Top tips to avoid first home buyer mistakes

Buying before you understand borrowing capacity

Most first home buyers fall in love with a property before checking what they can actually borrow. The property might be within your budget on paper, but lenders assess your borrowing capacity differently to how you might calculate affordability at home.

Consider a buyer who finds a unit in Woolloongabba listed at $550,000. They have a 10% deposit saved and assume that because they can cover the repayments on a mortgage calculator, approval will follow. The lender, however, factors in existing credit card limits, HECS debt, and applies a buffer to the interest rate when calculating serviceability. The application comes back with a maximum borrowing limit of $480,000. The buyer is now locked into a purchase they cannot settle, facing the possibility of losing their deposit.

Borrowing capacity is not the same as what you think you can afford. Lenders use a debt-to-income ratio and assess all your liabilities, not just your current spending. A $10,000 credit card limit can reduce your borrowing power by $30,000 or more, even if the card is paid off every month. If you are carrying a Buy Now Pay Later account or a car loan, those affect the calculation too. Getting this sorted before you start looking means you know your ceiling and can shop accordingly.

Not applying for a pre-approval before making an offer

Going to auctions or making offers without pre-approval in place is a gamble. A pre-approval gives you a conditional commitment from a lender, subject to valuation and a few final checks. It also signals to agents and sellers that you are in a position to move quickly.

In our experience, buyers without pre-approval often lose out to others who can proceed immediately, even when both parties are offering similar amounts. Brisbane's inner suburbs move quickly, and sellers are not interested in holding a property off the market while you scramble to organise finance. A pre-approval typically lasts three to six months and gives you confidence that your loan structure, deposit, and income have already been reviewed.

It also means you find out about problems early. If your employment type, visa status, or deposit source is going to create issues with certain lenders, a broker can identify that during pre-approval and structure the application accordingly. Finding out after you have signed a contract is too late.

Choosing the wrong loan structure for your situation

Picking a home loan is not about finding the lowest rate advertised online. The structure matters more than the headline rate, particularly if your circumstances are likely to change in the next few years.

Some first home buyers lock in a fixed rate for three or four years without considering whether they might want to make extra repayments, refinance, or sell before that term ends. Fixed rates often come with restrictions on additional repayments and break costs if you exit early. Others go for a variable rate with an offset account when they do not have surplus cash to park in the offset, meaning they are paying for a feature they are not using.

A split loan, where part of your borrowing is fixed and part is variable, can give you stability on a portion of your repayments while keeping flexibility on the rest. If you are expecting a pay rise, bonus, or parental gift in the next year or two, having at least part of the loan on a variable rate with an offset or redraw lets you pay that money down without penalty.

Overlooking the cost of Lenders Mortgage Insurance when it could be avoided

Lenders Mortgage Insurance (LMI) is charged when you borrow more than 80% of the property value. It protects the lender if you default, and the premium can add $10,000 to $20,000 or more to your loan balance depending on your deposit size and purchase price.

The First Home Guarantee allows eligible buyers to borrow up to 95% of the property value without paying LMI, provided the property is under the regional or national price cap and you meet the eligibility criteria. The scheme was expanded significantly in late 2025, with income caps removed and more properties included.

If you have a 10% deposit, it is worth checking whether you qualify for the guarantee before accepting a loan that includes LMI. Some buyers assume they need a 20% deposit to avoid the insurance, when in reality they could be buying sooner and keeping more cash in reserve by using the scheme. If you do not qualify, or the property is above the cap, some lenders offer no LMI loans to certain professions or in specific circumstances, so it is worth asking.

Missing out on state grants and concessions

Queensland offers first home buyers up to $30,000 towards buying or building a new home valued under $750,000, and this grant is available until 30 June 2026. On top of that, stamp duty concessions apply to established homes under $800,000, with no duty payable on properties up to $700,000 for eligible buyers.

Many first home buyers do not realise they can stack state grants with the federal First Home Guarantee, significantly reducing the upfront cost. If you are buying a new townhouse in Coorparoo for $680,000, you could access the $30,000 state grant, avoid LMI through the guarantee, and pay little to no stamp duty. That is a combined saving that could be $50,000 or more compared to buying without understanding what is available.

These concessions and grants have eligibility conditions around income, property value, and whether you have owned property before. Some are also time-limited, so if you are in the market now, it is worth confirming what applies to your situation before you make an offer. The Office of State Revenue in Queensland is the official source, but a broker familiar with first home buyer schemes can walk you through it quickly.

Skipping the budget for ongoing costs after settlement

Purchasing a property involves more than the deposit and the mortgage. First home buyers often budget carefully for the purchase itself but underestimate what it costs to live in the property once they move in.

Body corporate fees for units in suburbs like West End or Fortitude Valley can be $1,500 to $3,000 per quarter. Council rates, water, insurance, and maintenance add up quickly. If you are buying a standalone house, you are responsible for everything from replacing a hot water system to repairing a fence. A rule of thumb is to set aside at least 1% of the property value each year for maintenance, though older homes may require more.

If your budget only works because you are stretching to the maximum loan amount a lender will approve, any unexpected cost becomes a problem. Lenders assess serviceability with buffers built in, but they do not know your actual spending habits or how much you want to save each month. Building a buffer into your own budget means you can handle the inevitable costs without falling behind on repayments.

Using a gift or borrowed funds without declaring it properly

Lenders need to know where your deposit comes from. If part of your deposit is a gift from family, most lenders will accept it, but they require a signed declaration from the person giving the money confirming it is a genuine gift and not a loan that needs to be repaid.

Some buyers try to move borrowed money through their account and present it as savings. Lenders review bank statements going back three to six months, and they will ask about any large deposits that do not match your income pattern. If you cannot explain it, or if it turns out the funds are borrowed, the application can be declined or delayed.

The same applies to the First Home Super Saver Scheme, which allows you to withdraw up to $50,000 from your super for a deposit. You need to apply for the release through the ATO, and it can take a few weeks to come through. Leaving it until the last minute before settlement can create unnecessary stress. If you are planning to use this scheme, start the process as soon as your offer is accepted.

Choosing a lender based only on the interest rate

The advertised rate is only one part of the picture. Some lenders offer low rates but charge higher fees, have strict serviceability rules, or take longer to process applications. Others might not lend in certain postcodes, or they exclude apartments in buildings over a certain height.

If you are buying in a high-rise building in South Brisbane, some lenders will not touch it. If you are self-employed or on a visa, your choice of lenders narrows further. A broker who works with first home buyers regularly will know which lenders suit your situation and which ones to avoid, saving you the time and potential credit file impact of applying to the wrong lender.

Some buyers also choose a lender and then realise later that they cannot access features like an offset account, or that the lender does not allow additional repayments above a certain threshold. Knowing what matters to you before you apply means you end up with a loan that fits how you plan to use it, not just one that looked appealing on a comparison website.

Waiting too long to speak to a broker

Many first home buyers spend months researching online, trying to figure out deposit requirements, loan options, and eligibility on their own. By the time they reach out for help, they have often made decisions that limit their options or cost them money.

Speaking to a broker early means you can structure your finances in a way that maximises your borrowing capacity and eligibility for schemes like the First Home Guarantee. It also means you avoid mistakes like closing a credit card the day before applying, or paying off a small debt with funds you needed for settlement costs. Small decisions early on can have a significant impact later, and a broker can map out the steps in the right order.

If you are thinking about buying in the next six to twelve months, that is the right time to start the conversation. You do not need to have your deposit saved or a property picked out. You just need to know where you stand and what needs to happen between now and when you are ready to make an offer.

Call one of our team or book an appointment at a time that works for you. We work with first home buyers in Brisbane every week, and we will walk you through what applies to your situation without the jargon or the runaround.

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