When to Start Preparing for Your First Property Purchase

When Should You Start Getting Your Finances in Order?

Start at least six months before you plan to apply for a mortgage.

Lenders review your bank statements closely, often going back three to six months. They look at spending patterns, regular savings, and whether you can manage your money once a mortgage is added. If your account shows consistent overdrafts, frequent cash withdrawals with no explanation, or irregular income deposits, it raises questions. Starting early gives you time to build a clean record and address anything that might slow down approval.

Consider an educator who teaches casual relief across multiple schools. Their income deposits vary week to week, sometimes with gaps during school holidays. Six months of statements showing regular hours and consistent deposits, even if the amounts fluctuate, demonstrates reliable employment. That same applicant applying after only two months of casual work would struggle to show lenders they can service a loan.

You also need time to build genuine savings if you are using a low deposit option. Even if you are applying through the Australian Government 5% Deposit Scheme, lenders still want to see that you have saved the deposit yourself rather than received it all as a gift days before applying. Showing three to six months of regular contributions into a savings account, even small amounts, proves you can manage money and adjust to loan repayments.

What Deposit Do You Actually Need?

You can purchase with as little as a 5% deposit if you meet the eligibility criteria for the Australian Government 5% Deposit Scheme.

The scheme allows eligible first home buyers to purchase with a 5% deposit without paying Lenders Mortgage Insurance. The government guarantees the difference between your deposit and 20% of the property value. Educators often qualify because there are no income caps under the current version of the scheme, and property price caps are high enough to cover most metropolitan and regional purchases.

If you are looking outside the scheme, a 10% deposit is the next common threshold. You will pay LMI on any deposit below 20%, but many lenders offer reduced LMI or waivers for educators. Some LMI waivers for teachers allow you to borrow up to 90% of the property value without paying the insurance premium, which can save several thousand dollars.

Genuine savings matter more than the size of your deposit in some cases. A 5% deposit you have saved over 18 months is stronger than a 15% deposit gifted by family two weeks before you apply. Lenders define genuine savings as funds you have held for at least three months. Regular salary deposits do not count as genuine savings, but money you transfer from your salary into a separate account and leave untouched does.

How Do You Prove Your Income as an Educator?

You need recent payslips, a letter from your employer, and your most recent tax return or notice of assessment.

Permanent full-time and part-time teachers on salary usually only need two recent payslips and an employment letter confirming your role, salary, and employment status. Lenders treat educational income as stable, particularly if you work in public education or an established private school.

Casual and contract educators face more scrutiny. Lenders want to see at least six to twelve months of consistent work. If you have been working casual relief for eight months and your payslips show regular hours across that period, most lenders will accept it. If your hours dropped significantly during school holidays or you had a gap between contracts, you may need to wait until you have a longer track record or move into a permanent role before applying.

If you tutor privately or run an educational business alongside teaching, lenders treat that income differently. You will need tax returns, often two years' worth, and sometimes a letter from your accountant. The income is assessed more conservatively because it is considered self-employed income. In our experience, educators with side income often find it easier to apply based on their employed teaching income alone and ignore the tutoring income unless it is substantial and well documented.

What Government Support Can You Access?

You can access both federal schemes and state or territory concessions, and in most cases you can combine them.

The Australian Government 5% Deposit Scheme is available nationwide with no income caps. Property price caps vary by state and location. In New South Wales, the cap is $1,500,000 for Sydney and regional centres. In Victoria, it is $950,000 for Melbourne and regional centres. Queensland caps sit at $1,000,000 for Brisbane and regional centres. These caps are high enough that most educators can purchase in their preferred location without exceeding the limit.

State-based stamp duty concessions and grants stack on top of the federal scheme. In New South Wales, first home buyers receive full stamp duty exemption on properties up to $800,000 and a sliding concession up to $1,000,000. In Victoria, full exemption applies up to $600,000 with concessions to $750,000. Queensland offers a full stamp duty concession on new homes with no price cap, and a partial concession on established homes for properties under $800,000.

If you are purchasing in South Australia, the $15,000 First Home Owner Grant applies to new homes with no price cap, and stamp duty relief is available on new builds and vacant land. Western Australia now applies a single statewide threshold, with no stamp duty on homes up to $600,000 and concessional rates up to $800,000. Tasmania increased its grant to $20,000 for new homes from July 2026, though stamp duty exemptions for established homes ended at the same time.

You cannot combine the 5% Deposit Scheme with Help to Buy, which is a shared equity program where the government takes an ownership stake in your property. Help to Buy has income caps and lower property price limits, and is generally less suited to educators who earn above the individual income threshold of $100,000.

Should You Get Pre-Approval Before You Start Looking?

Yes, and you should do it as soon as your finances are in order.

Getting loan pre-approval tells you exactly how much you can borrow and shows sellers and agents that you are a serious buyer. Pre-approval is not a guarantee, but it is a conditional commitment from a lender based on your income, expenses, deposit, and credit history. It usually lasts three to six months, which gives you time to search without pressure.

Pre-approval also uncovers problems early. If your credit file shows a default you forgot about, or your expenses are higher than you realised, you find out before you make an offer. That gives you time to fix the issue rather than discovering it after you have signed a contract.

We regularly see educators who start looking at properties, find something they want to buy, then discover they need more deposit or their borrowing capacity is lower than they thought. By that stage they have already emotionally committed to a property they cannot afford. Pre-approval removes that risk.

What Records Do You Need to Keep Now?

Bank statements, payslips, and proof of savings from the last three to six months at minimum.

Lenders assess your spending as closely as your income. They look for regular gambling transactions, buy-now-pay-later services, and subscriptions that add up. They also check whether you can afford the loan repayments on top of your current spending. If your account is overdrawn regularly or you are spending everything you earn, that is a problem even if your income is high.

Keep digital or paper copies of every payslip. If you change schools or move from contract to permanent employment, keep the paperwork that documents the change. Employment letters, contracts, and pay summaries from your school all help demonstrate stability.

If you receive a gift or family contribution toward your deposit, keep a signed letter from the person giving the money confirming it is a gift and does not need to be repaid. Lenders treat gifts differently to loans. A $20,000 gift from your parents is fine. A $20,000 loan from your parents is treated as a liability and reduces how much you can borrow.

If you are buying with a partner, both of you need to provide the same documentation. One person having a clean financial record does not offset the other person having defaults, overdrawn accounts, or undisclosed debts. Lenders assess joint applications based on the combined financial position, and the weaker applicant often determines the outcome.

Fixed or Variable Rate for Your First Loan?

Most first home buyers benefit from splitting their loan between fixed and variable rather than choosing one or the other.

A fixed rate locks in your repayment amount for a set period, usually one to five years. You know exactly what you will pay, which makes budgeting easier in the first few years of ownership. The downside is that you cannot make extra repayments beyond a small annual limit without paying break fees, and you miss out if variable rates drop.

A variable rate moves with the market. You can make unlimited extra repayments, access an offset account, and redraw funds if the lender allows it. The risk is that if rates rise, so do your repayments.

Splitting the loan gives you both. You might fix 50% to 70% of the loan for certainty and keep the rest variable for flexibility. That way you have stable repayments on the majority of the loan, but you can still make extra repayments and use an offset account on the variable portion. Many mortgages for teachers are structured this way because it balances security with access to funds during school holidays or if you receive a lump sum payment.

What Happens If You Are Still Paying Off a Car Loan or HECS Debt?

Lenders reduce your borrowing capacity based on your existing debts, but they do not automatically disqualify you.

A car loan with $400 monthly repayments reduces how much you can borrow by roughly $80,000 to $100,000 depending on the lender's assessment rate. If paying off the car loan early is an option, doing that before you apply increases your borrowing capacity. If the loan has six months remaining and an exit fee, it may be worth paying it out. If it has three years remaining and no early exit penalty, the decision depends on whether you need the extra borrowing capacity or whether your current capacity is already enough.

HECS and HELP debt does not require monthly repayments, but it still affects your application. Lenders calculate a notional repayment based on your income and the compulsory repayment threshold. If your HECS repayment based on your salary is $3,000 per year, lenders factor that in as roughly $250 per month when calculating what you can afford. You cannot pay off HECS early to improve your borrowing capacity in the short term unless you have a lump sum available and your capacity is on the margin.

Credit card limits matter more than how much you owe. A card with a $10,000 limit is treated as though you have a $10,000 debt, even if the balance is zero. Cancelling cards or reducing limits before you apply can increase your borrowing capacity by $20,000 or more per $1,000 of limit reduced.

Call one of our team or book an appointment at a time that works for you. We work with educators who are preparing to purchase and can tell you exactly what your borrowing capacity is, what deposit you need, and what government support applies to your situation.

Frequently Asked Questions