Buying your first home can be a stressful experience. It's a big step, especially if you’re used to living with your parents, or renting while studying or working. Plus, getting a mortgage can seem incredibly complex at first glance.    

However, the benefits of buying property are often worth the hassle and expense of getting a mortgage, whether you’re buying a home to live in or an investment property.

Find and compare first home buyer home loans

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1.89%

Fixed - 2 years

2.94%

Suncorp Bank

$1.3k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.57

/ 5
More details

1.95%

Fixed - 3 years

2.27%

UBank

$1.3k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.10

/ 5
More details

2.14%

Fixed - 1 year

2.35%

UBank

$1.3k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

2.09

/ 5
More details

2.59%

Fixed - 5 years

2.46%

UBank

$1.4k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

2.47

/ 5
More details

2.88%

Variable

2.55%

UBank

$720

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

2.28

/ 5
More details

2.29%

Fixed - 3 years

2.65%

UBank

$1.3k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

2.18

/ 5
More details

2.74%

Variable

2.74%

UBank

$1.4k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

2.85

/ 5
More details

2.74%

Fixed - 5 years

2.76%

UBank

$1.4k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

2.12

/ 5
More details

2.29%

Variable

2.23%

Athena Home Loans

$1.3k

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.72

/ 5
More details

Learn more about home loans

What is a first mortgage?

Your first mortgage is simply the first home loan you successfully apply for, whether you’re buying your first home or an investment property. 

While your first mortgage should be affordable and suited to your needs, you may not be able to get the lowest interest rates or the most flexible features as a first home buyer. Once you’ve taken some time to pay your mortgage and build up some equity in the property, you may be in a position to refinance and get a home loan that better suits your needs

What type of mortgage is ideal for first time buyers?

Most first mortgages are similar to other standard home loans, though some banks and mortgage lenders offer home loan deals specifically for first home buyers. These mortgages may offer features and benefits that are useful to first time buyers, such as discounted introductory rates (aka “honeymoon rates”), or the option to borrow with a lower deposit. 

What is the difference between a first mortgage and second mortgage?

If you take out your second mortgage because you’re refinancing your current home loan, or have sold your first home and are moving to a second home, the process is likely broadly similar to when you applied for your first home loan. Work out what you can afford, compare mortgage options from different lenders, and choose both a home loan that you can comfortably afford and offers useful features and benefits. 

If you’re taking out a second mortgage to buy a second property as an investment, there may be extra considerations involved. Investment mortgages typically have different features and benefits than owner occupier home loans, and may charge higher interest rates. You may be able to use the equity in your first property to apply for your second mortgage, though there are risks involved in this strategy. Consider contacting a mortgage broker for personalised advice.

What is the best first home loan?

Because everyone’s financial situation is different, the best first home loan for you may not be the best option for somebody else. It’s important to compare different home loans and look at all the options, including:

  • Interest rate: The lower the rate, the lower your mortgage payments. Some banks offer special discounted interest rates for first home buyers, but once the introductory “honeymoon” period ends, you’ll revert to a higher rate, which could put pressure on your budget.
  • Fees: May be charged annually, or when you use certain loan features.
  • Comparison rate: Combines a loan’s interest rate and standard fees and charges. This can give you a better idea of its overall cost, such as when a mortgage offers a low interest rate but charges high fees that may cost more in total.

It's also worth comparing the features and benefits of different home loans, to work out which ones may help you better manage your repayments and enjoy extra value.

Some popular home loan features and benefits include:

  • Extra repayments: Pay off your loan faster, so you’re charged less interest.
  • Redraw facility: Take extra repayments back out of your loan if you need the cash.
  • Offset account: A separate savings or transaction account linked to your home loan, included when calculating your home loan’s interest charges to help you save some money. For example, if you have a $350,000 mortgage and $10,000 in your offset account, you’ll be charged interest as if you only owed $340,000.

How much can I afford to borrow for my first home loan?

To estimate if you can afford your first home loan, you can use a mortgage repayment calculator. Try entering different borrowing amounts and loan terms, and see how the repayments would fit into your household budget.

Remember, choosing a longer home loan term means your monthly repayments will be smaller, but you’ll likely pay more interest in total, while a shorter loan term will cost more from month to month, but the loan may cost less overall.

It’s important to work out if your first home loan would likely put your finances under stress, where a change in circumstances could leave you unable to afford your repayments. If a home loan may put you into mortgage stress, a lender may decline your application.

Lenders calculate mortgage stress in different ways. One commonly-accepted benchmark is that if more than one third of your household's income would go towards home loan repayments, the loan may put you into mortgage stress. You can use our mortgage stress calculator to estimate your risk.

How much do I need to save for a deposit?

Before you can buy your first property, you’ll need to pay a percentage of its value as an upfront deposit to secure your home loan. The more you can afford to pay as a deposit, the more comfortable the lender will feel about lending you money. This may let you enjoy lower interest rates or fees, or more useful home loan features and benefits.

Most lenders prefer that you pay a home loan deposit of at least 20 per cent of the property’s value. That’s a lot of money, especially if you’re buying in an Australian capital city.  It can take years of dedicated saving to get a 20 per cent deposit together, and during this time property prices may rise higher!

What if my deposit is a gift?

Generous friends or family may offer to help you with your home loan deposit. However, many lenders will want your deposit to be made up of “genuine savings” – that is, income earned from your job – to show that you’re a financially responsible borrower.

If part or all of your deposit will be a gift, consider holding the money for 6 months or more in a savings account to demonstrate your financial discipline, or organise a plan to pay back the gifted money in the future. Contact your lender to learn more about its requirements.

Some lenders will let you apply for a home loan with a smaller deposit of 10, 5 or even 2 per cent of the property’s value. However, this means the lender will need to take out a Lender’s Mortgage Insurance (LMI) policy to cover the risk that you’ll default on your loan. LMI protects the bank, not the borrower, and most lenders pass on the cost of LMI to you. The lower your deposit, the more the LMI may cost, which can reach tens of thousands of dollars. Our LMI Calculator can help you plan your budget in advance.

What other upfront costs are involved when buying property?

As well as budgeting for paying your first home loan’s deposit and LMI, there are other upfront costs you may need to consider:

  • Stamp duty: A state or territory government tax on the sale of land. As a first home buyer, you may qualify for an exemption or discount on stamp duty. Our stamp duty calculator can help you estimate the cost.
  • Conveyancing fees: Hiring a solicitor to manage the legal transfer of a property’s ownership.
  • Application fees: Covers the admin cost of processing your home loan application and setting up your mortgage.
  • Valuation fee: Covers the cost of confirming the value of the property you’re buying, as part of the home loan application process.

How can I get help with my first mortgage?

Finding, applying, and paying for your first home loan can sound intimidating, but you don’t have to go it alone.

You may be able to get help from the following:

Mortgage brokers

If you’re not sure which bank offers the best first home loan deal for you, you could consider getting in touch with a mortgage broker.

These home loan experts can:

  • recommend specific home loans to you, based on your financial situation;
  • negotiate with banks on your behalf to help you secure better deals, and;
  • tell you about special mortgage offers that aren’t typically advertised.

Using a mortgage broker to apply for a mortgage is usually free, as the broker is paid a commission by the bank or lender if the loan application is successful.

Guarantors

If you’re having trouble saving a home loan deposit, or if you’d like a home loan with no deposit, you may be able to get help from a guarantor. This is a close family member (usually a parent or grandparent) that uses the value of their own property to guarantee part or all of your home loan deposit. If you default on your home loan, your guarantor will become responsible for your mortgage payments.

Becoming a guarantor is a big commitment, so it’s important for everyone involved to be aware of the risks. However, once you’ve spent some time paying off your mortgage, it may be possible to refinance to a loan without a guarantor.

First home owner grants

Australia’s state and territory governments offer a range of grants, incentives, exemptions and other concessions to first home buyers who fulfil certain terms and conditions, such as purchasing newly built properties.

Check with your state or territory government to learn more about its first home owners grant:

First Home Loan Deposit Scheme

First introduced in 2020, this federal government initiative allows you to apply for a mortgage from selected lenders with a deposit of just 5 per cent, with the government guaranteeing the rest so you don’t need to pay LMI.  

Only 10,000 spots are available in the scheme each financial year, and to be eligible your income must be under the maximum threshold ($125,000 per annum for singles, or $200,000 per annum for couples).

Frequently asked questions

How much deposit do I need for a home loan from ANZ?

Like other mortgage lenders, ANZ often prefers a home loan deposit of 20 per cent or more of the property value when you’re applying for a home loan. It may be possible to get a home loan with a smaller deposit of 10 per cent or even 5 per cent, but there are a few reasons to consider saving a larger deposit if possible:

  • A larger deposit tells a lender that you’re a great saver, which could help increase the chances of your home loan application getting approved.
  • The more money you pay as a deposit, the less you’ll have to borrow in your home loan. This could mean paying off your loan sooner, and being charged less total interest.
  • If your deposit is less than 20 per cent of the property value, you might incur additional costs, such as Lenders Mortgage Insurance (LMI).

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

How do I refinance my home loan?

Refinancing your home loan can involve a bit of paperwork but if you are moving on to a lower rate, it can save you thousands of dollars in the long-run. The first step is finding another loan on the market that you think will save you money over time or offer features that your current loan does not have. Once you have selected a couple of loans you are interested in, compare them with your current loan to see if you will save money in the long term on interest rates and fees. Remember to factor in any break fees and set up fees when assessing the cost of switching.

Once you have decided on a new loan it is simply a matter of contacting your existing and future lender to get the new loan set up. Beware that some lenders will revert your loan back to a 25 or 30 year term when you refinance which may mean initial lower repayments but may cost you more in the long run.

What are the responsibilities of a mortgage broker?

Mortgage brokers act as the go-between for borrowers looking for a home loan and the lenders offering the loan. They offer personalised advice to help borrowers choose the right home loan for their needs.

In Australia, mortgage brokers are required by law to carry an Australian Credit License (ACL) if they offer credit assistance services. Which is the legal term for guidance regarding the different kinds of credit offered by lenders, including home loan mortgages. They may not need this license if they are working for an aggregator, for instance, as a franchisee. In both these situations, they need to comply with the regulations laid down by the Australian Securities and Investments Commission (ASIC).

These regulations, which are stipulated by Australian legislation, require mortgage brokers to comply with what are called “responsible lending” and “best interest” obligations. Responsible lending obligations mean brokers have to suggest “suitable” home loans. This means loans that you can easily qualify for,  actually meet your needs, and don’t prove unnecessarily challenging for you.

Starting 1 January 2021, mortgage brokers must comply with best interest obligations in addition to responsible lending obligations. These require mortgage brokers to act in the best interest of their customers and also requires them to prioritise their customers’ interests over their own. For instance, a mortgage broker may not recommend a lender who gives them a commission if that lender’s home loan offer does not benefit that particular customer.

How do I take out a low-deposit home loan?

If you want to take out a low-deposit home loan, it might be a good idea to consult a mortgage broker who can give you professional financial advice and organise the mortgage for you.

Another way to take out a low-deposit home loan is to do your own research with a comparison website like RateCity. Once you’ve identified your preferred mortgage, you can apply through RateCity or go direct to the lender.

What is a low-deposit home loan?

A low-deposit home loan is a mortgage where you need to borrow more than 80 per cent of the purchase price – in other words, your deposit is less than 20 per cent of the purchase price.

For example, if you want to buy a $500,000 property, you’ll need a low-deposit home loan if your deposit is less than $100,000 and therefore you need to borrow more than $400,000.

As a general rule, you’ll need to pay LMI (lender’s mortgage insurance) if you take out a low-deposit home loan. You can use this LMI calculator to estimate your LMI payment.

Will I have to pay lenders' mortgage insurance twice if I refinance?

If your deposit was less than 20 per cent of your property’s value when you took out your original loan, you may have paid lenders’ mortgage insurance (LMI) to cover the lender against the risk that you may default on your repayments. 

If you refinance to a new home loan, but still don’t have enough deposit and/or equity to provide 20 per cent security, you’ll need to pay for the lender’s LMI a second time. This could potentially add thousands or tens of thousands of dollars in upfront costs to your mortgage, so it’s important to consider whether the financial benefits of refinancing may be worth these costs.

Who has the best home loan?

Determining who has the ‘best’ home loan really does depend on your own personal circumstances and requirements. It may be tempting to judge a loan merely on the interest rate but there can be added value in the extras on offer, such as offset and redraw facilities, that aren’t available with all low rate loans.

To determine which loan is the best for you, think about whether you would prefer the consistency of a fixed loan or the flexibility and potential benefits of a variable loan. Then determine which features will be necessary throughout the life of your loan. Thirdly, consider how much you are willing to pay in fees for the loan you want. Once you find the perfect combination of these three elements you are on your way to determining the best loan for you. 

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

What if I can't pay off my guaranteed home loan?

If you can’t pay off your guaranteed home loan, your lender might chase your guarantor for the money.

A guaranteed home loan is a legally binding agreement in which the guarantor assumes overall responsibility for the mortgage. So if the borrower falls behind on their mortgage, the lender might insist that the guarantor cover the repayments. If the guarantor fails to do so, the lender might seize the guarantor’s security (which is often the family home) so it can recoup its money.

How can I calculate interest on my home loan?

You can calculate the total interest you will pay over the life of your loan by using a mortgage calculator. The calculator will estimate your repayments based on the amount you want to borrow, the interest rate, the length of your loan, whether you are an owner-occupier or an investor and whether you plan to pay ‘principal and interest’ or ‘interest-only’.

If you are buying a new home, the calculator will also help you work out how much you’ll need to pay in stamp duty and other related costs.

What is a debt service ratio?

A method of gauging a borrower’s home loan serviceability (ability to afford home loan repayments), the debt service ratio (DSR) is the fraction of an applicant’s income that will need to go towards paying back a loan. The DSR is typically expressed as a percentage, and lenders may decline loans to borrowers with too high a DSR (often over 30 per cent).

How do I calculate monthly mortgage repayments?

Work out your mortgage repayments using a home loan calculator that takes into account your deposit size, property value and interest rate. This is divided by the loan term you choose (for example, there are 360 months in a 30-year mortgage) to determine the monthly repayments over this time frame.

Over the course of your loan, your monthly repayment amount will be affected by changes to your interest rate, plus any circumstances where you opt to pay interest-only for a period of time, instead of principal and interest.

How much can I borrow with a guaranteed home loan?

Some lenders will allow you to borrow 100 per cent of the value of the property with a guaranteed home loan. For that to happen, the lender would have to feel confident in your ability to pay off the mortgage and in the security provided by your guarantor.

How can I get a home loan with no deposit?

Following the Global Financial Crisis, no-deposit loans, as they once used to be known, have largely been removed from the market. Now, if you wish to enter the market with no deposit, you will require a property of your own to secure a loan against or the assistance of a guarantor.

How does a redraw facility work?

A redraw facility attached to your loan allows you to borrow back any additional repayments that you have already paid on your loan. This can be a beneficial feature because, by paying down the principal with additional repayments, you will be charged less interest. However you will still be able to access the extra money when needed.

What is bridging finance?

A loan of shorter duration taken to buy a new property before a borrower sells an existing property, usually taken to cover the financial gap that occurs while buying a new property without first selling an older one.

Usually, these loans have higher interest rates and a shorter repayment duration.

What is a construction loan?

A construction loan is loan taken out for the purpose of building or substantially renovating a residential property. Under this type of loan, the funds are released in stages when certain milestones in the construction process are reached. Once the building is complete, the loan will revert to a standard principal and interest mortgage.

Do other comparison sites offer the same service?

Real Time RatingsTM is the only online system that ranks the home loan market based on your personal borrowing preferences. Until now, home loans have been rated based on outdated data. Our system is unique because it reacts to changes as soon as we update our database.

What is appreciation or depreciation of property?

The increase or decrease in the value of a property due to factors including inflation, demand and political stability.