Most first home buyer mistakes aren't exotic. They're predictable, common, and expensive. Here's what brokers, conveyancers and building inspectors say they see buyers get wrong — and what to do instead.
Mistake 1 — Borrowing the maximum the bank offers
Lenders will pre-approve you for more than you should borrow. The pre-approval figure assumes you can afford the repayments at current rates with no buffer for rate rises, life events, or cost-of-living increases.
What to do instead: Aim for monthly mortgage repayments below 30% of your take-home pay. Stress-test at 7–8% interest, not today's headline rate. If the repayment at 8% looks unaffordable, the loan is too big.
Mistake 2 — Skipping the building & pest inspection
Established homes can hide expensive problems — termite damage, structural movement, asbestos, leaking shower recesses, faulty wiring, illegal additions. A building and pest inspection costs $400–$800. A new roof costs $15,000–$30,000. Re-stumping a house costs $20,000–$50,000.
What to do instead: Always get an independent building and pest inspection for an established home. Use a different inspector to the one the agent suggests. Don't waive the inspection to "win" a competitive offer — if you waive and discover major defects, you have no recourse.
Mistake 3 — Not checking which schemes you qualify for
The most expensive mistake of all is the one you don't know you're making. Most first home buyers don't check every scheme — they hear about one or two and assume that's the whole picture.
In 2026, the schemes available include:
- Federal 5% Deposit Scheme (5% deposit, no LMI)
- Help to Buy (government co-owns up to 40%)
- Family Home Guarantee (single parents, 2% deposit)
- First Home Super Saver (withdraw $50K from super)
- State First Home Owner Grants ($10K–$30K depending on state)
- State stamp duty exemptions or concessions (up to $50K in some states)
- Keystart (WA) or HomeStart (SA) — state-backed lenders with low deposit, no LMI
What to do instead: Use our 60-second eligibility check and state-by-state comparison as a starting point. Then confirm with a licensed mortgage broker who can run your actual numbers against every scheme.
Mistake 4 — Not using the 5% Deposit Scheme
The federal 5% Deposit Scheme, expanded on 1 October 2025, lets eligible first home buyers buy with 5% deposit and no Lenders Mortgage Insurance. Without it, a $700K home with 5% deposit costs about $25,000 in LMI. With it, $0.
What to do instead: Check your eligibility before you look at properties. You need to be a first home buyer (or have not owned property in 10 years), an Australian citizen or permanent resident, and the property must be owner-occupied under the relevant state price cap.
Mistake 5 — Not claiming the state stamp duty exemption
Stamp duty is the largest upfront cost after your deposit. State exemptions can save $0 to $50,000 depending on your state and the property value. Many first home buyers don't realise the exemption exists, or miss the window to apply.
What to do instead: Check the threshold for your purchase price in your state. NSW: full exemption under $800K. VIC: under $600K. QLD: $0 on new homes at any price; established up to $700K. SA: $0 on new homes at any price. ACT: $0 at any price from 1 July 2026. Tasmania: new homes only, after the 30 June 2026 sunset.
Mistake 6 — Buying in the wrong suburb because the numbers worked
Pre-approval tells you what you can borrow. It doesn't tell you where you should live. Many first home buyers chase the maximum borrowing capacity into a suburb they don't actually want to live in, then resent it for the next 10 years.
What to do instead: Set your "must-haves" and "nice-to-haves" before you start looking. Visit at different times (weekday morning, Saturday afternoon, Sunday morning). Talk to actual residents, not just the agent. If the numbers work in a suburb you don't love, walk away.
Mistake 7 — Not budgeting for the gap between contract and valuation
The bank's valuation may come back lower than the contract price — especially in a falling market, an off-the-plan project, or a unique property. If they value at $650K and you contracted at $700K, you need to find the $50K difference yourself, or the deal falls through and you may lose your deposit.
What to do instead: Research recent comparable sales before you make an offer. Build a 5% valuation buffer into your budget. For off-the-plan, ensure your contract has a "sunset clause" that protects you if the valuation falls short.
Mistake 8 — Not getting building insurance from exchange
Building insurance is required from the day you exchange contracts, not the day you settle. If the property burns down, floods, or is seriously damaged between exchange and settlement and you don't have cover, you lose everything.
What to do instead: Arrange building insurance on the day you sign the contract. Most insurers can do it over the phone in 15 minutes. Cost: $1,200–$3,500 for the first year on a typical property.
Mistake 9 — Not shopping around for the loan
Many first home buyers take the loan their existing bank offers, or the first one a single broker recommends. Different lenders have different interest rates, different fees, different policies on LMI waivers, and different scheme eligibility. A 0.25% interest rate difference on a $600K loan over 30 years is about $50,000.
What to do instead: Talk to at least two brokers (or apply directly with 3+ lenders) before committing. Compare interest rates, comparison rates, fees, offset accounts, redraw facilities, and whether the lender participates in your target scheme (5% Deposit Scheme, Help to Buy, Keystart, etc.).
Two more mistakes worth flagging
Mistake 10 — Telling people you're saving for a house
You will be asked for money. Family, friends, charities — everyone has a cause. The moment you mention a deposit goal, the asks begin. Save quietly, set up an automatic transfer on payday, and tell people after you've bought.
Mistake 11 — Waiting for the "perfect" market
Most first home buyers spend years waiting for the market to drop. It usually doesn't drop enough to make a meaningful difference, and the years of waiting cost more in rent than any price drop would save. Buy when you're financially ready, not when you predict the market bottom.
How to avoid all of these at once
Three practical steps that prevent most first home buyer mistakes:
- Use a buyer's agent (1.5–2.5% of price, or flat fee $5K–$10K) for competitive markets. They represent you, not the seller, and prevent the inspection-skipping, suburb-mismatch, and price-overpaying mistakes.
- Talk to 2+ mortgage brokers. Different lenders, different policies, different scheme eligibility.
- Read the contract yourself, even if you have a conveyancer. You don't need to understand every clause, but read it once so you can ask intelligent ones.
Buying a home is the largest financial decision most Australians make. A few thousand dollars spent on advice, inspections, and pre-purchase research is trivial compared to the cost of these mistakes.
Cost estimates in this article are based on common scenarios seen by brokers, conveyancers, and building inspectors. Individual outcomes vary. Always get quotes from licensed professionals before relying on these estimates.