not approve loans or guarantee any outcome.