Common Mistakes First Home Buyers Make (and How to Avoid Them)

Learn from Others Before You Buy

Buying your first home is a huge achievement — but it’s also full of traps for the unprepared.
Many first home buyers waste thousands or miss opportunities simply because they didn’t know what to look out for.
Here are the most common mistakes and, more importantly, how to avoid them.

1️⃣ Not Getting Pre-Approval Early

Too many buyers start house-hunting before securing loan pre-approval.
Without it, you risk falling in love with a property you can’t afford — or missing out because your finance wasn’t ready in time.

Pre-approval gives you confidence in your budget range.
Most lenders issue pre-approvals valid for 90 days.
Renew or update your documents if you haven’t bought within that period.

2️⃣ Underestimating Upfront & Hidden Costs

It’s easy to focus on your deposit and forget the extras.
Stamp duty, conveyancing, inspections, loan setup fees, and moving costs can quickly add up to 5% of the property price.

Include all upfront costs in your savings goal.
Ask your broker to prepare a full cost estimate before you make an offer.
Keep a small buffer for last-minute expenses.

3️⃣ Ignoring Government Grants & Schemes

Every year, thousands of first home buyers miss out on government assistance because they didn’t apply early enough or didn’t know they were eligible.

Programs like the First Home Guarantee and Regional Guarantee can eliminate LMI.
State-based First Home Owner Grants (FHOG) can save you $10,000–$30,000.
Stamp duty exemptions may apply if you buy under the threshold in your state.

4️⃣ Not Comparing Loan Options

Different lenders have different appetites for first home buyers.
Relying on your everyday bank could mean missing out on better rates or products elsewhere.

Compare rates, fees, and features — not just the interest rate.
Use a broker who works with multiple lenders, not just one.
Check comparison rates to see the true long-term cost.

5️⃣ Overextending Your Budget

Just because a lender approves a certain amount doesn’t mean you should borrow it all.
Overspending now can limit your financial freedom later and increase stress if rates rise.

Set your own comfort limit below the lender’s maximum.
Consider lifestyle costs like commuting, childcare, and maintenance.
Leave room for rate increases or emergencies.

6️⃣ Skipping Building & Pest Inspections

Inspections cost a few hundred dollars — but can save you tens of thousands in repairs.
Even new homes can hide structural issues or pest infestations.

Always include inspection conditions in your offer if possible.
Use licensed, independent inspectors (not recommended by the seller).
Walk away if major problems are found — there will always be another home.

7️⃣ Getting Caught Up in Emotion

Buying your first home is emotional — but emotion can lead to bad financial choices.
Falling for a property can cloud your judgment or push you into bidding wars.

Set your price limit before auctions and stick to it.
Don’t rush decisions because of “FOMO” (fear of missing out).
Be patient — timing often beats speed in real estate.

8️⃣ Forgetting Future Needs

That cute one-bedroom apartment might suit you now — but what about in three years?
Consider how your home will fit future plans like a family, pets, or working from home.

Think long-term when choosing property type and location.
Buy with potential for growth or flexibility to upgrade.
Location and layout often matter more than finishes or décor.

9️⃣ Not Reviewing Your Loan After Purchase

Many first home buyers “set and forget” their loan.
But lenders change rates frequently, and better deals emerge all the time.

Review your loan annually with your broker.
Refinance once your LVR drops below 80% to remove LMI and lower your rate.
Use offset and redraw features to reduce long-term interest.

🔟 Trying to Do It All Alone

The biggest mistake? Not asking for help.
A good mortgage broker, solicitor, and building inspector can protect you from costly missteps and guide you confidently through each stage.

Get Expert Help on Your First Home Journey

Book a free first home buyer call with the Loan Location team — we’ll make sure you avoid the common traps and buy smarter.