Understanding the basics of First Home Buyer Support

Getting into the property market in Hampton often feels out of reach when you're looking at median house prices around $1.8 million and units closer to $700,000.

The good news is that a range of federal and state programs exist specifically to reduce the upfront costs and deposit requirements for first home buyers. These schemes can mean the difference between waiting years to save a 20% deposit or purchasing sooner with as little as 5% down, without paying thousands in Lenders Mortgage Insurance.

How the First Home Guarantee Works

The First Home Guarantee allows eligible buyers to purchase a property with a deposit as low as 5% without paying Lenders Mortgage Insurance.

From October 2025, the scheme was expanded with no income caps and no place limits, meaning you can purchase anywhere in Australia, including Hampton. The federal government essentially guarantees up to 15% of the property's value to the lender, which removes the need for LMI. On a property purchased with a 5% deposit, this can save anywhere from $10,000 to $30,000 or more, depending on the purchase price and lender.

Consider a buyer who has saved $50,000 and wants to purchase a unit in Hampton around $650,000. Under the First Home Guarantee, they could proceed with a 5% deposit of $32,500, keeping the remainder for settlement costs and retaining some financial buffer. Without the scheme, they would either need to save closer to $130,000 for a 20% deposit or pay substantial LMI on a smaller deposit.

The scheme applies to both new and established properties, and participating lenders include most major banks. You'll need to work with a participating lender and meet their credit criteria, but the eligibility requirements are now far more accessible than previous versions of the program.

Victorian Stamp Duty Concessions and the $10,000 Grant

Victoria offers a full stamp duty exemption on properties valued up to $600,000 and a reduced concession on properties up to $750,000 for eligible first home buyers.

For a property purchased at $600,000, the exemption saves around $31,070 in stamp duty. Between $600,000 and $750,000, the concession tapers, but even at $700,000 you're still saving a significant amount compared to paying full duty. Given many units and townhouses in Hampton fall within or close to this range, the concession can make a tangible difference to your budget.

Victoria also provides a $10,000 First Home Owner Grant, but this applies only to new homes valued up to $750,000. If you're purchasing an established property in Hampton, you won't qualify for the grant, but you can still access the stamp duty concession and the federal First Home Guarantee.

In a scenario where a buyer purchases an established apartment at $650,000 in Hampton, they would pay no stamp duty under the concession, use the First Home Guarantee to avoid LMI, and could proceed with a 5% deposit. That's a total saving of over $60,000 in upfront costs compared to a standard purchase without any support.

Deposit Sources and the First Home Super Saver Scheme

Your deposit can come from genuine savings, the First Home Super Saver Scheme, or a genuine gift from a family member.

The FHSS allows you to save for a deposit inside your superannuation at a concessional tax rate of 15%, rather than your marginal income tax rate. You can contribute up to $15,000 per financial year and withdraw up to $50,000 in total to put towards your deposit. If you've been salary sacrificing into super specifically for this purpose, it's worth having that assessed early in the home loan application process.

Gifts from parents or family members are also accepted by most lenders, provided the funds are declared as a genuine gift with no expectation of repayment. Lenders will typically require a signed gift letter and evidence of where the funds came from. Combining genuine savings with a family gift and withdrawals from the FHSS can help you reach the required deposit without needing years of additional savings.

What Lenders Assess Beyond Your Deposit

First home buyer eligibility for a loan depends on your income, living expenses, existing debts, and credit history.

Lenders calculate your borrowing capacity using a serviceability buffer, meaning they assess whether you can afford repayments at a rate higher than the actual interest rate you'll pay. This buffer is typically around 3%, so even if you're offered a variable interest rate around 6%, the lender will assess your application as if the rate were closer to 9%.

Your regular expenses matter just as much as your income. Lenders review bank statements for recurring subscriptions, buy-now-pay-later arrangements, credit card limits, and general spending patterns. In our experience, buyers who reduce their credit card limits and consolidate small debts before applying often qualify for a higher loan amount simply because their serviceability looks stronger on paper.

If you're self-employed or work casually, lenders generally require two years of tax returns or financials to verify income. For PAYG employees, recent payslips and a letter of employment are usually sufficient. The key is to have your documentation organised early, particularly if you're planning to move quickly in a competitive market like Hampton.

Using Pre-Approval to Your Advantage

Pre-approval gives you a clear understanding of your borrowing capacity before you start attending opens or making offers.

It's not a guarantee, but it does confirm that a lender is willing to provide finance subject to a property valuation and final checks. Pre-approval typically lasts three to six months and can be updated if your circumstances change. For buyers in Hampton, where properties can move quickly, having pre-approval in place means you're ready to act when the right property comes up.

Pre-approval also reveals any issues with your application early, whether that's insufficient deposit, a low credit score, or serviceability concerns. Identifying these ahead of time allows you to address them before you're under pressure to meet a settlement deadline.

Fixed Versus Variable Interest Rates and Offset Accounts

You can choose between a fixed interest rate, a variable interest rate, or a combination of both.

A fixed rate locks in your repayments for a set period, usually between one and five years, which provides certainty if you prefer to know exactly what you'll pay each month. A variable rate moves with the market, which can work in your favour if rates drop, and typically comes with more flexibility, including the option to make extra repayments and access features like an offset account.

An offset account is a transaction account linked to your home loan where the balance offsets the amount of interest you're charged. If you have a $500,000 loan and $20,000 in your offset account, you only pay interest on $480,000. It's a useful feature if you're regularly paid into that account and want to reduce interest without locking funds into the loan itself, as you retain full access to the offset balance.

Many first home buyers in Hampton split their loan, fixing part for rate certainty and keeping part variable to maintain access to an offset and repayment flexibility. This can be a sensible middle ground, though the right structure depends on your income stability, savings habits, and risk tolerance.

When Shared Equity Programs Make Sense

The Victorian Homebuyer Fund is a shared equity scheme where the state government contributes up to 25% of the purchase price in exchange for an equivalent share of the property's equity.

This program is income tested, with single applicants capped at $125,000 gross income and couples at $200,000. It's designed for buyers who can afford repayments but struggle to save a large deposit. The government doesn't charge rent on its share, but when you sell or refinance, it receives the same percentage of the sale price as it contributed upfront.

Shared equity can be useful if you're purchasing a property within the scheme's price caps and meet the income criteria, but it does mean you won't own the property outright from day one. Some buyers prefer to wait and save a larger deposit rather than share equity, while others see it as a faster path into the market with manageable repayments.

Why Local Knowledge Matters When Structuring Your Loan

Hampton sits within a suburb where property types and price points vary significantly depending on proximity to the beach, train station, and local schools.

A buyer targeting an apartment close to Hampton Street will face a different financial structure compared to someone purchasing a older townhouse further from the station. Lenders also assess properties differently depending on type, size, and location. Apartments in smaller blocks or those with higher owner-occupier ratios are generally viewed more favourably than large investor-heavy developments, which can affect your ability to borrow and the interest rate you're offered.

Working with a local mortgage broker in Hampton means your loan structure reflects both your financial position and the specific property market you're entering. That might mean steering you towards certain lenders who are more comfortable with unit purchases in Bayside, or structuring your deposit and loan-to-value ratio to avoid unnecessary hurdles during the valuation process.

Call one of our team or book an appointment at a time that works for you. We'll assess your eligibility, confirm which schemes apply to your situation, and structure your application to give you the strongest chance of approval.

Frequently Asked Questions