How to Get Past First Home Buyer Challenges

Saving a Deposit That Matches What You Can Borrow

The deposit you need depends on which government scheme you qualify for and how much your lender will approve. Under the Australian Government 5% Deposit Scheme, you can purchase with a 5% deposit and no LMI. A teacher earning $95,000 per year with no other debts might borrow around $650,000 to $680,000 depending on the lender and their living expenses. In most states, that puts the purchase within reach at suburbs outside the capital city centre, provided the property sits under the state price cap. In New South Wales, for example, the cap for regional centres is $1,500,000, while in Victoria it is $950,000. If you are saving outside the scheme, most lenders ask for at least 10% plus settlement costs, which pushes the upfront cash requirement higher.

The scheme has no income cap and no annual limit on places, which removes two barriers that existed under previous programs. Applications go through participating lenders, not directly through Housing Australia. Not every lender offers the same loan features under the scheme, so confirm whether your chosen lender allows an offset account or permits extra repayments if those matter to your circumstances. The scheme allows home loans for teachers to proceed with less cash upfront, but you still need genuine savings or an eligible gift to cover the deposit and settlement costs.

Lenders Mortgage Insurance When You Are Below 20% Deposit

LMI protects the lender if you default, and it applies whenever your deposit sits below 20% of the property value. A one-off LMI premium on a $600,000 purchase with a 10% deposit can cost between $15,000 and $25,000 depending on the lender and your employment profile. High school teachers employed on permanent contracts often qualify for LMI waivers for teachers, which can reduce or remove that cost entirely. Some lenders waive LMI at 90% of the property value, while others extend the waiver up to 95%. Each lender maintains its own eligibility criteria, and not all teaching roles are treated the same way. Casual or relief teaching positions may not meet the lender's employment definition for a waiver, even if your income is steady.

If you do not qualify for a waiver, the Australian Government 5% Deposit Scheme removes LMI as part of the program structure. This makes it a useful fallback for teachers in roles that do not meet lender waiver criteria, or for those buying in locations where a participating lender will approve the loan under the scheme.

Pre-Approval That Stays Valid While You Search

Pre-approval gives you a borrowing limit before you start looking at properties. Most lenders issue pre-approval for three to six months, but that period can shorten if your financial situation changes or if the lender reassesses lending criteria. Consider a teacher on a fixed-term contract who receives pre-approval in November but does not find a property until February. If the contract is not renewed and the lender asks for proof of ongoing employment at the time of full application, the original pre-approval may not carry forward without additional documentation or a contract extension.

Getting loan pre-approval before attending auctions or making offers gives you a clear budget and shows sellers you can settle. When your pre-approval nears expiry, contact your mortgage broker for teachers to confirm whether it can be extended or whether a new application is required. If your circumstances have remained stable and the property market has not shifted significantly, most lenders will extend the approval with minimal additional paperwork. If your income or debts have changed, the lender may reassess your borrowing capacity from scratch.

First Home Buyer Grants and Duty Concessions by State

Each state runs its own grant and stamp duty schemes, and the rules differ depending on whether you are buying a new home, an established property, or vacant land. In Queensland, first home buyers purchasing a new home valued under $750,000 receive a $15,000 grant and pay no stamp duty on the residential land component for contracts signed from 1 May 2025. In Victoria, the $10,000 grant applies only to new homes under $750,000, while stamp duty exemptions apply to both new and established homes valued up to $600,000, with a sliding concession up to $750,000.

In Western Australia, the $10,000 grant applies to new homes valued under $800,000 south of the 26th parallel and $1,000,000 to the north. Stamp duty concessions under the First Home Owner Rate apply up to $800,000 for homes and $550,000 for vacant land, regardless of location within the state. South Australia removed the property price cap for its $15,000 grant and stamp duty relief on new homes from 6 June 2024, which opened up more suburbs to first home buyers building or buying new.

You can generally combine state grants and duty concessions with the Australian Government 5% Deposit Scheme, but not with Help to Buy. If you are buying an established home in a state that limits grants to new builds, you miss out on the grant but may still access the stamp duty concession if your purchase price sits within the threshold. Check your state revenue office or speak to a broker before assuming eligibility, as residency and occupancy requirements differ between jurisdictions.

Applying for a Home Loan When Your Income Includes Allowances

High school teachers often receive base salary plus allowances for additional responsibilities, coordination roles, or regional postings. Lenders assess income differently depending on whether the allowance is guaranteed, temporary, or discretionary. A permanent coordination allowance that appears on your employment contract and payslips over consecutive months will generally be included in your income assessment. A one-off payment for covering a class during a colleague's leave may not be counted, even if it appears regularly throughout the year.

When you apply for a home loan, provide payslips covering at least the most recent three months, your employment contract, and a letter from your employer confirming the nature and expected duration of any allowances. If your lender excludes an allowance that forms a significant part of your income, your borrowing capacity drops. This can push you below the amount needed to buy in your target area or force you to increase your deposit to meet the lender's loan-to-value ratio limits. Clarify how your lender treats allowances before you finalise your budget or make an offer.

Fixed or Variable Interest Rates for Your First Loan

A fixed rate locks your repayments for a set period, usually one to five years. A variable rate moves with the market and usually allows unlimited extra repayments and full offset account access. Teachers on probation or fixed-term contracts sometimes prefer the certainty of a fixed rate during the first few years of ownership, while those with stable income and surplus cash flow lean toward a variable loan with an offset to reduce interest over time.

If you fix your rate and need to sell or refinance before the fixed term ends, break costs may apply. These costs reflect the difference between the rate you locked in and the rate the lender can now charge on the remaining loan term. A split loan structure, where part of the loan is fixed and part is variable, gives you some repayment certainty while retaining flexibility on the variable portion. Most lenders under the Australian Government 5% Deposit Scheme offer variable, fixed, and split loan options, but you need to confirm which features are available through your participating lender.

Offset Accounts and Redraw Facilities

An offset account is a transaction account linked to your loan. The balance in the offset reduces the amount of interest you pay without locking the funds away. A redraw facility lets you access extra repayments you have already made on the loan, but the funds are not as liquid as an offset and some lenders restrict how much you can withdraw or charge a fee per transaction.

If you expect to keep a buffer of cash on hand for school holidays, professional development costs, or car registration, an offset account gives you full access while still reducing your interest. If you plan to make extra repayments whenever you have surplus income but do not need regular access to those funds, redraw may be sufficient. Some loans under the 5% Deposit Scheme do not include an offset account depending on the lender, so confirm the loan features before you proceed if this matters to your repayment strategy.

Using the First Home Super Saver Scheme Alongside Other Programs

The First Home Super Saver Scheme lets you contribute up to $50,000 into your super fund and withdraw it for a home deposit, with concessional contributions taxed at 15% instead of your marginal rate. If you are a teacher earning $95,000 per year, your marginal tax rate is 32.5%, so the saving on each dollar contributed is 17.5%. Over several years, this can add thousands of dollars to your deposit without requiring any additional income.

You need to apply to the ATO for a determination before signing a purchase contract, and the funds are generally released after you have a signed contract in place. The scheme can be used alongside the Australian Government 5% Deposit Scheme, state grants, and stamp duty concessions. If you have been making extra super contributions for several years but did not initially intend to use them for a home purchase, you cannot retroactively apply those contributions to the FHSS Scheme. Only contributions made after you notify your super fund and the ATO are eligible.

Call one of our team or book an appointment at a time that works for you. We will confirm which schemes you qualify for, calculate the deposit you need, and arrange mortgages for teachers that match your income and contract type.

Frequently Asked Questions