We will never contact you unexpectedly and ask for your account information. Find more info on how to spot a scam here.

This site uses cookies to shape your online experience. Read more

Property Home loan application checklist A handy checklist to what you’ll need before applying.
Money Discover more joy in your budget Decluttering some of your expenses might help free up some money in your budget.
Property 3 tips for solo first home buyers Purchasing a property on your own is possible.

Understanding how much to borrow


Top 5 first home buyer tips to calculate how much you can borrow.

Borrowing for your first home is an exciting time in your life, but before you talk to your lender, how do you know how much you can safely borrow to avoid any future home owner stress? Planning your first home purchase will give you a better understanding of any hidden costs as well as any first home buyer grants or stamp duty exemptions that could help you own your home sooner.

1. How much can you borrow?

Before you start looking at real estate, it’s important to know how much you can borrow to set your first home budget. To establish your borrowing power, lenders will consider many factors including your salary, deposit amount, savings habits, living expenses, debt, credit history and if you have any dependents. You can use online calculators to get an approximate idea of how much you can borrow.

Remember that online calculators are only indicative and based on assumptions, so while they’re a good guide to your approximate borrowing capacity, the actual amount you can borrow may differ when you see a lender who has a more detailed understanding of your position.

When you get serious about looking for your first home, it’s helpful to contact your lender to have a conversation so they get a comprehensive view of your specific circumstances, and in turn you will get a clearer understanding of how much you can actually borrow.

2. How much should you borrow?

As a first home buyer it’s important for you to consider how much you could borrow versus how much you should borrow. Just because you can borrow up to a particular amount doesn’t necessarily mean you should, as you may want to keep in touch with some indulgences, or pursue life’s non-essentials like holidays, extra study or more expensive hobbies. Remember as well that life continues after you buy a home, so there could be weddings, renovation and maintenance costs or changes in work arrangements, so always ensure you allow some additional room in your budget.

3. Be aware of the true cost of buying a home

Most first home buyers aren’t aware of the many extra costs associated with buying a home. When determining how much you should borrow for the first time it’s wise to factor in additional costs in case they pop up down the track. During the buying process, the basic costs you can expect are:

  • Pest and building inspection: many lenders require a report from a pest and building professional to finalise your loan (approx. $500)1
  • Conveyancing fees: your solicitor or conveyancer will finalise the purchase and transfer of land titles (approx. $2,000)1
  • Insurance: to be cautious it is generally a good idea to insure the property*  during the settlement period to safeguard against things that could happen during this time. You could consider getting an online quote so you know what to factor into your budget
  • Stamp duty: this differs by state. For the most up to date information on stamp duty for first home buyers visit http://www.firsthome.gov.au
  • Lenders mortgage insurance (LMI): if your deposit is less than 20% you may need to pay LMI. Some lenders will let you add this to your loan total, however it is important to note that the maximum loan amount for some lenders is 95%, including LMI charges.

4. Factor in the unexpected costs in your home

Even if you hope to buy a brand new house or build a new home, buildings will always require unexpected maintenance, prompting a call to a local tradie, and even your home contents like appliances can stop working at the worst possible time for your budget. Factor in space to cover these to help ensure you’re not under unnecessary strain if and when they do pop up. It’ll make your home ownership experience much less stressful once you start making repayments!

5. Factor in first home buyer grants and stamp duty exclusions

If you are an eligible first home buyer and intend on living in your first home for at least 12 months you could be eligible for government grants or discounts. The first home buyer grants and discounts vary by state and can also change based on if you are buying an existing home or building a new one. You can view the most current first home buyer grants and eligibility criteria by visiting http://www.firsthome.gov.au.

Home, Contents and Landlord Insurance is arranged by Newcastle Permanent Building Society Limited ACN 087 651 992, AFS Licence No. / Australian Credit Licence 238273 (NPBS) and is issued by the insurer Allianz Australia Insurance Limited ABN 15 000 122 850, AFS Licence No. 234708 (Allianz). In arranging this insurance, NPBS acts under its own AFS Licence and as agent for Allianz under an agreement with Allianz.
This information is general advice only and does not take into account your objectives, financial situation or needs. Policy terms, conditions, limits and exclusions apply. You should consider whether or not the insurance is appropriate for you and the relevant Product Disclosure Statement (PDS) in deciding whether to buy or continue to hold any of these insurance products.
You can get a PDS for the relevant insurance product from any branch of NPBS or by phoning 13 19 87. We will receive a commission that is a percentage of the premium for insurance product sales. Our staff earn a salary and may also be eligible for annual and other discretionary performance bonuses that are based on a number of factors that include the amount of insurance products sold. Discretionary bonuses may be of a monetary or non-monetary nature. We may also receive other benefits under our agreement with Allianz that are not directly related to the services we provide you. We also have an arrangement with a related company of Allianz under which we provide services including but not limited to training, marketing, administrative and support services relating to some Allianz insurance products, and for this we receive a share of aggregate profits from those Allianz insurance products that we arrange. Ask us for more details before we provide you with any services. Further details can also be found in our Financial Services Guide.
1. Fee estimates are approximations only and set by the third party providing the service. The links provided are to websites controlled or offered by third parties (non-Newcastle Permanent).
This article is intended to provide general information of an educational nature only. It does not have regard to your objectives, financial situation or needs and must not be relied upon as financial product advice. Before you act on this information, you should consider whether it is appropriate for your circumstances. Information in this article is current as at the date of publication. Information in this article is current as at the date of publication. Applications subject to credit approval and fees and charges are payable. Terms and conditions apply and are available on request.

Home loans and mortgages

We'll help you find the right home loan for your needs.

Learn more

Send this article to friends and family

Property Managing your new home loan All the things you need to know for settlement.
Money Audit your subscriptions How the decluttering trend can save money in your budget.