Using a mortgage broker as a first home buyer

What does a mortgage broker do for a first home buyer?

Three things in order. First, eligibility: they check you against the Home Guarantee Scheme, your state's first home owner grant and stamp duty concession, and the lenders' own first home buyer offers, then tell you which combination you can actually use. Second, lender choice: they know which lenders participate in the scheme, which accept a 5% deposit without it, which will take a family guarantee, and how each treats your income if you are casual, on probation or newly self-employed. Third, pre-approval: they lodge one application with the lender most likely to approve you, so you can bid at auction or make an unconditional offer with a limit you know is real.

The bank branch can do the third of these for one bank. It cannot do the first two across the market.

Which government schemes can a first home buyer use?

The federal Home Guarantee Scheme, which lets eligible buyers purchase with a 5% deposit while the government guarantees the gap to 20%, so no LMI is payable. It is available only through participating lenders, within property price caps that vary by region, and to buyers under income limits. Each state then adds its own first home owner grant, usually for new builds, and a stamp duty exemption or concession up to a threshold. The grants and thresholds change with state budgets; our state grant guides are updated as they do. A broker's job is to stack whichever of these you qualify for and to lodge the scheme application with the lender, because the lender, not you, submits it.

How much deposit do you actually need?

Less than 20%, but the smaller it is the more the structure matters. With 20% you pay no LMI and every lender is open. With 5% to 19% you either pay LMI, which can run to tens of thousands on a capital-city property, use the Home Guarantee Scheme to avoid it, or use a family guarantee. With a family guarantee some lenders publish 100% of the purchase price plus costs, so the cash deposit can be close to zero. A broker's value is in knowing which of these applies to you and which lender does it best; the wrong choice can cost the LMI premium unnecessarily.

Can a family member help without giving you money?

Yes, through a family guarantee, which the majors call Family Security Guarantee (ANZ, Westpac), Family Pledge (St.George, Bank of Melbourne, BankSA) or Guarantor Support (CommBank). A parent or family member offers equity in their own home as extra security for part of your loan, which lifts your effective deposit to 20% and removes LMI. The guarantee is limited to a set amount, is released once your own equity reaches the lender's threshold, and requires the guarantor to get independent legal advice. Our guarantor guide compares what each lender publishes.

Why get pre-approved before you start looking?

Because it tells you your real budget and it makes your offer credible. At auction there is no finance clause and no cooling-off period, so bidding without pre-approval is bidding with money you may not have. For a private sale, a pre-approved buyer's offer is preferred by agents over one that is subject to finance. Pre-approval lasts about 90 days and a broker can usually arrange it within a few days of receiving your documents. Our pre-approval guide covers what you need and how long it takes.

What should a first home buyer bring to a broker?

Two recent payslips and your last tax return or notice of assessment; three months of bank statements showing your savings and spending; a list of debts and credit card limits; your deposit amount and where it came from; and, if a family member will help, whether that is a cash gift or a guarantee. First home buyers on probation, on a casual contract, or with HECS should say so up front, because lender policy on each of those differs and the broker will choose the lender accordingly.