What a mortgage broker wishes every first home buyer knew before they started looking

Finding the right first home is hard enough. Getting yourself into a position to actually buy it is a completely different challenge. Deposits, borrowing capacity, government schemes and a whole new vocabulary can make the finance side feel more daunting than the search itself.

In part two of our first home buyer series on Property, Straight Up, Warwick Brookes sat down with Jacquie Chia, owner of Melbourne mortgage broking business Mortgage Zone, to break it all down. Her starting point might surprise you. The biggest mistake she sees first home buyers make has nothing to do with numbers at all.

From temporary job to business owner

Jacquie joined her mother’s broking business around 2014 as a temporary arrangement while waiting on job offers after university. She never left, and today owns Mortgage Zone alongside her business partner, Audrey Chong.

She sees two kinds of first home buyer. The first has read everything and arrives with detailed questions, but needs help filtering the noise to work out what actually applies to them. The second has had their head in the sand until a life event or their parents pushed them through the door, and simply wants to be told what to do.

The real barrier is believing it is impossible

Asked about the most common mistake buyers make before they even start, Jacquie did not point to credit cards or savings habits. She pointed to mindset.

“The biggest mistake I see with buyers is the mindset that it’s impossible.”  Jacquie Chia

Many people come to the market later in life because they assumed they could never earn or save enough, without ever testing that assumption. Jacquie has watched people lose several years this way.

Her answer is a plan. Once you have one, you can work towards it. The plan may change along the way, but at least you are moving in a direction rather than standing still.

You cannot speak to a broker too early

When should a prospective buyer first see a broker? The earlier the better, says Jacquie. She regularly works with clients aged 19 to 23 who are just entering the workforce and know they want to own a home in a few years.

Together they map out a budget, a savings target and a timeframe. Many return within three to five years ready to buy. An early conversation is not a commitment; it is simply an education about what is possible.

How much deposit do you really need?

The traditional rule of thumb has always been a 20% deposit, which allows a buyer to avoid lenders mortgage insurance (LMI). According to Jacquie, that benchmark is neither necessary nor, for many people, desirable.

In very specific circumstances, the right buyer can technically get into the market with no deposit at all. For most first home buyers who qualify for the federal government’s 5% Deposit Scheme, the requirement is a 5% deposit plus stamp duty, if any applies to the property.

Waiting to save the full 20% can actually work against you, because property prices often rise faster than people can save. Jacquie’s view is that most buyers are better off getting in sooner, even if that means paying LMI.

“In the two years that it takes you to save the extra money, the property market’s probably gone up by another five percent.”  Jacquie Chia

LMI is a one time cost, and very unlikely to approach 5% of the purchase price.

The costs beyond the deposit

The deposit is only part of the money a first home buyer needs to have ready. Jacquie walked through the settlement costs buyers should budget for:

• Stamp duty, which in Victoria is calculated by the State Revenue Office, where concessions and exemptions may apply to eligible first home buyers
• Transfer and registration fees
• Solicitor or conveyancer fees
• Building and pest inspections
• Settlement adjustments for council rates, water and, where applicable, owners corporation fees

She asks clients to hold a buffer of around $5,000 on top of these costs, and then factors in how much cash each buyer wants left in the bank after settlement. For some that is $2,000; for others, $20,000.

Making sense of the government schemes

Jacquie focused on the two federal schemes that matter most.

The 5% Deposit Scheme. Administered by Housing Australia, this is the scheme Jacquie uses most. Buyers must be Australian citizens or permanent residents, and since October 2025 there is no income cap. Price caps vary by location; in Melbourne and Geelong the cap is $950,000. Buyers show 5% in genuine savings, the government guarantees the portion that would otherwise need LMI, and the lender provides 95% of the price, provided the buyer can service the loan.

Help to Buy. This is the federal shared equity scheme, also run by Housing Australia. The government takes up to 40% of a new home or 30% of an existing one, and buyers need as little as 2% deposit. But income limits are low (currently $103,000 for singles and $165,000 for couples and single parents), so Jacquie rarely uses it.

Warwick noted that if your income rises, you may need to start buying back the government’s share. And when you sell, the proceeds are shared with the government, which is what turns most people away.

Buying new and building: proceed with care

Some buyers turn to new properties for stamp duty savings, or to house and land packages when an established house is out of reach.

It can work for the right person, but construction costs are high, surprises are common and land can take a long time to title. Jacquie often sees clients wait around two years to move in. Buying established is frequently the faster way into the market.

What really determines your borrowing power

According to Jacquie, borrowing capacity comes down to three things:

• Your income
• Your liabilities, including car loans, personal loans, credit card limits, HECS debt, general living expenses and commitments such as private health insurance
• Your credit report, which determines which lenders are willing to deal with you

A poor score can limit which lenders will deal with you: a buyer who might borrow $600,000 from one lender could be pushed to another offering only $400,000. A very poor score may mean waiting around 24 months for your report to recover.

Two things that surprise buyers

The serviceability buffer. Lenders do not assess your application at today’s interest rate. Under guidance from the Australian Prudential Regulation Authority, they test whether you could still afford the loan at a rate around 3% higher. If the actual rate is 6.14%, the bank is assessing you at 9.14%. A buyer may think a $2,500 monthly repayment is easily covered; the bank may be assessing closer to $4,000.

Credit card limits. Lenders treat the full limit of every card as if it were drawn down, whether or not you owe anything.

“A $10,000 credit card limit means I have to put away $380 a month, which I can’t use towards your mortgage.”  Jacquie Chia

Simple ways to improve your position

For buyers who want to strengthen their borrowing capacity before applying, Jacquie’s advice is practical:

• Pay down personal debt, including car loans, personal loans and buy now pay later accounts
• Avoid applying for multiple loans or credit cards in a short space of time; chasing a new points card every month will damage your credit score
• Above all, do a budget: know what you spend, what you need to spend, and what you can save

A clear budget makes the broker’s job easier and gives you confidence when you commit to a mortgage.

The Bank of Mum and Dad

How significant is family help today? In Jacquie’s words: huge. It is now rare to see a first home buyer without some parental support, and it does not always come as cash.

Living at home rent free, or for a minimal amount, is one of the most valuable forms of assistance. Jacquie illustrated it simply. Even a modest one bedroom apartment at $400 a week costs around $20,000 a year in rent. Save that for two years and you have $40,000, which is effectively a deposit.

Cash gifts range from around $10,000 to, in rare cases, $400,000, and many parents view them as an early inheritance.

Occasionally parents come on to the title as joint owners while only the child holds the loan, which can be useful for asset protection.

Protecting a family gift

Warwick raised a question many parents quietly worry about: what happens to a cash gift if their child buys with a partner and the relationship later ends?

Jacquie encourages families to get legal advice. A common approach is to document the money as an interest free loan repayable only when the property is sold. Many banks still accept this as a gift, yet it protects the family if the couple separates.

How much can you rely on a preapproval?

A preapproval is a preliminary assessment of how much you can borrow and your maximum purchasing power. But not all preapprovals are created equal.

Some lenders issue automated preapprovals that check your credit score but do not verify payslips or savings. Jacquie recommends a fully assessed preapproval for most first home buyers.

What no preapproval can guarantee is the valuation. Buy for $700,000, have the bank value it at $650,000, and you have a shortfall. Jacquie stressed this is very rare.

Auctions: unconditional, and not as scary as you think

Some buyers still do not realise a winning auction bid is unconditional. Warwick has seen buyers win and then ask about their building and pest inspection. By then it is too late.

The more common issue is fear. Many first home buyers avoid auctions altogether. Jacquie actually prefers them: with a solid preapproval and a clear limit, they are quick and you can see exactly who you are bidding against.

Warwick agreed; in a private sale or best and final offers campaign, you often have no idea what is happening on the other side.

His tip: do not let emotion carry a $700,000 budget to $715,000. Jacquie noted that detachment usually only comes after losing a few auctions, and that it does get easier.

Interest rates and a more realistic mindset

With rates back in the sixes, Jacquie has noticed first home buyers becoming far more conscious of cash flow and the monthly repayment they are genuinely comfortable with.

“Your borrowing capacity may be a million dollars, but do you really want to make the repayments on a million dollar loan?”  Jacquie Chia

If $5,000 a month is your ceiling, Jacquie suggests capping your borrowing to match. She has clients who could buy at $1.5 million but have chosen to buy at $1.2 million to keep their lives manageable.

Realism about the property matters too. Jacquie’s advice: your first home is not your dream home. Getting the finance is often the easy part; finding the property is what takes six months.

Couples need to agree early on why they are buying and where they will compromise. Otherwise the search scatters, and a couple who have spent months in the south east suddenly find themselves inspecting in Essendon.

The quick fire round

Warwick closed with a few rapid questions. Jacquie’s answers:

• Save longer or buy sooner? Buy sooner.
• Fixed or variable? Fixed for certainty; variable if you are happy to go with the flow.
• Apartment or house? It depends on your lifestyle.
• Renovate later or buy turnkey? It depends how handy you are and how much building work you can live with.
• Broker or bank? Broker, admittedly with some bias.
• Biggest waste of money before applying for a loan? Paying for building and pest inspections when you do not yet know whether you can afford the property.

On searching for months before talking finance, Jacquie agreed it is the cart before the horse, though for some people falling for a home is the catalyst they need.

Key takeaways for first home buyers

• Do not assume ownership is out of reach. Sit down with a broker and test the numbers before deciding it is impossible.
• Speak to a broker early, even years before you plan to buy, and build a savings plan with a timeframe.
• You probably do not need a 20% deposit. The 5% Deposit Scheme can get eligible buyers into the market sooner without LMI, within the price caps.
• Budget for stamp duty, legal fees, inspections and settlement adjustments, plus a buffer of around $5,000 and the post settlement cash reserve you need to feel comfortable.
• Lenders assess you at around 3% above the actual rate, and every credit card limit reduces what you can borrow.
• Choose a fully assessed preapproval where possible, and remember an auction bid is unconditional.
• Cap your borrowing at a repayment you are genuinely comfortable with, not at the maximum the bank will lend.
• Above all, do your budget.

Key takeaways for parents and family supporters

• Help does not have to be cash. Letting a child live at home rent free can effectively fund a deposit within a couple of years.
• Cash gifts are increasingly common and are often viewed as an early inheritance.
• Consider documenting a gift as an interest free loan repayable on sale, which many lenders still treat as a gift but which offers protection if a relationship ends. Get legal advice first.
• Coming on to the title as a joint owner, without taking on the loan, is another option that may suit some families, particularly for asset protection.
• Encourage your child to have the finance conversation early, so your support fits into a clear plan.

Final word

Jacquie’s one piece of advice: do your budget. Know what is coming in, what is going out and the most you would comfortably pay towards a mortgage. Arrive with that, and a broker can quickly map your path into the market.

Getting finance right is about understanding your position and having a plan before you start making offers. The more prepared you are, the more confident you will be when the right opportunity arrives.

To speak with Jacquie and the team, visit Mortgage Zone. For independent help with the search, negotiation and auction bidding, talk to the team at Domain & Co.

This article is based on the Property, Straight Up podcast episode “First Home Finance, Deposits, Borrowing Power and the Bank of Mum and Dad,” featuring Jacquie Chia from Mortgage Zone. A first home buyer’s finance checklist is available to download from the episode show notes. This article is general information only and does not constitute financial or legal advice.