Buying your first home can feel like there are about 100 things you are supposed to know before you even start looking.

How much deposit do you need? How much can you actually borrow? Should you get pre-approved first? What happens if the bank values the property for less than you paid? And what exactly happens between making an offer and getting the keys?

The good news is that the process is much more straightforward once you break it down.

In this guide, we take you through the steps to buying a house in Australia, from working out your budget and getting pre-approval through to making an offer, exchanging contracts, formal loan approval and settlement.

This guide is written with NSW buyers in mind, so some of the legal and purchasing details are specific to NSW. Rules can differ between states.

It is also written from a mortgage broker’s perspective, because the finance side is where many buyers get caught out. At AFMS Group, we help Sydney buyers work through these steps so they know what they can afford before they start making offers.

Key Takeaways

Sort your finances first. Work out your deposit and borrowing power, then get pre-approval before you seriously start house hunting.
Budget for more than a deposit. Stamp duty, conveyancing, inspections, LMI and other purchasing costs can add a significant amount to the cash you need.
Treat pre-approval as a guide, not a guarantee. Your final borrowing capacity can change, and the lender still needs to approve the specific property.
Line up your broker and conveyancer early. Having the right people ready can make a big difference when you find the property you want.
Protect yourself when buying privately. Finance and building-and-pest conditions are not automatically included. Your conveyancer needs to make sure the contract protects you.
Be especially careful at auctions. In NSW, auction purchases generally have no cooling-off period, so your finance, contract review and inspections need to be sorted beforehand.
Check first home buyer schemes early. The First Home Guarantee, NSW transfer duty concessions and First Home Super Saver scheme can change the amount you need to save.
Allow time. Saving the deposit and finding the right property can take months or years, while the period from exchange to settlement is commonly around six weeks in NSW.

Before You Start: What Buying a House Actually Costs

One of the biggest mistakes first home buyers make is assuming the deposit is the amount they need to have sitting in their bank account.

It isn’t.

A deposit of 10% or 20% is often the starting point, but you also need to allow for the other costs involved in buying a property.

A 20% deposit is commonly used as a benchmark because borrowing more than 80% of the property’s value can mean paying Lenders Mortgage Insurance (LMI). Some buyers can purchase with a smaller deposit, particularly if they qualify for a government guarantee or have another lending strategy available.

Here is a simplified picture of the costs to think about:

Cost	Typical Range (Illustrative)	Notes
Deposit	10% to 20% of purchase price	May be lower under eligible schemes or lending arrangements
Lenders Mortgage Insurance (LMI)	Varies	May apply when borrowing above 80% LVR unless an exemption or guarantee applies
Stamp duty	Varies	NSW first home buyers may qualify for an exemption or concession
Conveyancing/Legal	$1,500 to $3,000	Varies depending on the property and legal work required
Building and pest inspection	$400 to $600	Illustrative only
Loan application/ valuation fees	Varies	Some lenders charge these, others may not. Varies based on lender.
Moving and connections	Varies	Removalists, utilities, furniture and other moving costs
Council and water rates	Varies	Adjustments may be made at settlement

These figures are illustrative only, not quotes or current guaranteed costs. Always confirm the actual costs for the property you are buying.

For example, a buyer might think, “I just need 10%.”

Then they find a $400,000 property and discover that the cash required is considerably more once conveyancing, inspections, duty and other costs are included. A buyer in that situation could easily find that the total cash requirement is closer to $65,000 rather than simply $40,000.

The exact number depends heavily on the property, your eligibility for concessions and how you structure the loan.

If you are still working out your numbers, start with our guide to how much you need to buy a house and use a stamp duty calculator before setting your target.

If you are borrowing with less than a 20% deposit, it is also worth understanding how Lenders Mortgage Insurance works.

Step 1: Work Out What You Can Really Afford

The first step to buying a house is working out what you can comfortably afford, not simply the maximum a lender may approve.

Your borrowing power is based on much more than your salary.

Lenders generally look at your income, existing debts, living expenses, deposit, credit commitments and their own serviceability requirements.

That can include things buyers sometimes forget about, such as

HECS-HELP debt
Car loans
Personal loans
Buy-now-pay-later accounts
Credit card limits, even if you rarely use the card
Existing home loans or investment debts
Ongoing living expenses

This is why two people earning the same salary can have very different borrowing capacities.

There is also a difference between what a bank says you can borrow and what you actually want to borrow.

If your lender says you can borrow $700,000, that does not necessarily mean you should spend $700,000. A safer approach is to leave some breathing room for rate changes, unexpected expenses, repairs, travel, children or simply the fact that life does not always follow your spreadsheet.

Many lenders also look at your savings history. This is often referred to as genuine savings. Depending on the lender and loan structure, they may want to see evidence that you have been able to save and manage money consistently.

Before you start attending every Saturday inspection, work out your comfortable budget.

A loan repayment calculator can help, but speaking to a Sydney mortgage broker can give you a much clearer picture of your actual borrowing position.

Step 2: Get Pre-Approval (and Understand Its Limits)

Pre-approval gives you an indication of how much a lender may be prepared to lend before you buy a property.

Pre-approval is sometimes called conditional approval or approval in principle.

It means a lender has assessed your financial position and indicated that, subject to certain conditions, it may lend you up to a particular amount.

It is useful because you can house hunt with a realistic budget rather than guessing.

It can also make you a more credible buyer when you are negotiating with an agent. If you find a property you love, you already know that your finances have been assessed to a certain extent.

But there is an important catch.

Pre-Approval Is Not a Guarantee

Pre-approval is not the same thing as unconditional or formal loan approval.

Your circumstances can change, the lender’s policies can change, or the particular property may create an issue.

One of the biggest traps is the bank valuation.

Imagine you have been pre-approved to borrow $600,000 and you find a property you want to buy for $600,000.

The lender orders a valuation and determines that the property is worth $580,000.

The lender may base its lending on the lower valuation rather than simply the price you agreed to pay.

That can leave you needing to contribute additional cash to complete the purchase.

This is why it is sensible not to treat your maximum pre-approval figure as your shopping budget. A practical buffer, such as keeping your target purchase price around 10% below your maximum borrowing capacity, can give you more room if something changes.

The risk can be even greater with certain off-the-plan purchases because the valuation may be completed later, after the contract has been signed.

Pre-approval generally lasts for a limited period, often around three months, although this varies between lenders. If you have not bought within that time, your broker can usually review your circumstances and arrange a renewal or fresh assessment where appropriate.

If you want to understand the details, read our guide to how pre-approval works and see what documents you will need.

Don’t Apply to Five Lenders at Once

Avoid submitting multiple formal applications just to see which lender says yes.

Formal credit applications can result in hard enquiries on your credit file. Several applications within a short period can make your credit profile look less attractive and may work against you.

The better approach is to work out which lender is appropriate first, then submit the application strategically.

A broker can help compare lending policies and match your circumstances to an appropriate lender before you apply.

You can also learn more about getting pre-approved with AFMS Group.

Step 3: Line Up Your Team Before You Find the Home

Have your mortgage broker and conveyancer ready before you find the property, not after you make the offer.

Your mortgage broker handles the finance side. Your conveyancer or solicitor handles the legal side of the purchase.

A conveyancer can review the contract, carry out searches, check title and planning information, deal with the legal documentation and coordinate settlement.

This matters because property decisions can move very quickly.

Imagine finding the perfect property on a Thursday afternoon. The agent wants offers by Friday morning. You have your finance sorted, but you have never spoken to a conveyancer.

You now need to find someone, send them the contract, get them to review it and understand what you are signing, all while another buyer may already be ready to proceed.

Having that relationship established beforehand can make the process much easier.

It also gives you someone you can call when the agent sends you a contract full of legal terminology and you are wondering what half of it means.

A useful rule is simple: find the conveyancer before you find the property.

That way, when the right property appears, you are ready to move rather than scrambling.

If you are not sure what your broker actually does during the buying process, read our guide on what a mortgage broker does.

Step 4: Search, Inspect and Do Your Homework

Once your finances are sorted, start looking for a property that fits your budget and your lifestyle.

This is the fun part, but it is also where emotions can take over.

Before inspecting properties, write down your must-haves and nice-to-haves.

Think about location, transport, schools if relevant, property type, bedrooms, outdoor space, parking and how much work you are prepared to do after moving in.

Also be careful with advertised price guides. A guide is not necessarily the final market value or the amount the property will sell for.

When inspecting, look beyond the furniture and styling.

Turn on taps. Check doors and windows. Look at ceilings and walls. Pay attention to damp smells, cracks, water damage and signs of pests. If you are buying an apartment or townhouse, look beyond the individual property as well.

Always Get a Building and Pest Inspection

A building and pest inspection can uncover problems that are easy to miss during a normal inspection.

The cost is generally small compared with the financial consequences of buying a property with serious structural or pest issues.

As an illustrative guide, a standard inspection might cost around $400 to $600, depending on the property and provider.

That is money well spent if it identifies a problem before you commit to the purchase.

For example, you might see a crack in a wall and be told it is simply the result of normal movement or landscaping. A qualified inspector may identify something that requires much more investigation.

The important point is that a building inspection is not simply about finding a reason to negotiate the price. It is about understanding what you are buying.

NSW Government guidance also recommends arranging inspections as early as possible because reports can take time to organise.

For Apartments and Townhouses, Read the Strata Reports

When you buy strata property, you are buying into a shared building, so the financial health of the strata scheme matters.

Do not look only at the apartment itself.

Ask to see the strata report and read the AGM minutes. Look at the administration fund and capital works fund, sometimes referred to as the sinking fund. Check for special levies, major repairs, disputes, defects and any major works being discussed.

Pay particular attention to recurring issues. A problem mentioned repeatedly over several years deserves more investigation.

You should also check whether there are concerns involving building defects or cladding.

Another easy-to-miss detail is the parking space or storage cage. Do not simply assume that everything shown with the apartment is included on the title. Check exactly what you are buying and whether any area is subject to a lease or other arrangement.

A few hours of research can save you from buying into a building with a major financial problem hiding behind an otherwise beautiful apartment.

Step 5: Make an Offer or Bid at Auction

Australian property is generally bought either through private treaty or auction, and the protections are very different.

Understanding which process you are dealing with is important before you make your move.

Private treaty gives you an opportunity to negotiate price and contract terms.

Auction is much more immediate. In NSW, once the hammer falls and you are the successful bidder, the purchase is generally unconditional.

Buying by Private Treaty

When buying by private treaty, your offer and the contract conditions matter.

You make an offer to the vendor, usually through the real estate agent. The negotiation may involve price, deposit, settlement date and other terms.

One of the biggest misconceptions among first home buyers is that protections such as subject to finance and subject to building and pest are automatically included.

They are not.

If you need those protections, they need to be properly included in the contract and drafted appropriately. This is where your conveyancer is important.

A finance condition can provide an exit if your lender does not provide formal approval, subject to the exact wording and requirements of the clause.

Similarly, a building and pest condition needs to actually give you meaningful protection. A vague clause may not do what you think it does.

From a negotiation perspective, buyers can also improve their position by being organised.

Have your finance ready. Have your conveyancer ready. Have the deposit funds available. If you make an offer, consider giving the vendor a clear timeframe rather than leaving the offer open indefinitely.

A signed contract and a buyer who can move quickly can sometimes be more attractive to a vendor than a slightly higher offer that comes with uncertainty.

Buying at Auction

If you are buying at auction in NSW, assume you need everything sorted before you bid.

There is generally no cooling-off period when you buy at auction. If you are the successful bidder, you cannot simply decide a few days later that you have changed your mind.

You should therefore have:

Your finance position sorted
The property inspected
The contract reviewed by your conveyancer or solicitor
Your deposit ready
Your maximum bid decided before the auction begins

Do not rely on being able to fix a finance issue after winning.

If the property is passed in, meaning bidding has not reached the vendor’s reserve, the agent may negotiate with interested bidders afterwards. But do not build your strategy around that possibility.

If the property sells to you under the hammer, you have bought it.

Step 6: Exchange Contracts, Cooling-Off and the Deposit

Exchange of contracts is the point at which the purchase becomes legally binding, subject to any applicable cooling-off rights and contract terms.

In NSW, both the buyer and vendor sign their respective copies of the contract and the contracts are exchanged.

At exchange, you generally pay a deposit. A 10% deposit is common, although a different amount can sometimes be negotiated. NSW Government guidance notes that a lesser amount, such as 5%, can be agreed.

The deposit is generally held in trust until settlement.

For a standard private-treaty residential purchase in NSW, you generally have a five-business-day cooling-off period after exchange. If you withdraw during this period, you forfeit 0.25% of the purchase price to the vendor.

For example, on a $1 million purchase, 0.25% would be $2,500.

There are important exceptions. Auction purchases do not have the standard cooling-off period, and the cooling-off period can also be waived or changed in certain circumstances. NSW Government guidance notes that a 66W certificate can be used to waive the cooling-off period.

Your conveyancer will continue working through the contract and searches during this period and towards settlement.

You may also hear about a deposit bond. Rather than paying the deposit entirely in cash, a deposit bond can act as a guarantee for the deposit where the vendor and contract allow it. It is something many first home buyers do not realise exists, so it is worth asking your broker and conveyancer whether it is relevant to your situation.

And one common misconception is worth clearing up: having a guarantor does not automatically mean you never need to deal with a deposit. The exact arrangement depends on the lender and guarantor structure, so understand how the deposit and settlement funds will actually work before signing.

You can read more about guarantor home loans and the First Home Guarantee.

Step 7: Get Formal (Unconditional) Loan Approval

Once you have a signed contract, the lender needs to formally approve the specific property and finalise the loan.

This is where the difference between pre-approval and formal approval becomes very real.

Your lender will assess the signed contract and generally arrange a valuation of the property.

If the valuation supports the purchase price and everything else checks out, the lender can move towards unconditional approval and loan documentation.

But if the valuation comes in lower than your purchase price, you may need to contribute more money to the purchase.

For example, if you agree to pay $700,000 but the bank values the property at $670,000, the lender may calculate its maximum loan based on the lower figure. Depending on your circumstances, you may need to find the difference or reconsider the structure.

This is one of the reasons it is important to avoid spending right up to your absolute borrowing limit.

If a finance condition has been properly included in your contract and formal approval cannot be obtained within the terms of that condition, you may have an avenue to exit the purchase. The exact outcome depends on the contract wording, which is why legal advice matters.

A broker can also help manage this stage and work with the lender if an issue such as a valuation arises.

You can learn more about working with AFMS Group.

Step 8: The Run-Up to Settlement

Before settlement, your conveyancer and lender work through the final legal and financial details so the property can be transferred into your name.

Your conveyancer will prepare or review the transfer documents and calculate the settlement figures.

Those figures can include adjustments for things such as council rates, water charges and strata levies, depending on the property and settlement date.

You also need to make sure any required funds are available before settlement.

A pre-settlement inspection is usually carried out shortly before settlement. This gives you an opportunity to check that the property is in substantially the condition you agreed to buy it in and that included items are still there.

If you discover a problem, contact your conveyancer immediately.

By this stage, the contract is generally unconditional, so you cannot simply decide not to settle because an appliance has stopped working or the property is not as clean as you expected.

This is why important requirements should be dealt with in the contract before exchange.

For example, if you need appliances to remain operational, that should be addressed through an appropriate contractual condition rather than relying on a verbal promise from the seller.

Settlement itself is usually completed electronically through platforms such as PEXA. Your lender and conveyancer coordinate the transfer of money and title.

Make sure your name and other details on the legal documents are correct. A small error can create unnecessary problems later.

Step 9: Settlement Day and Getting the Keys

Settlement is the day the remaining purchase money is paid and you become the legal owner of the property.

The lenders and legal representatives generally handle most of the work electronically, so you may not have much to do on the actual day.

Once settlement has been confirmed, the agent can release the keys.

And that is the moment the months, or sometimes years, of saving and searching finally become real.

You have a home.

But remember that the costs do not stop at settlement. From this point forward, you need to budget for council rates, insurance, maintenance, utilities and, if applicable, strata levies.

It is also worth thinking about how you structure the loan from day one. Features such as an offset account may be useful depending on your circumstances and loan structure.

First Home Buyer Schemes That Change the Maths

First home buyer schemes can significantly change the amount of cash you need to buy a property, so check your eligibility before you set your savings target.

The First Home Guarantee can allow eligible first home buyers to purchase with a deposit of as little as 5% without paying Lenders Mortgage Insurance, subject to the scheme’s eligibility requirements, property price caps and participating lender requirements. Housing Australia’s current scheme information should always be checked before relying on the scheme.

NSW also has the First Home Buyers Assistance Scheme, which can provide a full exemption or concessional rate of transfer duty for eligible buyers. As at 2026, eligible buyers purchasing a new or existing home valued at $800,000 or less may qualify for a full exemption, while properties above $800,000 and below $1 million may qualify for a concession, subject to the scheme’s eligibility rules.

The First Home Super Saver scheme is another option. It allows eligible first home buyers to make voluntary super contributions and later apply to have eligible amounts released to help purchase or build their first home. The scheme has contribution and withdrawal limits, so it needs to be planned carefully.

These schemes can potentially be used together, depending on your circumstances.

Read our detailed guides on the First Home Guarantee scheme, stamp duty for first home buyers and using your super for a deposit.

Eligibility, property price caps and government rules can change, so check the current requirements before making financial decisions.

Common First-Home-Buyer Mistakes to Avoid

Most first home buyer mistakes are not caused by a lack of effort. They happen because nobody explains the small details that become important at the wrong time.

Here are some of the big ones to avoid:

Only saving a 10% deposit. Remember that stamp duty, legal costs, inspections and other purchasing costs sit on top of the deposit.
Spending right up to the pre-approval maximum. Leave room for valuation differences and changes in your circumstances.
Assuming finance and building-and-pest conditions are automatic. They are not. Your contract needs to protect you.
Skipping inspections to save a few hundred dollars. A building issue or strata problem can cost vastly more.
Assuming a guarantor means you do not need to think about the deposit. Understand exactly how the guarantee and settlement funds work.
Applying to several lenders at once. Multiple hard credit enquiries can work against you.
Trusting a seller’s promise to fix something later. If something matters, ask your conveyancer whether it needs to be included in the contract.
Ignoring government schemes. You may qualify for assistance that changes the amount you need to save.
Only speaking to your existing bank. Your bank may not be the lender with the most suitable policy for your circumstances.

How Long Does It Take to Buy a House?

The time it takes to buy a house can range from a few months to several years, depending on how long it takes you to save and find the right property.

For many buyers, the biggest time commitment is actually before they make an offer.

Saving a deposit can take years. Getting pre-approval may take anywhere from a few days to a couple of weeks, depending on the lender and complexity of your application. House hunting can take weeks or months, and some buyers find the right property almost immediately while others inspect dozens.

Once you have exchanged contracts, settlement in NSW commonly occurs around six weeks later, although the timeframe can be shorter or longer depending on what has been negotiated in the contract.

The simplest way to speed up the process is to get your finance organised before you find the property.

When the right home appears, you want to be ready to act rather than starting the finance process from scratch.

Frequently Asked Questions

If you are still unsure about the process, these are some of the questions we hear most often from buyers.

How much deposit do I need to buy a house in Australia?

You may be able to buy with a deposit of 5%, depending on your circumstances and eligibility. A 20% deposit is commonly used as a benchmark because borrowing above 80% LVR can result in LMI. Eligible first home buyers may have other options through government schemes. Your deposit is also only one part of the upfront cost. Read our guide to how much you need to buy a house for a more detailed breakdown.

What are the steps to buying a house for the first time?

The main steps are to work out your budget, save your deposit, get pre-approval, find a property, complete your inspections and due diligence, make an offer or bid, exchange contracts, obtain formal approval and settle. First home buyers should also check government schemes before deciding how much they need to save.

How long does it take to buy a house?

It can take anywhere from a few months to several years depending on your deposit, finance and how quickly you find the right property. Pre-approval may take days or weeks, house hunting can take months, and settlement commonly occurs around six weeks after exchange in NSW. The contract can specify a different settlement period.

Do I need a 20% deposit to avoid Lenders Mortgage Insurance?

No, not necessarily. LMI can generally apply when borrowing above 80% of a property’s value, but some buyers can borrow with a smaller deposit without paying LMI. Eligible first home buyers may be able to use the First Home Guarantee. Read our guide to how LMI works for more detail.

Can I buy a house with my superannuation?

You generally cannot simply withdraw your super to buy a home, but eligible first home buyers may use the First Home Super Saver scheme. It allows eligible voluntary super contributions to be released for a first home, subject to contribution limits and other rules. Read our guide to using your super to buy a house for more information.

What is the difference between pre-approval and unconditional approval?

Pre-approval is an indication of how much a lender may lend, while unconditional approval is the lender’s final approval after assessing the specific property and completing its checks. Pre-approval does not guarantee that your chosen property will be approved. The lender may still order a valuation and request additional information before providing formal approval.

Is there a cooling-off period when buying a house in NSW?

Generally, private-treaty residential purchases in NSW have a five-business-day cooling-off period. If you withdraw during that period, you generally forfeit 0.25% of the purchase price.

There is no standard cooling-off period for auction purchases. Cooling-off can also be waived in certain circumstances, so have your conveyancer explain the contract before you sign. (NSW Government)

Ready to Take the First Step? Talk to AFMS Group

Buying a house is a big process, but you do not need to work everything out at once.

The smartest first step is getting your finances sorted. Once you know your borrowing power, understand your deposit and have appropriate pre-approval in place, everything that follows becomes easier.

A quick, no-pressure conversation with AFMS Group can help you understand your borrowing position, compare lending options and arrange pre-approval with a suitable lender. We can then help with the finance side as you move from searching to settlement.

There is no cost to you for the consultation.

If you are planning to buy soon, or you are simply starting to work out whether buying is realistic, you can book a free consultation or call 1300 659 756.

General information only and not financial or legal advice. Lending policies, government schemes, costs and NSW property rules can change. Confirm current requirements with AFMS Group and your conveyancer or solicitor.

Author: Andrew Hadjidemetri, Principal Mortgage Broker, AFMS Group. Top 10 Brokers in Australia (MPA 2025). Andrew has personally settled more than $700 million in loans across more than 520 five-star client reviews. Andrew and the team help Sydney buyers navigate the journey from budgeting and pre-approval through to settlement.

This article is general information only and does not constitute financial or credit advice. Speak to a licensed mortgage broker for advice tailored to your circumstances.

Steps to Buying a House in Australia: A First Home Buyer’s Guide