The Complete Home Buying Guide for Australia

Step 1: Work Out What You Can Afford

Before you look at a single listing, work out two numbers: what a lender will let you borrow, and what you can comfortably repay. They are not the same thing, and the second one matters more to your life.

When a lender assesses you, it looks at your income, your declared living expenses (benchmarked against a standard measure called HEM, the Household Expenditure Measure), your existing debts, and the total limits on your credit cards, not just the balances. A card with a high limit counts against you even if you owe nothing on it.

Then comes the stress test. Since October 2021, APRA (the banking regulator) has required lenders to assess new loans at your actual interest rate plus a 3 percentage point buffer. With owner-occupier variable rates sitting around 6% in mid 2026, that means being tested at roughly 9% or higher, which trims maximum borrowing power by roughly 15 to 20 per cent compared with testing at your actual rate.

Two more things worth knowing. First, since 30 September 2025, student loan (HELP and HECS) debts are excluded from the debt-to-income calculation, and lenders may set aside your HELP repayments entirely where the debt will be repaid soon. That lifted borrowing power for many graduates. Second, every lender weighs these inputs a little differently, so the same person gets a different maximum from every calculator.

One caution on rates: the Reserve Bank (RBA) cash rate sat at 4.35% in July 2026 after several rises earlier in the year. Check the RBA website for the current rate, and budget your repayments at a higher rate than today's, because rates move.

Step 2: Save Your Deposit and Understand LMI

A 20% deposit is the traditional target because it lets you avoid lenders mortgage insurance (LMI). LMI is a one-off premium usually charged when your loan is more than 80% of the property's value. Here is the part that surprises people: LMI protects the lender if you default, not you.

At high loan-to-value ratios the premium is serious money, commonly tens of thousands of dollars (roughly $15,000 to $37,000 on a 95% loan, depending on the loan size). Most borrowers add it to the loan instead of paying it upfront, but then you pay interest on it for the life of the loan, which can roughly double its total cost over 30 years.

You do not always need 20%, though. Since 1 October 2025 the federal Home Guarantee Scheme has had unlimited places and no income caps, with property price caps of $1.5 million in Sydney and $1 million in Melbourne and Brisbane. It lets eligible first home buyers purchase with a 5% deposit and no LMI, because the government guarantees part of the loan. Caps and eligibility rules can change, so check Housing Australia for the current details. If that might be you, it is worth reading up on separately.

Remember to save beyond the deposit itself. You will also need money for stamp duty (check your state revenue office for what applies to you), conveyancing, inspections, loan fees and moving costs. A buffer left over after settlement is not a luxury, it is your safety net.

Step 3: Get Pre-Approval

Pre-approval (also called conditional approval or approval in principle) is a lender saying: based on what you have shown us, we would likely lend you up to this much. It turns your budget from a guess into a number you can house hunt with, and it tells agents you are a serious buyer.

Two things it is not. It is not a guarantee of finance, and it is not approval for a specific property. Full (unconditional) approval only comes later, after the lender values the actual property you are buying and re-verifies your finances.

Pre-approval typically lasts 60 to 90 days depending on the lender, with 90 days the most common. If it expires before you find a home, you can usually renew it with updated payslips and bank statements.

One warning: not all pre-approvals are equal. Some lenders run a full credit assessment before issuing one; others generate them automatically with barely a check. A pre-approval that was never properly assessed can fall over exactly when you need it. Ask how thoroughly yours was assessed, and never treat any pre-approval as certainty, especially at auction.

Step 4: Choose a Broker or Go Direct to a Lender

You have two ways to get a home loan: apply directly with a bank or lender, or use a mortgage broker who compares loans across many lenders and manages the application for you.

Going direct can work well if you already bank with a lender you trust and your situation is simple. The trade-off is that a single lender can only offer its own products, and as we saw in Step 1, every lender assesses the same person differently. The lender that offers you the most is often not the one you would have guessed.

A broker's job is to know those differences: which lenders suit self-employed applicants, which are generous with rental income, which will look past a short employment history. Brokers are typically paid commission by the lender, so for most borrowers there is no direct fee, but it is always fair to ask a broker how they are paid and which lenders they compare.

Whichever route you choose, do some groundwork first. Know your rough borrowing power, your deposit position and your monthly comfort zone before the first conversation. Free tools such as Byrz can help here: you build a loan profile, see an estimate of your borrowing power, and connect with a broker when you are ready.

Step 5: Search, Inspect and Get the Contract Reviewed

Now the fun part. Shortlist suburbs against your budget, walk through open homes, and go back at different times of day. Listen for traffic, check phone reception, and look past the staging furniture at the things that cost money: roofline, damp smells, cracked walls, old wiring.

Before you make any offer, two professionals earn their fee many times over:

• A building and pest inspector checks the structure for defects, damp and termites. For an apartment, a strata report does a similar job for the building and its finances.
• A conveyancer or property lawyer reviews the contract of sale before you sign, flags unusual clauses, orders title and planning searches, manages the deposit, calculates settlement adjustments for council rates and water, coordinates settlement with your lender, and lodges the transfer of ownership.

Sellers must also give you certain documents, and this varies by state. In Victoria you get a Section 32 vendor statement. In South Australia, a Form 1 disclosure. And in Queensland the rules changed recently: since 1 August 2025, under the Property Law Act 2023, sellers must give buyers a seller disclosure statement (Form 2) plus prescribed certificates before the contract is signed. Read whatever you are given, and have your conveyancer read it too.

Do not skip the contract review because you are worried about missing out. It is the cheapest insurance in the whole process.

Step 6: Make an Offer (Private Treaty) or Bid at Auction

Australian homes sell two main ways, and they carry very different levels of risk for the buyer.

Private treaty (a private sale) means you negotiate price and terms through the agent. You can make the contract conditional: subject to finance, subject to building and pest inspections, even subject to selling your current home. If a condition fails, you can walk away under the terms of that condition. A statutory cooling-off period usually applies too, depending on your state.

One trap to know in New South Wales: nothing is binding until contracts are exchanged, so gazumping (the seller accepting a higher offer after verbally accepting yours) is legal. A holding deposit does not secure the property. If your offer is accepted, push to exchange quickly.

Auction is a different game entirely. The winning bidder signs the contract and pays the deposit on the day. There is no cooling-off period at auction anywhere in Australia, and you cannot make the purchase subject to finance. Everything must be done before you raise a hand: contract reviewed, inspections completed, finance as solid as your lender will make it.

Victoria adds a detail many guides miss: the cooling-off exclusion also covers sales within three clear business days either side of a publicly advertised auction. And in Western Australia, sales run on an offer-and-acceptance form with no statutory cooling-off at all, so your only protection is the conditions written into the contract.

Step 7: Exchange Contracts and the Cooling-Off Period

Exchange of contracts is the moment the deal becomes real: you and the seller sign identical copies of the contract and swap them. The deposit is paid at exchange. It is customarily 10% of the purchase price, but that is convention, not law: a 5% deposit is commonly negotiated, and deposit bonds or bank guarantees can stand in for cash if the seller agrees.

After exchange in a private sale, most states give you a short cooling-off period in which you can withdraw for a small penalty:

Withdrawing usually costs you something: 0.25% of the purchase price in NSW and Queensland, and the greater of $100 or 0.2% in Victoria. Penalties elsewhere vary, so check your local consumer affairs office.

In NSW, sellers in hot markets often ask buyers to waive cooling-off with a section 66W certificate signed by your solicitor or conveyancer, while off-the-plan contracts get an extended 10 business day period. Never waive cooling-off without advice.

Step 8: Unconditional Finance and Settlement

Once you have exchanged, your lender moves from pre-approval to formal approval. It values the specific property and re-verifies your finances. Only when it issues unconditional approval is your finance truly locked in. This is why buying subject to finance matters in a private sale: if you fail to complete after exchange with no conditions to fall back on, you typically forfeit the full deposit and can be sued for further losses.

Settlement is the finish line: the day the balance of the purchase price is paid and ownership transfers to you. It typically happens 30 to 90 days after exchange, with the exact period set in the contract and fully negotiable. Common defaults are 42 days in NSW, 30 to 60 days in Victoria and 30 days in Queensland, and Queensland contracts treat the settlement date strictly, so do not let deadlines drift there.

You will not attend a settlement room with a cheque. Virtually all Australian settlements now happen electronically through platforms called PEXA and Sympli. E-conveyancing has been compulsory in most states for several years, with Queensland the most recent to mandate it in 2023. Your conveyancer and lender handle it, including the adjustments that split council rates and water charges between you and the seller as at settlement day.

Once settlement completes, the agent releases the keys. The home is yours.

Step 9: After You Move In

The buying process ends at settlement, but a few jobs in the first weeks set you up well.

• Insurance first. Have building insurance in place from settlement at the latest. In some states the property can be at your risk even earlier, so ask your conveyancer when cover needs to start.
• Set up the loan properly. Confirm your first repayment date, link your offset account if you have one, and consider paying fortnightly or rounding repayments up. Small extra payments early in a 30 year loan do outsized work.
• Update the paperwork. Redirect mail, transfer utilities, update your licence address, and keep every purchase document (contract, adjustments, receipts) somewhere safe. You may need them for years.
• Watch your rate. Rates rose through the first half of 2026, and they will keep moving in one direction or the other. Check your rate against the market every year, and do not be shy about asking your lender for a better deal or refinancing. Loyalty is rarely rewarded in home lending.

And then, genuinely: enjoy it. You have just finished one of the biggest and most complicated purchases most Australians ever make, and you did it with your eyes open.

Frequently asked questions