Buying your first home can be a thrilling time of your life. You've probably spent years saving up that deposit and now you're finally ready to take the plunge… but wait, not so fast!

There's a lot to consider when buying your first home and taking the time to understand the general process most people go through can help you avoid any common pitfalls.

How to buy a home

  • Work out what you can afford – check your budget (or create one if you don't have one) to see whether you can afford to pay a mortgage every month. Use a handy online calculator, like our one , to see how much you'd be paying monthly. If you don't have your eye on any particular property at this point, use the average sale price for the area you're looking at.
  • Work out what you want to buy (and where) – after a family home? A one-bedroom apartment? Or an investment property you plan to rent? Check out suburbs and property types within your budget. Visit the different suburbs on the weekends and during the week to get an idea of the community and keep a close eye on sales in the area.
  • Save your deposit – ideally you want to have at least 20% of the sale price of your ideal home saved away. Any less and you will be charged a percentage based fee called Lender's Mortgage Insurance (which could cost you thousands extra). Any more and you'll be cheering – the more you can put down upfront, the less interest you'll pay over the life of the loan. Also, you may even be able to cover stamp duty and other costs (such as moving and legal costs) without needing to dip into other savings or a credit card.
  • Check for any entitlements – depending on which state you live in, and if this is your first home purchase, you may be eligible for a grant as well. These grants can go a long way to reducing the cost of buying your first home.
  • Compare home loans – once you know how much you can afford, what and where you want to buy, it's time to talk to the financial institutions. Compare home loans across as many lenders as you can. Each loan is required to have a Key Facts Sheet which can make comparing them much easier. Pay attention to the Comparison Rate which considers the interest rate as well as any fees and charges. Once you've chosen a loan, apply for pre-approval so you know you can start to seriously look around.
  • Start shopping around – go to as many open homes and speak to as many agents in your ideal area as you can. Let them know what you're looking for and give them a rough idea of your budget. Homes and apartments are sometimes sold 'off market' – meaning they're never advertised. The agent can put an interested buyer in touch with the vendor if they know you'll be a good match. Once you've found your dream property, arrange a building and pest inspection to ensure it doesn't just look good on the surface.
  • Make an offer – it's time to show your interest; either directly to the agent or at an auction. Formally state how much you're willing to pay for the property. Leave a little room up your sleeve in case there are multiple bidding parties, but have a maximum limit and don't go over it!
  • Exchanging contracts – depending on your state or territory, your solicitor or conveyancer will organise the formal exchange of contracts and negotiate your settlement date (the date you officially become the owner). Your home loan provider can usually put you in touch with a good solicitor or conveyancer, or you can shop around for your own. Something to be aware of is that contract exchange is only applicable in some states. WA and QLD have a simplified process using a single signed contract and may not contain a 'cooling off' period the same way that the other states and territories do. At the end of the day, depending on where you're buying the house, always obtain advice from a reputable conveyancer or solicitor.
  • Day of settlement – a few things need to happen on settlement day – the deposit and home loan is paid to the vendor or their acting representative (agent, solicitor etc), you pay the duty on the contract, the Certificate of Title is transferred and you gain access to the property's keys. It's usually a thrilling and stressful day but a good solicitor or conveyancer can help you to navigate it calmly.

Hurray! You're a home owner! Now you get to move in and get to know the neighbours. Enjoy!