Preparation and Planning for First Home Buyers in WA

Understanding Your First Home Buyer Budget

Before you start searching for properties, establishing a realistic first home buyer budget is essential. This means looking beyond the property price to understand all the costs involved in buying your first home.

Your budget should include:

• Property purchase price
• Deposit (typically ranging from a 5% deposit to 20%)
• Lenders Mortgage Insurance (LMI) if your deposit is less than 20%
• Stamp duty (though first home buyer stamp duty concessions may apply in WA)
• Legal fees and conveyancing
• Building and pest inspections
• Moving costs

Western Australia offers specific benefits for first home buyers through various government schemes. Understanding first home buyer eligibility criteria helps you determine which programmes you can access and how they impact your budget.

Checking Your First Home Buyer Eligibility

First home buyer eligibility requirements vary depending on the assistance programme you're applying for. The First Home Loan Deposit Scheme and Regional First Home Buyer Guarantee are federal initiatives that help eligible buyers purchase property with low deposit options.

For these schemes, you generally need to:

• Be an Australian citizen aged 18 or over
• Not have previously owned property in Australia
• Meet income caps (these vary by programme)
• Intend to live in the property as your primary residence
• Purchase a property below the regional price cap

Western Australian first home buyers may also qualify for state-based first home owner grants (FHOG) and stamp duty concessions, which can significantly reduce upfront costs.

Creating Your First Home Buyer Checklist

A comprehensive first home buyer checklist keeps your property purchase preparation on track. Here's what you should include:

Financial preparation:

• Review your credit score and address any issues
• Save your deposit (including gift deposit if family members are contributing)
• Reduce existing debts to improve borrowing capacity
• Gather employment and income documentation
• Calculate your genuine savings

Research and planning:

• Research suburbs and property types
• Understand current market conditions
• Investigate first home buyer grants and concessions
• Learn about the first home super saver scheme if you've been contributing

Loan preparation:

• Compare Home Loan options from various lenders
• Decide between fixed interest rate, variable interest rate, or split loans
• Consider loan features like offset account and redraw facilities
• Obtain pre-approval before making offers

Exploring Home Loan Options

Understanding the various Home Loan options available helps you select the right product for your circumstances. When buying your first home, you'll encounter several loan types and features.

Interest rate types:

• Variable interest rate: Fluctuates with market conditions, offering flexibility to make extra repayments without penalties
• Fixed interest rate: Locks in your rate for a set period (typically 1-5 years), providing repayment certainty
• Split loans: Combines fixed and variable portions for balance between certainty and flexibility

Many lenders offer interest rate discounts for first home buyers or those with larger deposits. An offset account can reduce the interest you pay by offsetting your savings against your loan balance, while redraw facilities allow you to access extra repayments you've made.

Low Deposit Options for First Home Buyers

Many first home buyers struggle to save a 20% deposit. Fortunately, several low deposit options exist:

The First Home Loan Deposit Scheme allows eligible buyers to purchase with just a 5% deposit without paying LMI, as the government guarantees up to 15% of the property value. The Regional First Home Buyer Guarantee offers similar benefits for those purchasing in regional areas of Western Australia.

Traditional lenders also offer 10% deposit loans, though you'll typically need to pay Lenders Mortgage Insurance (LMI). Some first home buyers use a gift deposit from family members to boost their deposit, though lenders have specific requirements about how these funds are documented.

You can learn more about deposit requirements through our guide on low deposit loans for first home buyers.

The First Home Loan Application Process

When you're ready to apply for a home loan, understanding the first home loan application process reduces uncertainty. Your first Home Loan application requires substantial documentation:

1. Identification documents: Driver's licence, passport, or birth certificate
2. Income verification: Recent payslips, tax returns, and employer letters
3. Expense documentation: Bank statements showing living expenses and rent payments
4. Asset and liability statements: Details of savings, vehicles, debts, and credit cards
5. Deposit evidence: Bank statements showing genuine savings or gift deposit documentation

Most buyers benefit from obtaining pre-approval before they start seriously looking at properties. Pre-approval indicates how much you can borrow and shows sellers you're a serious buyer. However, pre-approval isn't a guarantee - final approval depends on the specific property and your circumstances at settlement.

Understanding Lenders Mortgage Insurance (LMI)

Lenders Mortgage Insurance (LMI) protects the lender if you default on your loan. It's typically required when your deposit is less than 20% of the property value.

LMI can cost thousands of dollars and is usually added to your loan amount. The cost depends on:

• Your loan-to-value ratio (LVR)
• The loan amount
• Your employment type
• The lender's pricing

Some first home buyers can avoid LMI through:

• Government guarantee schemes (First Home Loan Deposit Scheme or Regional First Home Buyer Guarantee)
• Family guarantee or guarantor arrangements
• Professional packages for certain occupations
• Saving a 20% deposit

Our page on Home Loans for First Home Buyers provides additional information about managing LMI costs.

Taking Advantage of WA First Home Buyer Benefits

Western Australian first home buyers can access several benefits:

First Home Owner Grant (FHOG): Available for eligible buyers purchasing or building a new home under specific price thresholds.

Stamp duty concessions: First home buyer stamp duty concessions in WA can significantly reduce or eliminate transfer duty on eligible properties.

First Home Super Saver Scheme: Allows you to save for your deposit inside your superannuation fund with tax benefits.

Our comprehensive guide for first home buyers in Western Australia details these state-specific benefits and eligibility requirements.

Preparing for Pre-Approval

Obtaining pre-approval is a crucial step in your property purchase preparation. Pre-approval demonstrates to real estate agents and sellers that you're financially ready to purchase.

Before seeking pre-approval:

• Review your budget and determine your comfortable borrowing amount
• Check your credit report and address any issues
• Reduce discretionary spending to improve your borrowing capacity
• Consolidate documentation required for your application
• Research different lenders and their first home buyer products

A mortgage broker can help you navigate the pre-approval process, compare Home Loan options, and identify lenders offering competitive interest rate discounts for first home buyers. Find out more about getting loan pre-approval and what it means for your property search.

Making Your Property Purchase

Once you have pre-approval and understand your budget, you're ready to start viewing properties. Remember that your pre-approval amount represents your maximum borrowing capacity, not necessarily what you should borrow.

When making offers:

• Factor in all purchase costs, not just the property price
• Include building and pest inspection clauses in contracts
• Ensure your offer remains within your budget
• Keep your lender informed about properties you're considering
• Don't overcommit - maintain a buffer for unexpected expenses

After your offer is accepted, your lender will conduct a formal valuation and complete their assessment before providing final approval.

Getting Professional Support

Buying your first home involves complex financial decisions and legal processes. Working with professionals who understand the challenges first home buyers face can make the process less overwhelming.

A mortgage broker with experience in first home loan applications can:

• Compare Home Loan options across multiple lenders
• Identify lenders offering the most suitable interest rate types for your situation
• Help you understand loan features like offset account and redraw facilities
• Guide you through low deposit options and government schemes
• Manage your application and communicate with lenders

Property purchase preparation takes time, but thorough planning positions you for success when buying your first home.

Ready to start your first home buying journey? Call one of our team or book an appointment at a time that works for you at Simple Lending. We'll help you understand your Home Loan options, navigate the first home loan application process, and access the first home buyer grants and schemes available to Western Australian buyers.