First Home Buyer Guide for Melbourne's South-East

Buying your first home is exciting, but it can also feel overwhelming. There's a lot of new language, a lot of paperwork, and a lot of money involved. The good news is that the process is much easier when you understand it step by step.

This guide is for first home buyers looking in Melbourne's south-east, including suburbs like Oakleigh, Clayton and Carnegie. It covers how to work out your budget, what government help may be available, and what to expect from search to settlement.

Melbourne's south-east offers a good mix of things first home buyers care about: train lines, schools, shopping and a range of property types at different price points.

• Oakleigh has a lively village centre, a train station on the Pakenham and Cranbourne lines, and a mix of apartments, units and family homes.
• Clayton is close to Monash University and the Monash Medical Centre, with plenty of units and townhouses that suit first home buyers.
• Carnegie has a busy shopping strip on Koornang Road and a large number of apartments and units within walking distance of the station.

Units, apartments and townhouses are often the most realistic entry point for first home buyers in these suburbs. They can be a great way to get into a good location and build equity over time.

Before you start going to open inspections, it's important to know what you can actually afford. Your budget depends on three main things:

1. Your deposit and how much you've saved
2. Your borrowing capacity, based on your income, expenses and debts
3. Upfront costs, such as stamp duty, legal fees and moving costs

How much deposit do you need?

Traditionally, lenders like a 20 percent deposit. With 20 percent, you avoid lenders mortgage insurance (LMI), which can add thousands of dollars to your costs.

But many first home buyers buy with less. Some lenders accept deposits of 5 to 10 percent, usually with LMI. Government schemes may also let eligible buyers purchase with a smaller deposit and no LMI.

What affects your borrowing capacity?

Lenders look at:

• Your income, including salary, overtime and any secondary income
• Your living expenses
• Existing debts, such as car loans, personal loans and HECS-HELP
• Credit card limits, even if you don't use them
• How many dependants you have

Lenders also add a buffer to the interest rate when assessing you, to make sure you could still afford repayments if rates go up.

There are several types of government support for first home buyers. Eligibility rules and thresholds change, so always check the current details with us or on the official government websites.

Home Guarantee Scheme

The Australian Government's Home Guarantee Scheme can help eligible first home buyers purchase with as little as a 5 percent deposit without paying LMI. There are property price caps that apply in each area, and these are reviewed from time to time.

First Home Owner Grant (Victoria)

In Victoria, the First Home Owner Grant is generally available for new homes only, such as a newly built home, a home you build yourself, or an off-the-plan purchase, within a price limit. It's not usually available for established homes.

Stamp duty exemptions and concessions

Victorian first home buyers may be eligible for a full stamp duty exemption or a reduced rate, depending on the property's value. This can save you tens of thousands of dollars, so it's worth checking early.

Pre-approval, also called conditional approval, is when a lender gives you an indication of how much they're willing to lend before you find a property.

It helps you:

• Shop with confidence, knowing your budget
• Move quickly when you find the right home
• Bid at auction with more certainty

Pre-approval usually lasts three to six months. It isn't a guarantee of final approval, as the lender still needs to assess the property you buy.

When you're looking, think about:

• Location, transport, schools and amenities
• Property type, apartment, unit, townhouse or house
• Body corporate fees, if it's part of an owners corporation
• Building condition, always get a building and pest inspection where possible
• Future plans, will it still suit you in five years?

For apartments, check the size and building. Some lenders have stricter rules for small apartments, high-density buildings or certain postcodes, which can affect how much you can borrow.

In Melbourne, many properties are sold at auction. If you buy at auction, the sale is unconditional, meaning you can't make it subject to finance. That's why pre-approval is so important.

For private sales, you can often make your offer subject to finance and a building inspection. In Victoria, there's also a three business day cooling-off period for most private sales, but not for auctions.

Before you sign anything, have a solicitor or conveyancer review the contract and the vendor's statement, called the Section 32.

Once your offer is accepted, your broker submits your application for formal approval. The lender will usually value the property and finalise your loan.

Settlement is typically 30 to 90 days after the contract is signed. On settlement day, the lender pays the seller, and you get the keys.

Some first home buyers choose to buy off the plan or build a new home. This may make you eligible for the First Home Owner Grant, and stamp duty may be lower.

If you're building, you'll need a construction loan, which works differently from a standard home loan. Read our guide on how construction loans work in Victoria.

• Not checking all the upfront costs
• Not getting pre-approval before going to auction
• Applying with several lenders directly, which can affect your credit file
• Taking on new debt, like a car loan, before settlement
• Stretching to the maximum borrowing amount without a buffer

Our team helps first home buyers across Melbourne's south-east understand their options and get into the market with confidence. We:

• Work out your realistic borrowing capacity
• Check which government schemes you may be eligible for
• Compare home loans from a range of lenders
• Explain each step in plain English
• Manage the process through to settlement

Learn more about our support for first home buyers, or book a free chat to get started.