Getting ready to buy your first home means sorting out your finances and paperwork before you start attending open homes.
Most first-time buyers do this the wrong way around. They find a property they love, make an offer, and then discover their borrowing capacity is lower than expected or their documentation takes three weeks to gather. By then, the property has sold to someone who had everything ready. Preparation means you can move quickly when the right property appears, and it means understanding what you can actually afford before you fall in love with something out of reach.
Working out what you can borrow
Your borrowing capacity depends on your income, existing debts, living expenses, and the deposit you have saved. Lenders assess your income after tax and subtract your minimum debt repayments, living costs, and a buffer to ensure you can still afford the loan if interest rates rise. The amount left over determines how much they will lend you.
Consider a buyer earning $85,000 per year with a $12,000 car loan and monthly credit card repayments of $300. Their take-home pay might support a loan around $450,000 to $480,000 depending on the lender, but that car loan and credit card reduce their capacity by roughly $80,000 to $100,000. Paying off the car loan before applying would increase what they can borrow without changing their income at all.
Lenders also assess your spending patterns over the past three to six months. If your account shows regular gambling transactions, frequent buy-now-pay-later payments, or consistently hitting your overdraft, that will reduce what they are willing to lend. Cleaning up your spending habits a few months before you apply makes a tangible difference to your borrowing capacity.
Understanding deposit options in Western Australia
In Perth, you have several pathways depending on how much you have saved. The First Home Guarantee allows eligible buyers to purchase with a deposit as small as 5% without paying Lenders Mortgage Insurance, which can save tens of thousands. This scheme was expanded in late 2025 and no longer has income caps, making it accessible to far more buyers than before.
Western Australia increased its stamp duty concession thresholds in the 2026-27 budget. You now pay no stamp duty on homes purchased pre-construction up to $800,000, with a 50% concession for homes above $900,000. The First Home Owner Grant property cap also rose from $750,000 to $800,000, giving eligible buyers $10,000 towards a new home or land and build package.
If you are buying an established home, you will need to cover stamp duty unless you qualify for a concession. For a property around $500,000, stamp duty in WA is roughly $17,000. Adding that to your deposit, settlement costs, and any immediate repairs means you need more than just the purchase deposit saved.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at Simple Lending today.
Gathering your documents before you apply
Lenders need proof of your income, savings, employment, and identity. For most PAYG employees, that means your two most recent payslips, two years of tax returns or PAYG summaries, and three to six months of bank statements showing where your deposit came from. If you are self-employed, lenders typically want two years of tax returns, two years of financial statements, and a letter from your accountant.
Your bank statements need to show genuine savings, meaning money you have accumulated over at least three months rather than a lump sum that appeared suddenly. If part of your deposit is a gift from family, lenders will ask for a signed letter confirming the money does not need to be repaid. Some lenders are more flexible with gifted deposits than others, and this is where a broker familiar with low deposit options can help match you to the right lender.
Gathering these documents takes longer than most people expect. Requesting statements from your superfund for the First Home Super Saver Scheme can take two weeks. Chasing an old payslip from a previous employer or locating your birth certificate adds time. Starting this process before you find a property means you can submit your application within 24 to 48 hours of making an offer.
Getting pre-approval so you can act quickly
Pre-approval gives you a conditional commitment from a lender before you find a property. It tells you exactly how much you can borrow, confirms your financial position is acceptable, and allows you to make offers with confidence. In a competitive market, sellers take offers from pre-approved buyers more seriously because they know the finance is likely to proceed.
Pre-approval is typically valid for three to six months depending on the lender. During that time, you can search for properties knowing your budget is locked in. If your circumstances change, such as changing jobs or taking on new debt, you will need to update your pre-approval before settling.
A mortgage broker can help you get pre-approval from multiple lenders without affecting your credit score, compare interest rates and loan features, and identify which lenders are most likely to approve your application based on your income type and deposit source. This removes much of the guesswork and reduces the risk of applying to a lender who will decline you.
Choosing the right loan structure and features
Once you know your borrowing capacity and deposit amount, you need to decide on your loan structure. The most common decision is whether to fix your interest rate, leave it variable, or split the loan between both. Fixed rates give you certainty for a set period, but you lose flexibility if you want to make extra repayments or refinance early. Variable rates move with the market, but they allow unlimited extra repayments and usually come with features like offset accounts and redraws.
An offset account sits alongside your home loan and reduces the interest you pay without locking the money away. If you have a $400,000 loan and $20,000 in your offset, you only pay interest on $380,000. This is particularly useful for first-time buyers who want to keep some savings accessible for furniture, repairs, or emergencies after settlement. Not all lenders offer offset accounts on every loan product, and some charge higher fees for loans with this feature, so weigh up whether the interest saving justifies the cost.
Some buyers in Perth are splitting their loans, fixing part to lock in a rate while leaving the rest variable for flexibility. This approach works if you want some protection against rate rises but still want the ability to make extra repayments or access features like an offset. Your broker can model different split scenarios to show you the trade-offs in interest cost and flexibility.
Planning for settlement and upfront costs
Beyond your deposit, you will need to budget for settlement costs including conveyancing, building and pest inspections, loan application fees, and any immediate repairs or modifications. In Perth, conveyancing typically costs between $1,200 and $2,000 depending on the property type and complexity. Building and pest inspections cost around $400 to $600 combined, and some lenders charge application or valuation fees of $300 to $600.
If you are buying in a suburb like Baldivis, Byford, or Ellenbrook where new estates are common, factor in additional costs like connecting utilities, landscaping, and window coverings. These costs can add $5,000 to $15,000 depending on the size of the property and how much is already installed. Established homes closer to the city may need less upfront work but could require renovations or repairs shortly after you move in.
Some buyers underestimate how much cash they need on settlement day. Your conveyancer will provide a settlement statement showing exactly what is due, including adjustments for rates and water already paid by the seller. Having a buffer of at least $2,000 to $3,000 beyond your expected costs reduces the risk of scrambling for funds at the last minute.
Call one of our team or book an appointment at a time that works for you. We will walk you through the whole process, help you understand your borrowing capacity, gather your documents, and get you pre-approved so you are ready to move when you find the right property.
Frequently Asked Questions
How much deposit do I need to buy my first home in Perth?
You can buy with as little as 5% deposit under the First Home Guarantee without paying Lenders Mortgage Insurance. Most lenders require at least 10% if you are not using a government scheme, though some allow gifted deposits to make up part of that amount.
What documents do I need to apply for a home loan?
PAYG employees need two recent payslips, two years of tax returns or summaries, three to six months of bank statements, and proof of identity. Self-employed buyers need two years of tax returns, financial statements, and an accountant's letter.
How long does pre-approval last?
Pre-approval is typically valid for three to six months depending on the lender. If your circumstances change during that time, such as changing jobs or taking on new debt, you will need to update your application before settling.
What are the upfront costs beyond my deposit?
You will need to budget for stamp duty (unless you qualify for a concession), conveyancing fees, building and pest inspections, loan application fees, and any immediate repairs or modifications. In Perth, these costs typically add $3,000 to $20,000 depending on the property and whether it is new or established.
Should I fix or keep my interest rate variable?
Fixed rates give you certainty but limit flexibility for extra repayments and refinancing. Variable rates move with the market but allow features like offset accounts and unlimited extra repayments. Many buyers split their loan to get some of both.
