Common Mistakes First Home Buyers Should Avoid

Thanks to the Australian Government’s 5% Deposit Scheme, more first home buyers are entering the property market without needing to pay costly Lenders’ Mortgage Insurance (LMI).

The expanded scheme — launched on 1 October 2025 — is expected to help around 70,000 Australians buy their first home within its first year of operation. But before you dive in, it’s important to understand a few common pitfalls first home buyers often face.

The new 5% Deposit Scheme explained

Previously known as the Home Guarantee Scheme, the initiative has been rebranded as the Australian Government 5% Deposit Scheme.

Under the program, eligible buyers across all income levels can now purchase a property with a 5% deposit, while the government guarantees up to 15% of the loan allowing you to avoid LMI entirely.

Property price caps have also increased significantly:

• Sydney: Up to $1.5 million

• Melbourne: Up to $950,000

• Brisbane: Up to $1 million

That means a first home buyer in Sydney could now purchase a $1.5 million property with just a $75,000 deposit.

With unlimited places and broader eligibility, it’s one of the most accessible times for first home buyers to step onto the property ladder.

Common mistakes to avoid

1️⃣ Underestimating your purchasing costs

Your deposit is just one piece of the puzzle. Don’t forget about:

• Stamp/transfer duty

• Legal and conveyancing fees

• Building and pest inspections

• Loan setup costs

• Ongoing expenses like rates, insurance, and utilities

Having a clear picture of all costs upfront helps prevent budget blowouts and stress later on.

2️⃣ Letting emotions take over

It’s easy to get attached to a dream home — but emotion-driven decisions can lead to overpaying or overlooking red flags.
Focus on value, condition, and location, not just looks. Remember: there will always be another great property.

3️⃣ Skipping pre-approval

Home loan pre-approval gives you a clear understanding of how much you can borrow and positions you as a serious buyer. It also strengthens your hand when negotiating or bidding at auction.
Pre-approval usually lasts for 90 days, giving you time to find the right home.

4️⃣ Ignoring building and pest inspections

It’s tempting to skip the inspection to save money, but that can backfire fast. Hidden issues like termites, rising damp, or structural damage can cost thousands to fix.
Always arrange your inspections before signing the contract of sale.

Ready to buy your first home?

Buying your first property is exciting, but expert advice makes all the difference.

At Haus of Loans, your trusted mortgage broker in Wollongong and the Illawarra, we’ll guide you through every step — from pre-approval and lender comparisons to explaining government incentives and deposit options.

📞 Get in touch today to find out how the 5% Deposit Scheme could help you achieve your homeownership goals sooner.