Top 6 mistakes first home buyers make - and how to avoid them
At FMD Financial, we work with many first home buyers and see the excitement that comes with this milestone, along with the challenges it brings. We also notice common traps that first home buyers fall into, which can create financial strain, unnecessary stress, or missed opportunities. To help you navigate the journey with confidence, here are the top five mistakes first home buyers make—and how to avoid them.
Not taking full advantage of first home-buyer subsidies
Home buyer subsidies programs can be complex and hard to keep track of and that's where our team can help.
Tip: From 1 October, several changes expanding subsidies for first-home buyers will come into effect, with benefits your family’s first-home buyer can take advantage of.
- From this date, the Home Guarantee Scheme will be easier to access than ever: income caps will be removed, property price caps will rise significantly, and the number of places available will become unlimited.
- That means many first home buyers will be able to purchase with as little as a 5% deposit and avoid costly lenders’ mortgage insurance.
How to avoid this mistake:
Speak to us to find out about the latest the subsidies available and how they may help in your individual circumstances.
Overextending your budget
A common pitfall is committing to a property beyond your financial comfort zone. While lenders may approve you for a sizeable loan, managing repayments—especially if interest rates rise—can become difficult.
How to avoid this mistake:
- Set a realistic budget: Base it on your income, living expenses, and future goals (e.g. savings, family planning).
- Plan for interest rate rises: Use calculators to test higher repayment scenarios.
- Borrow less than your maximum: Staying below your limit provides breathing space.
Tip: An FMD adviser & lending specialist can help you assess a borrowing amount that aligns with your long-term financial health.
Underestimating additional costs
Many first home buyers focus on the purchase price and forget the other expenses that come with buying a property.
Costs to consider:
- Stamp duty (with some concessions available for first home buyers)
- Legal and conveyancing fees ($1,000–$3,000)
- Building and pest inspections ($300–$700)
- Moving and furnishing costs
- Utility connections and council rates
How to avoid this mistake:
- Research all potential costs and build a buffer into your budget (aim for around 6% of the purchase price).
- Use stamp duty calculators for your state.
- Explore available grants and concessions, such as the First Home Owner Grant or First Home Guarantee.
Skipping mortgage pre-approval
House hunting without pre-approval can lead to disappointment if finance isn’t secured when you find the right home.
Why pre-approval matters:
- Confirms your borrowing power.
- Strengthens your credibility with sellers.
- Speeds up the buying process.
How to avoid this mistake:
- Secure pre-approval before searching for a property.
- Work with an advisor & lending specialist to compare lenders and arrange pre-approval.
- Tip: Pre-approvals usually last 3–6 months. If your financial situation changes, you may need an update.
Neglecting property inspections
Some buyers skip building and pest inspections to save time or money, but hidden problems can lead to costly repairs later.
Risks of skipping inspections:
- Structural defects
- Termite or pest infestations
- Asbestos or mould issues
How to avoid this mistake:
- Always invest in professional inspections.
- Use reports to negotiate repairs or price reductions.
- Be cautious of sellers who discourage inspections.
Letting emotions drive decisions
Buying your first home is exciting, but emotional decisions can lead to overpaying or choosing a property that isn’t right long-term.
Emotional traps:
- Falling in love with one property and overlooking flaws.
- Fear of missing out (FOMO).
- Focusing on short-term desires over long-term needs.
How to avoid this mistake:
- Define your must-have features before you start.
- Take time to compare multiple properties.
- Consider long-term factors such as location, schools, transport, and resale value.
Tip: Seek advice from a trusted professional or mentor who can provide an objective perspective.
The bottom line
Buying your first home is a milestone worth celebrating, but preparation and planning are key to avoiding common mistakes. By setting a realistic budget, accounting for extra costs, securing pre-approval, completing inspections, and making rational decisions, you can move forward with confidence.
At FMD Financial, we help first home buyers prepare, plan, and secure the right loan for their needs. With expert guidance, you can avoid costly missteps and focus on enjoying your new home.
Ready to take the next step?
If your adult children have already got that deposit together and they want to get the right loan with plenty of support along the way to help them succeed, they can book a chat with me.
General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977. Rev Invest Pty Ltd is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977.