Everything You Need to Know: First Time Buyer Advice

Understanding Your Deposit Options as a First Home Buyer

The amount you need upfront depends on which scheme you use and what your lender requires. Under the Australian Government 5% Deposit Scheme, eligible first home buyers can purchase with a 5% deposit without paying Lenders Mortgage Insurance. For ADF members, this often combines with no LMI loans that some lenders extend to Defence personnel regardless of deposit size.

Consider a buyer at Puckapunyal looking at a unit in nearby Seymour. With the Melbourne property price cap at $950,000 for the 5% Deposit Scheme, a purchase within the regional market would typically require 5% of the property value plus settlement costs. That means your genuine savings need to cover stamp duty, conveyancing, building and pest inspections, and any initial loan fees. Applications are made through a participating lender panel of 31 lenders comprising three major banks and 28 non-major lenders.

Gifted deposits are generally accepted by most lenders, but the funds must come from an immediate family member and be genuinely gifted rather than loaned. Your broker will confirm what your chosen lender requires in writing before you proceed.

First Home Owner Grants and Stamp Duty Concessions in Victoria

Victoria offers a $10,000 First Home Owner Grant for new homes valued up to $750,000. The grant does not apply to established properties, so if you are buying an existing house or apartment in Seymour, Shepparton, or Euroa, you will not receive it. The grant is only available when you purchase a newly built home or build a new property yourself.

For stamp duty, Victoria provides a full exemption on properties up to $600,000 and a sliding scale concession from $600,001 to $750,000. This applies to both new and established homes, provided the property will be your principal place of residence. If the property you are buying falls below $600,000, you pay no transfer duty at all. Between $600,001 and $750,000, the concession phases out progressively.

In a scenario like this: an Army member posted to Puckapunyal buys an established townhouse for $580,000 in Seymour. The stamp duty exemption applies in full. Settlement costs include conveyancing around $1,500, building and pest inspection approximately $600, and loan establishment fees if applicable. With a 5% deposit under the Federal scheme, the upfront cost remains manageable without needing to save for LMI.

How the Australian Government 5% Deposit Scheme Works

The scheme allows eligible first home buyers to purchase with a 5% deposit, with Housing Australia guaranteeing the difference between the deposit and 20% of the property value, and no lenders mortgage insurance is payable. There are no income caps, and there are no annual limits on the number of places available. This removes two of the barriers that existed under earlier versions of the scheme.

You cannot apply directly to Housing Australia. Your application goes through a participating lender. Defence Loans works with lenders on that panel who also understand ADF income structures, including allowances and deployment pay, which can affect your borrowing capacity.

The scheme applies to owner-occupiers only. Investment properties are not eligible. The property must be your principal place of residence, and you must move in within 12 months of settlement.

Fixed or Variable Interest Rates for First Home Buyers

Your decision between a fixed interest rate and a variable interest rate comes down to how much certainty you need and how long you expect to stay in the property. A fixed rate locks in your repayment amount for a set period, usually one to five years. A variable rate moves with the market and typically comes with features like an offset account or redraw facility.

Many ADF members we work with prefer a split loan structure, fixing a portion of the loan for stability and leaving the remainder on a variable rate for flexibility. That way, if you receive a lump sum from posted allowances or a tax refund, you can put it into an offset account linked to the variable portion and reduce the interest you pay without losing access to the funds. If your fixed rate is nearing expiry, reviewing your options early gives you time to restructure rather than rolling onto a higher rate automatically.

Offset accounts are particularly useful for ADF members who move frequently. If you are posted away from Puckapunyal and need to rent out the property temporarily, having accessible savings in an offset account lets you cover unexpected maintenance costs without applying for a redraw or increasing your loan balance.

Pre-Approval Before You Start Searching

Getting loan pre-approval tells you what you can borrow and shows sellers you are in a position to proceed. Pre-approval is not a guarantee, but it is conditional approval based on the financial information and documentation you have provided. It usually lasts between three and six months, depending on the lender.

For ADF members, pre-approval often involves submitting recent payslips, a notice of assessment from the ATO, and a statement of your current savings and liabilities. If you receive allowances such as posted living-in allowance or rental assistance, some lenders will include a portion of that income in their assessment, while others will not. Working with a broker who knows which lenders accept ADF-specific income makes a measurable difference to how much you can borrow.

Pre-approval also gives you a clear view of what you will pay at settlement. Once you know your purchase budget, your deposit amount, and whether you qualify for Victorian stamp duty concessions, you can calculate the total upfront cost and plan accordingly.

Combining Federal and State Schemes

State and territory grants and stamp duty concessions can generally be used alongside the Australian Government 5% Deposit Scheme. In Victoria, that means a first home buyer purchasing a new build under $750,000 can access the $10,000 grant, the stamp duty exemption or concession depending on price, and the 5% deposit option under the Federal scheme, all at the same time.

Help to Buy cannot be combined with the 5% Deposit Scheme but can in most jurisdictions be used alongside applicable state grants and duty concessions. Help to Buy is a shared equity arrangement where the Australian Government takes an equity stake in your property in exchange for contributing up to 40% of the purchase price for a new home or up to 30% for an existing home. Income limits apply: $100,000 for individuals and $160,000 for joint applicants or single parents. The scheme is available in Victoria, but if you are using it, you cannot also access the 5% Deposit Scheme in the same transaction.

For most ADF members at Puckapunyal, the 5% Deposit Scheme combined with Victorian state concessions provides the most direct path to purchasing your first home without taking on a shared equity obligation.

What Happens After Settlement

Once settlement is complete, your lender will require you to take out building insurance before you move in, and you will need to arrange contents insurance separately if you want your belongings covered. Both are your responsibility as the owner, and most lenders will not release funds until building insurance is confirmed.

If you are posted away from Puckapunyal within the first 12 months and need to rent the property out, you must notify your lender. Most home loans have different terms for investment properties, including a slightly higher interest rate. Moving out temporarily for ADF service reasons does not automatically disqualify you from first home buyer concessions, but you need to check the specific residency requirements attached to the Victorian stamp duty exemption and the Federal scheme you have used. In most cases, you are required to move into the property as your principal place of residence within 12 months of settlement and live there for a minimum period, often 6 to 12 months continuously.

If your circumstances change and you need to sell within the first few years, check whether any clawback provisions apply to the grants or concessions you received. These vary by state and by scheme, and your broker or conveyancer can confirm what applies to your situation before you list the property.

Call one of our team or book an appointment at a time that works for you. We work with ADF members across Puckapunyal and regional Victoria every week, and we will walk you through the full application process from pre-approval to settlement.

Frequently Asked Questions