Buying your first home runs in a fairly fixed order: work out what you can borrow, get pre-approved, find the property, make an offer, exchange contracts with a deposit, then settle roughly six weeks later. The parts that go wrong are almost never the exciting ones. They are the finance clause, the valuation and the cash you need on exchange day.
Most first home buyer guides are a list of tips. This is the actual sequence, in order, with what happens at each stage and what tends to go wrong. If you are at the very start, the first home buyer loans page covers the loan side in more detail.
1. Work out what you can borrow, before you look
Looking at properties before you know your borrowing capacity is the single most common way to waste a year. Lenders assess your capacity on your income, your existing debts, your living expenses and the number of people depending on you — and then they stress-test the repayment at a rate meaningfully above the one you would actually pay.
That buffer is why people are often surprised by the number. Two households on identical incomes can have very different capacity because one has a car loan and three credit cards with high limits. An unused credit card still reduces your borrowing power, because lenders assess the limit rather than the balance.
Start with the borrowing power calculator for a realistic range.
2. Save the deposit, and the costs on top
The deposit is not the whole cash requirement. Transfer duty, conveyancing, inspections and lender fees all have to be paid, and mostly in cash rather than added to the loan.
As a first home buyer in NSW you may pay no duty at all. The First Home Buyers Assistance Scheme exempts purchases up to $800,000, then tapers the concession away up to $1,000,000. There is also a $10,000 First Home Owner Grant for newly built homes valued up to $600,000. Both are reviewed and reindexed, usually from 1 July, so confirm the current figures with Revenue NSW rather than relying on any article.
Total your own numbers with the purchase costs calculator and the stamp duty calculator.
3. Get pre-approved
Pre-approval is a lender looking at your finances and saying, in principle, that they would lend you a given amount. It is not a guarantee and it is not the loan. It typically lasts around three months and can be extended.
What it does is let you bid or negotiate knowing your ceiling, and it flushes out problems while you still have time to fix them — a credit file error, a document your lender will not accept, an income structure that needs a different lender. Finding that out at pre-approval is inconvenient. Finding it out after you have exchanged contracts is expensive.
Not all pre-approvals are equal. Some are automated and barely assessed; others are checked by a human who has seen your documents. Ask which kind you have, because an automated one can evaporate at exactly the wrong moment.
4. Find the property, and check it properly
Get a building and pest inspection, and a strata report if it is an apartment. Read the contract before you offer, not after — or have your conveyancer read it. Things that matter and are easy to miss: unapproved works, easements, planned special levies in a strata scheme, and anything unusual in the zoning.
Keep in mind that the lender will value the property independently. If their valuation comes in below the price you agreed, they lend against their figure, not yours, and you make up the difference in cash. This is one of the most common late surprises, and it is more likely on off-market purchases and new apartments.
5. Making the offer, and the two ways it goes
Private treaty. You negotiate, and your offer can be made subject to finance. That clause matters: it gives you a defined window to get formal approval, and lets you withdraw if the loan does not come through. In NSW there is also a cooling-off period on private treaty sales, with a fee if you use it.
Auction. There is no cooling-off and no subject-to-finance clause. If the hammer falls you are committed, deposit down, on the spot. That is why pre-approval before bidding is not optional advice — it is the difference between a strong position and a serious problem.
6. Exchange, then settlement
At exchange you sign contracts and pay the deposit, commonly 10% of the price, though a smaller deposit can sometimes be negotiated. This is real cash and it is needed on the day, which catches out buyers whose savings are tied up in a term deposit or arriving from an offset in a few days.
Between exchange and settlement your lender completes formal approval, valuation and loan documents. Settlement in NSW is usually around six weeks, though it can be negotiated. On the day, the money moves, the title transfers and you get the keys.
Do not make any large purchases, change jobs or open new credit between exchange and settlement. Lenders can and do re-check, and a new car loan at the wrong moment can undo a formal approval.
The mistakes that cost first buyers the most
- Bidding at auction without formal pre-approval. No cooling-off, no finance clause, no way back.
- Leaving credit card limits open. Reduce or close what you do not use, well before you apply.
- Forgetting the cash needed at exchange, which is separate from the cash needed at settlement.
- Assuming the lender will value the property at what you paid. Sometimes they do not.
- Buying to beat a scheme deadline. A concession is worth real money; it is not worth the wrong house.
Common questions
From starting to save seriously to holding keys, most first buyers take between six months and two years. Once you have pre-approval, finding a property is the unpredictable part; from a signed contract to settlement is usually around six weeks in NSW.
A full pre-approval usually involves a credit enquiry, which is recorded. A small number of enquiries is normal and not a problem. Making many applications to many lenders in a short period does look poor to an assessor, which is a good reason to work out the right lender first rather than applying broadly.
No. Auction contracts in NSW are unconditional and there is no cooling-off period. If you are bidding, your finance needs to be sorted first.
The lender lends against their valuation, so you cover the gap in cash or the deal falls over. Sometimes a different lender values it differently, which is worth exploring, but not something to rely on after you have exchanged.
A licensed conveyancer handles a standard residential purchase perfectly well. A solicitor is worth it where there is something legally unusual — a complicated title, a deceased estate, a dispute, or development potential you intend to use.