Purchasing your first home is a major financial decision that you will ever take in your life, and the current property market in 2025 presents challenges of its own. Increasing property rates, fluctuating interest rates, and tightening lending policies have resulted in the fact that, more than ever, it is important to know what you are getting into.

The right advice can make the difference whether you are saving to deposit, assessing what offers the best home loan for first-time buyers, or how to stretch your money. Ready to enter the property market to buy your first home? Here are 10 practical tips that first-time home buyers in Melbourne should consider to be confident in their step-into-the-market efforts.

Tip 1 – Get Your Finances in Order Before You Start

The foundation of a successful home purchase is a rock-solid financial profile. Lenders in 2025 are scrutinising applications more closely than ever.

• The importance of checking your credit score. This credit score is one of the significant concerns when securing a loan and the interest rate at which you will be provided. Ask to get a free credit report early enough before it is too late to correct the mistakes. The greater your score, the greater the loan alternatives.
• Reducing debts and building a savings history. Minimise high-interest debts (such as credit card debts and the use of personal loans) because this enhances your borrowing capacity. Lenders would rather view steady and authentic savings over three or six months.
• Why lenders look at financial stability. Your stability proves you can manage a mortgage. Ensure your spending habits are in check and avoid taking on new, large debt while preparing to apply for a loan.

Tip 2 – Understand How Much You Can Borrow

Don’t confuse what a property might sell for with your true budget. Knowing your maximum capacity is crucial.

• Mortgage pre-approval explained. Pre-approval (or conditional approval) is a lender’s formal confirmation of the amount they are willing to lend you, based on an initial assessment of your finances.
• How borrowing power is calculated in 2025. A serviceability calculator is used by lenders and evaluate your income and expenditure, taking into account any outstanding debts and a buffer against interest rate increases. Talk to a mortgage expert to have a realistic and current estimate.
• Why knowing your budget upfront avoids disappointment. Browsing in your pre-approved budget is also time-saving, less emotionally damaging (because the home you love might not be within your budget), and allows you to move quickly when you do find the right place.

Tip 3 – Save for More Than Just a Deposit for First-Time Home Buyers

Most first-time home buyer tips revolve around the deposit, but the transactional costs can be very high and must also be considered.

• Typical deposit requirements for first-time home buyers. Although 20% is the ideal deposit to avoid Lenders Mortgage Insurance (LMI) and get a better interest rate, most schemes can now be deposited with 5% (see Tip 4).
• Hidden costs- Stamp duty, legal fees, and inspections: .Initial expenses comprise stamp duty (which can be an enormous burden, but first-time buyers are frequently exempt from/concessions on the duty are common), legal/conveyancing charges, building and pest inspection reports, loan application charges and mortgage registration fees.
• Planning to avoid financial stress. Budgeting for these additional costs (often 3-5% of the property price on top of the deposit) ensures you’re not caught short on settlement day.

Tip 4 – Research Government Grants and Schemes for First-Time Home Buyers

The 2025 landscape includes a variety of federal and state support measures designed to ease the entry barrier for first-time home buyers.

• Overview of current first-home buyer grants and incentives (2025). Key schemes include the First Home Guarantee (FHBG), enabling first home buyers to buy their home with a 5% deposit and no LMI, and state-based First Home Owner Grants (FHOG ) and Stamp Duty concessions/ exemptions.
• How schemes can reduce your upfront costs. LMI is often one of the biggest costs after the deposit and stamp duty. Schemes that waive LMI or provide grants can save you tens of thousands of dollars.
• Why it’s important to apply early. Schemes like the FHBG have limited allocations, which are distributed by participating lenders. Get pre-approval and secure your spot early.

Tip 5 – Compare the Best Home Loan Options for First-Time Buyers

Finding the right loan is as important as finding the right house. Your choice determines how much you pay over the next few decades.

• Fixed vs. variable interest rates.
  • Fixed rates offer payment stability, which is excellent for budgeting but typically lacks flexibility (e.g., limits on extra repayments).
  • Variable rates allow you to benefit from rate drops and offer flexibility like an offset account and unlimited extra payments, but your repayments can increase if rates rise.
• Special first-home buyer loan packages. Many lenders offer tailored packages that may include discounted interest rates or waived fees for first-time buyers.
• Why using a mortgage broker may save time and money. Using a broker, you could get a better deal than you would have on your own, as he could compare hundreds of loans with different lenders to help you obtain the most appropriate home loan according to your particular financial situation.

Tip 6 – Don’t Skip the Pre-Approval Step

Pre-approval is an often-underestimated tool in a competitive market.

• Benefits of pre-approval in a competitive market. Pre-approval is an indication to the agents and sellers that you are a serious buyer and you are willing to make a transaction. This assurance would provide you with a crucial advantage, particularly when it comes to the other buyers whose financing documents have not been finalised.
• How does it strengthen your position when making an offer? In a private sale, a quick, clean offer from a pre-approved buyer is highly attractive. At auction, it sets your maximum budget and ensures you can sign the contract immediately.
• Validity period and renewal. Pre-approvals usually last for 90 days. Keep track of the expiry date and be ready to renew it with your lender or broker if your house hunt takes longer.

Tip 7 – Be Realistic with Your Property Search

The first home rarely ticks every box, so clarity on your must-haves versus your wants is essential.

• Avoid stretching your budget too far. While interest rates may fluctuate, commit to a repayment amount you can comfortably afford, even with a buffer for rate rises. Overstretching leads to “mortgage stress.”
• Factors to consider: Location, transport, and growth potential. Look beyond the paint colour. Prioritise non-negotiables like commute time, school zones, access to essential services, and the area’s long-term growth prospects.
• Why compromise may be necessary for your first home. You might need to compromise on property size, age, or proximity to the city. See your first property as a stepping stone toward your dream home.

Tip 8 – Get Professional Help When Needed

The buying process involves complex legal and financial documents. Relying on experts reduces risk.

• The role of buyer’s agents, mortgage brokers, and conveyancers.
  • Mortgage brokers assist with loan selection and application.
  • Conveyancers/Solicitors handle all the legal transfer of title and contract review.
  • Buyer’s agents (optional) search for and negotiate the purchase on your behalf.
• How expert advice prevents costly mistakes. Legal experts ensure contracts are sound, and financial experts protect you from choosing a predatory or unsuitable loan.
• Why DIY can sometimes cost more: Attempting to navigate legal or financial complexities yourself can lead to expensive errors, delays, or choosing a sub-par property or loan.

Tip 9 – Inspect Carefully Before You Commit

Never take a property at face value. Diligence before commitment is one of the most important first-time home buyer tips.

• Importance of building and pest inspections. These reports are your insurance cover against serious structural imbalances, serious maintenance problems or pest problems (such as termites) that can only be detected by taking a quick walk around.
• Identifying hidden problems that could become expensive. Issues like foundation cracks, faulty wiring, or a leaking roof can cost tens of thousands to fix and are often excluded from a home’s price unless identified early.
• Negotiating repairs or price reductions. If the report reveals significant faults, you gain leverage to negotiate the price down or request that the seller fix the issues before settlement.

Tip 10 – Check your Credit

A quick point to reiterate: check your credit report early to ensure you are in the best position for a lender to view your application favourably.

Bonus Point: Compare mortgage lenders

Do not simply go with your existing bank. Different lenders will have different criteria and different special offers for first-time home buyers- the most common is a discounted interest rate or waived fees. A quick comparison can save you significant money over the life.

Final Thoughts for First-Time Home Buyers in 2025

Coming into the property market in 2025 is a big task, but with the right plan and the right team, it is not only possible but can also be done. Concentrate on strong preparation, expectations, and securing the most appropriate financing with the best mortgage broker in Melbourne.

Contact CapKon today and speak to our mortgage advisor to find the best home loan for first-time buyers in today’s market.

FAQ related to First-Time Home Buyers

What are the best tips for first-time home buyers in 2025?

The most useful tips for first-time home buyers of 2025 are to start with pre-approval, minimise your personal debt to maximise your ability to borrow, and to use government programs such as the First Home Guarantee to cut your deposit and avoid LMI.

How much deposit does a first-time buyer need in 2025?

Ideally, a 20% deposit avoids Lenders Mortgage Insurance (LMI) and gets you a better rate. However, government schemes like the First Home Guarantee allow eligible first-time home buyers to purchase with as little as a 5% deposit, with the government guaranteeing the difference (saving you the cost of LMI).

What is the best home loan for first-time buyers?

The best home loan for first-time buyers is highly individual. It depends on your risk tolerance, income stability, and whether you value budget certainty (fixed rate) or flexibility and features like an offset account (variable rate). Consulting a mortgage broker is the best way to compare options across many lenders and find the most suitable product and rate.

Should I choose a fixed or variable loan as a first-time buyer?

A fixed-rate loan offers predictable, stable repayments, which is excellent for budgeting but sacrifices flexibility. A variable rate loan may be lower initially and allows features like offset accounts and extra repayments, but your repayments can increase if the official cash rate rises. A split loan (part fixed, part variable) offers a balance of both.

Can first-time home buyers get government grants in 2025?

Yes. In addition to state-based First Home Owner Grants (FHOG) for new builds and stamp duty concessions, federal schemes like the First Home Guarantee (FHBG) and the Regional First Home Buyer Guarantee are available in 2025, which can significantly reduce the required deposit and eliminate the need for LMI.

How do I improve my chances of loan approval?

Improve your chances of loan approval by: having a stable employment history, minimising high-interest debts, providing evidence of genuine savings, and checking your credit file to correct any errors before submitting your application.

What mistakes should first-time buyers avoid?

The most common mistakes are: skipping the pre-approval process, stretching the budget past a comfortable repayment level, neglecting to budget for all upfront costs (like stamp duty and legal fees), and failing to get building and pest inspections.