First Home Buyer Melbourne Guide: Deposits, Schemes, Costs, Borrowing and Settlement

Buying your first home in Melbourne involves more than finding the right property. Before you start attending inspections, it helps to understand how much you can borrow, how large a deposit you need, which government assistance you may qualify for and what the full cost of purchase looks like. This guide, based on content published by Natloans in September 2026, walks through each stage of the first home buying journey in Melbourne — from saving your deposit and assessing borrowing capacity through to pre-approval, government schemes, contracts and settlement.

This guide preserves Natloans’ article published 21 September and modified 28 September 2026. Official scheme and Victorian assistance guidance was checked on 15 October 2026 and is linked below. Business claims remain attributed to Natloans. This is general information rather than an individual loan, tax or legal assessment; check the actual property, contract, borrower and lender requirements before committing.

How Do You Buy Your First Home in Melbourne?

While every buyer's situation is different, the first home buying journey in Melbourne will generally follow a sequence of steps. According to Natloans' guide published 21 September 2026, those steps are:

Work out your budget and likely borrowing capacity.
Understand how much deposit you have available.
Check whether you may qualify for first home buyer schemes, grants or stamp duty concessions.
Compare suitable home loan options.
Obtain home loan pre-approval where appropriate.
Start searching for a property within your budget.
Have the contract reviewed by your conveyancer or solicitor before committing where appropriate.
Make an offer or bid at auction.
Finalise your home loan approval.
Complete settlement and move into your first home.

The source recommends establishing a workable purchase budget before becoming attached to a property. A broker can help assess lending options and costs, but a maximum lending estimate is not necessarily a comfortable personal spending limit. No comparative study establishing the most common buyer mistake is supplied.

How Much Deposit Does a First Home Buyer Need in Melbourne?

A 20% deposit is not a universal requirement. Depending on your circumstances, the lender and any government scheme you qualify for, purchasing with a smaller deposit may be possible. The following table summarises the general deposit levels discussed in Natloans' published guide (September 2026). All figures should be confirmed with a broker and the relevant lender before relying on them.

Deposit Level	General Considerations	LMI Typically Applies?
5%	May be available to eligible first home buyers through the Australian Government 5% Deposit Scheme. Government provides a guarantee to the participating lender.	No, for eligible scheme participants
10%	Some lenders may consider applications at this level outside government schemes, subject to their credit policies.	Potentially, depending on lender and loan-to-value ratio
20%	Generally brings the loan-to-value ratio to 80% or below (subject to lender valuation). May provide access to a broader range of lending options.	Generally not required at this level

Waiting until you have saved 20% is not necessarily the right strategy for every first home buyer. A mortgage broker can help you compare the potential benefits and costs of purchasing sooner with a smaller deposit against continuing to save.

What Is Lenders Mortgage Insurance?

Lenders Mortgage Insurance (LMI) is insurance that generally protects the lender — not the borrower — if the borrower defaults and the lender suffers a loss after selling the property. LMI may be required where a borrower has a higher loan-to-value ratio. The cost can vary significantly depending on the lender, loan amount, property value and deposit size. Eligible buyers using the Australian Government 5% Deposit Scheme can purchase with a minimum 5% deposit without paying LMI, which can substantially reduce one of the major upfront barriers for some first home buyers.

Australian Government 5% Deposit Scheme

The Australian Government 5% Deposit Scheme can support an eligible first-home purchase with a minimum 5% deposit through a participating lender. Its official guidance, checked 15 October 2026, confirms the expanded scheme has no income caps, unlimited places and no waiting list. Approval and ongoing obligations still apply; the guarantee does not pay your repayments or protect you from property losses.

From 1 October 2025, the expanded scheme removed income caps and waiting lists, and made places unlimited for eligible applicants.
The Government provides a guarantee to the participating lender, allowing eligible buyers to borrow with a smaller deposit without paying LMI.

5% Scheme eligibility: current official guidance checked 15 October 2026

Australian citizen or permanent resident aged at least 18.
Minimum 5% deposit available.
First home buyer, or not having owned property or land in Australia during the previous 10 years.
Purchasing an eligible owner-occupied property within the applicable price cap.
Must still qualify for the home loan under the participating lender's normal credit and lending requirements.

The official first-home buyer pathway permits an individual application or a joint application with one other eligible person, including a partner, friend or family member. It also requires an eligible owner-occupier principal-and-interest loan from a participating lender. Both applicants must satisfy the rules. Scheme eligibility alone does not establish credit approval, and you must meet ongoing owner-occupation requirements.

5% Scheme price caps for Melbourne, Geelong and other Victorian areas

The official factsheet dated 1 July 2026, checked on 15 October 2026, confirms these Victorian caps. The file’s older URL date is not the document’s current internal date. Geelong is the designated Victorian regional centre in the higher-cap category.

Location	Cap checked 15 October 2026
Melbourne (Victorian capital-city area)	$950,000
Geelong (treated as a regional centre)	$950,000
Other areas of Victoria	$650,000

Both purchase price and lender-assessed value must be at or below the applicable scheme cap. The boundary is inclusive. Confirm the exact location with the participating lender; a Victorian address outside Melbourne and Geelong does not automatically receive the $950,000 cap. An amount within the cap is not assurance that the lender will approve it.

Stamp Duty for First Home Buyers in Victoria

SRO’s current first-home duty rules provide these exemption and concession thresholds for eligible buyers. Dutiable value is the relevant measure; it may differ from the contract price where an eligible deduction applies. Applicant, spouse or partner, transaction and occupancy tests must also be satisfied.

Dutiable Value of Property	Duty treatment checked 15 October 2026
Up to $600,000	No land transfer duty payable for eligible first home buyers
$600,001 to $750,000	A first home buyer duty concession may apply
Above $750,000	The specific first home buyer exemption/concession no longer applies; other concessions may potentially be relevant depending on circumstances

The benefit can apply to eligible new homes, established homes and vacant land. Eligibility requirements apply, including occupancy requirements. Purchasing a property just above or below a threshold can change the amount of upfront money required, making this an important consideration when setting your first home buying budget. Your conveyancer or solicitor can help determine the land transfer duty payable for a particular transaction. You can also use Natloans' stamp duty calculator as a starting point.

Victorian First Home Owner Grant in 2026

SRO’s FHOG guidance, checked 15 October 2026, confirms a $10,000 grant for qualifying new homes with a value of $750,000 or less. The new-home definition can include substantially renovated premises meeting the relevant tests. It is not a grant for ordinary established-home purchases or routine renovation costs. Key points:

The home must generally be new and not previously sold or occupied as a residence.
Eligible property types can include a house, townhouse, apartment or unit.
Ordinary established homes do not qualify; have SRO or an approved agent determine whether substantially renovated premises meet the separate new-home definition.
Eligibility includes applicant and spouse or partner history and residency conditions, with specified exceptions. Generally at least one applicant must occupy for 12 continuous months beginning within 12 months of settlement or completion of construction. Do not rely on price alone or assume the grant is immediately available at contract signing.

The First Home Owner Grant is separate from the first home buyer stamp duty exemption or concession. A buyer purchasing an eligible new home may potentially qualify for both, subject to meeting the requirements of each. Always check the current Victorian State Revenue Office rules before relying on the grant as part of your purchase budget.

How Much Can I Borrow as a First Home Buyer?

There is no single amount that every first home buyer can borrow. According to Natloans' guide (September 2026), lenders assess borrowing capacity using a range of factors:

Your income and, if applying jointly, your partner's income
Employment type and history
Living expenses
Existing home, personal or car loans
Credit card limits (even if not fully drawn)
HELP/HECS debts and other liabilities
Number of dependants
Your deposit
The proposed loan term
Interest rates and lender serviceability buffers
Your credit history
The type and value of the property being purchased

Different lenders can assess the same borrower differently. This is one reason that a borrowing capacity figure from one bank should not automatically be assumed to represent the maximum or most appropriate option available across the market. A mortgage broker can compare relevant lender policies and help you understand how different lenders may assess your circumstances.

Natloans' borrowing power calculator can provide a general starting point, but it is not a substitute for a lender assessment.

Does HELP or HECS Debt Affect a First Home Loan?

Having a HELP or HECS debt does not automatically prevent you from obtaining a home loan. However, compulsory student loan repayments can affect your disposable income and therefore your borrowing capacity. The impact will depend on your income, outstanding obligations and the lender's assessment methodology. If you have a HELP debt, disclose it when discussing your borrowing capacity so that your assessment is based on accurate information.

Does a Car Loan Affect How Much You Can Borrow?

Yes, it can. Existing car loans, personal loans and other credit commitments generally affect the amount of income available to service a new home loan. Credit card limits can also affect borrowing capacity, even if you do not currently owe the full limit. Before applying for your first home loan, it can be useful to review your existing debts and unused credit facilities. That does not mean you should automatically close accounts or repay loans without considering your overall position — your broker can discuss how your existing commitments may affect different lender assessments.

Costs First Home Buyers Need to Budget For

Your deposit is not the only money you may need when buying your first home. Depending on the property and your circumstances, costs can include:

Land transfer duty where applicable
Conveyancing or legal fees
Building and pest inspections
Owners corporation or strata-related costs for some properties
Loan and valuation fees where applicable
Government registration and transfer fees
Home and contents insurance
Moving costs
Utility connections
Rates and other settlement adjustments
Lenders Mortgage Insurance where applicable
An emergency cash buffer after settlement

Understanding these costs before setting your maximum purchase price can help avoid using every dollar of available savings simply to complete the purchase.

Should First Home Buyers Get Pre-Approval?

For many buyers, obtaining home loan pre-approval before seriously searching for a property can be worthwhile. Pre-approval can provide a clearer indication of what a lender may be prepared to lend based on the information supplied at that time, and can help you set a realistic property search range.

However, pre-approval is generally conditional rather than a guarantee of final approval. The lender may still need to assess the particular property, obtain a valuation, verify updated financial information and ensure nothing material has changed before providing unconditional approval.

Before bidding at auction, obtain legal advice on the binding contract and funding risks. Pre-approval does not give a right to withdraw if a valuation is low or finance fails. Consumer Affairs Victoria’s auction guidance explains the auction process and cooling-off limits. Confirm the contract, deposit, all conditions and settlement funds before bidding.

What Documents Do First Home Buyers Usually Need?

Requirements vary between lenders, but preparing documentation early can make the process easier. You may be asked for:

Identification documents
Recent payslips
Employment information
Bank statements
Evidence of your deposit and savings
Details of existing loans
Credit card limits
Details of living expenses
Evidence relating to other income
Contract of sale once a property is found

Self-employed first home buyers may need different financial documentation depending on the lender and loan type.

Should a First Home Buyer Use a Bank or a Mortgage Broker?

A bank generally offers its own products; a broker can consider products on its approved panel. A panel is not necessarily the entire market, and not every panel lender will accept every borrower or property. The source highlights differing treatment of deposits, employment, income, HELP debts, apartments, other property types and capacity. Ask why the proposed product is suitable and how fees, features and commission are disclosed.

A broker can also help explain the process from initial borrowing assessment and pre-approval through to formal approval and settlement. The objective should not simply be finding the lowest advertised interest rate — a suitable home loan also needs to work with your financial circumstances, property, deposit and longer-term objectives.

Buying Your First Apartment in Melbourne

The source presents apartments as a possible entry point in some suburbs, without current price evidence. Loan acceptance and total ownership costs can differ from a house. It identifies the following eight property factors for lender review:

Apartment size
Location
Density of the development
Property valuation
Owners corporation arrangements
Particular developments or postcodes
Whether the property has unusual features
The proportion of similar properties within the development

For a small apartment or large development, confirm lender acceptability and valuation before committing. No universal minimum floor area, postcode ban or deposit requirement is established here. Have the conveyancer review the title, owners corporation certificate, fees, rules, insurance and planned works. Consumer Affairs Victoria’s apartment checklist explains why this investigation matters; low purchase price does not establish low ongoing costs.

First Home Buyer Mistakes to Avoid

Looking at Properties Before Understanding Your Budget

Online borrowing calculators can be useful starting points, but they are not the same as a lender assessment. Understand your financial position before setting your property search range.

Using Every Dollar for the Deposit

Remember the other costs associated with purchasing and moving into a property. Keeping an appropriate financial buffer after settlement can be important.

Assuming Your Own Bank Will Automatically Provide the Best Option

Your existing bank may have a suitable product, but it is still worth understanding what other options may be available across the market.

Taking On New Debt Before Settlement

Applying for a car loan, personal loan, new credit card or other credit after obtaining pre-approval can affect your financial position. Talk to your broker before making significant financial changes during the home-buying process.

Making an Unconditional Offer Without Understanding the Finance Risk

Pre-approval is not the same as unconditional loan approval. Make sure you understand the implications of your contract before signing or bidding at auction.

Focusing Only on the Interest Rate

Interest rate matters, but so can fees, features, lending policy, loan structure and whether the lender is suitable for your circumstances.

About Natloans — First Home Buyer Mortgage Brokers in Melbourne

Natloans’ September 2026 article reports more than 15 years in finance, a property-finance division developed over the preceding five years, access to over 50 lenders, more than 10,000 customers across the broader business and more than 900 five-star Google reviews. It says it won Best Finance Brokerage (Office) – Victoria/Tasmania at the 2026 Better Business Awards. These are dated publisher claims, not independently verified current counts, a lender acceptance list or an incorporation date. The five-year division history does not mean the whole business began then.

Natloans' mortgage brokers help first home buyers understand their borrowing position, compare suitable home loan options from a broad panel of lenders and navigate the process from initial assessment through to settlement — whether you are buying an apartment in Melbourne, a townhouse in the suburbs or your first family home.

You can explore Natloans' home loan services at natloans.com.au/home-loans or use the tools below as a starting point:

Frequently Asked Questions

Can I buy my first home in Melbourne with a 5% deposit?

Potentially. Eligible first home buyers may be able to purchase with a minimum 5% deposit under the Australian Government 5% Deposit Scheme without paying Lenders Mortgage Insurance. Eligibility, property price limits and lender credit requirements apply. Confirm current scheme rules at firsthomebuyers.gov.au before relying on this option.

What is the current 5% Deposit Scheme property price cap for Melbourne?

The official 1 July 2026 factsheet gives a $950,000 cap for Melbourne and Geelong and $650,000 for the rest of Victoria. Both the price and lender-assessed value must be at or below the correct location cap. These figures were checked on 15 October 2026; the lender must still confirm the property and applicant qualify.

Do first home buyers pay stamp duty in Victoria?

Eligible first home buyers can obtain an exemption at a dutiable value of $600,000 or less, or a concession from $600,001 to $750,000. The SRO rules checked 15 October 2026 also contain applicant, partner, transaction and residence conditions; the threshold is not the only test.

How much is the Victorian First Home Owner Grant?

SRO guidance checked 15 October 2026 confirms $10,000 for eligible new homes valued at $750,000 or less. Check the new-home definition, applicant and partner history, residency and occupation rules, and when funds can be paid.

Can I get the First Home Owner Grant when buying an established home?

An ordinary established home does not qualify for FHOG. Substantially renovated premises can qualify only if they satisfy the new-home rules. Separately, an eligible established-home buyer may qualify for duty relief; the grant and duty concession have different tests.

Do I need a 20% deposit to buy my first home?

Not necessarily. Some borrowers can purchase with less than 20%, although LMI or other conditions may apply. Eligible first home buyers using the Australian Government 5% Deposit Scheme may be able to purchase with a minimum 5% deposit without LMI, subject to scheme eligibility and lender credit requirements.

Can two people use the 5% Deposit Scheme together?

Yes. Eligible first home buyers can apply individually or jointly with one other eligible person, which can include a partner, friend or family member. Both applicants must meet the scheme's eligibility requirements.

Is there an income limit for the 5% Deposit Scheme?

No income cap applies under the expanded 5% Scheme, as confirmed in official guidance checked 15 October 2026. That does not remove the lender’s assessment of income and repayments or other scheme eligibility requirements.

Does pre-approval guarantee I can buy the property?

No. Pre-approval is generally conditional. Final approval will depend on factors including the specific property, valuation, updated financial information and lender requirements at the time of formal application. This distinction is particularly important if you are planning to bid at auction, where contracts are generally unconditional.

How does HELP or HECS debt affect my borrowing capacity?

Having a HELP or HECS debt does not automatically prevent you from obtaining a home loan, but compulsory repayments can reduce the income available to service a new loan, which may affect how much you can borrow. The impact depends on your income, outstanding balance and the lender's assessment methodology. Disclose any HELP debt when discussing your borrowing capacity.

When should I speak to a mortgage broker?

Ideally, before you become serious about making offers. Understanding your borrowing capacity, deposit requirements and potential first home buyer assistance early can help you search within a realistic price range and avoid common mistakes.

How do I get started with Natloans?

You can explore Natloans' home loan services and contact the team via natloans.com.au/home-loans or visit bestmortgagebrokermelbourne.com.au. Speaking with a broker early in the process — before you start attending inspections — can help you understand what may be achievable and which government assistance you may qualify for.

Next Steps

Buying your first home does not need to start with a property inspection. A good first step is understanding your borrowing position, deposit situation, potential government assistance and suitable home loan options.

Use Natloans' Borrowing Power Calculator to get a general sense of your position.
Use the Stamp Duty Calculator to estimate transfer duty on a potential purchase.
Check current First Home Owner Grant eligibility at the Victorian State Revenue Office.
Check current 5% Deposit Scheme eligibility and property price caps at firsthomebuyers.gov.au.
Speak with a Natloans mortgage broker about your specific circumstances via natloans.com.au/home-loans.

Sources and References

Natloans, First Home Buyer Melbourne Guide 2026, published 21 September 2026, last modified 28 September 2026. natloans.com.au/first-home-buyer-melbourne-guide
Victorian State Revenue Office — First Home Owner Grant: sro.vic.gov.au
Australian Government First Home Buyer information: firsthomebuyers.gov.au
Natloans Home Loans: natloans.com.au/home-loans
Natloans Borrowing Power Calculator: natloans.com.au
Natloans Stamp Duty Calculator: natloans.com.au
Natloans Home Loan Calculator: natloans.com.au

The original Natloans article is dated September 2026; linked official assistance rules were checked on 15 October 2026. Business statistics remain attributed public claims. Calculator results are estimates rather than approvals, duty assessments or guarantees. Obtain current advice for the actual transaction.

Turn the budget into a settlement plan

Check	Practical question
Deposit and valuation	What loan is available if the valuation is lower than the contract price, and how will any shortfall be paid?
Assistance	Which grants, guarantees or concessions are confirmed, which remain conditional, and when will any money be received?
Contract	What deposit is due, when is the finance deadline if agreed, and what happens if finance or settlement is delayed?
Repayments and reserves	Can the household cover repayments, ongoing ownership costs and a realistic changed-income or changed-rate scenario?
Final approval	Have all lender conditions, documents, security requirements and required cash been satisfied?

This is an editorial planning checklist. A 5% loan contribution does not automatically make the contract deposit 5%; agree the contract terms with the seller and obtain conveyancing advice. A grant or guarantee is not spare money to count twice in the funding plan.

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