Eligibility Checks Before Applying for a First Home Buyer Loan

Purchasing a first home represents a significant milestone that requires detailed planning and thoughtful preparation. Securing financing often forms a critical part of this journey, and understanding what lenders evaluate can significantly enhance the likelihood of a smooth process. The pursuit of homeownership goes beyond selecting a property—it demands a thorough review of financial readiness and alignment with lender criteria.  Prospective buyers can establish a strong basis for mortgage qualification. 

Eligibility checks are key to avoiding delays or rejections in first home buyer loan applications. Beyond choosing a property, buyers must assess financial readiness and meet lender criteria. Early evaluation reveals qualification requirements and areas for improvement. The following sections explore the essential factors that support first-home ownership. Understanding these elements can help buyers approach the process with greater confidence and clarity.

1. Income and Employment History

Lenders require evidence of stable income to ensure that loan repayments can be met consistently. Employment history plays a large role in this, especially for those in permanent full-time or part-time positions. A history of regular earnings over at least six months is typically viewed positively. Applicants working casually or under contract may also be eligible, though they may be asked to provide a longer consistent income history. 

Self-employed individuals are usually assessed over a longer timeframe and must submit tax returns and business financials for one to two years, depending on the lender's policy. This part of the assessment helps lenders determine the reliability of income over time and the applicant’s capacity to meet repayment obligations even if financial conditions shift.

2. Credit History and Liabilities

A strong credit profile reflects positive financial behaviour and can influence not just loan approval but also the interest rate and borrowing amount offered. Lenders review the applicant’s credit file to understand how previous debts have been managed and whether any risks exist. Checking a credit report ahead of time can highlight any errors or forgotten accounts that need to be addressed. 

It's also a chance to review existing liabilities, such as personal loans, car finance, or credit cards, and take steps to minimise unnecessary commitments. Managing debt responsibly is key. Even if some liabilities are still active, showing a solid repayment history can support the application and build lender confidence.

3. Evidence of Genuine Savings

Many lenders assess whether a deposit has been built up through genuine savings. This term refers to funds accumulated gradually from income rather than lump sums received through gifts or inheritance. Genuine savings demonstrate both commitment to the property purchase and financial discipline. Although the minimum deposit required varies, applicants should generally show consistent contributions over at least three months.

In addition to the deposit, first-time buyers should be prepared for related upfront costs, including:

• Legal or conveyancing fees
• Application and settlement charges
• Inspection and valuation costs

Planning for these expenses ensures the process continues smoothly once a property is selected.

4. Government Scheme Eligibility

Several state and federal initiatives are designed to support first-time buyers, and understanding eligibility requirements is important before including them in financial planning. These may include stamp duty concessions, the First Home Owner Grant, or the First Home Guarantee. Each scheme has its criteria. Factors often assessed include residency status, whether the buyer has previously owned property in Australia, and whether the home will be used as a primary place of residence. 

Additionally, purchase price thresholds may apply depending on the state or region. Confirming eligibility for available support not only assists with affordability but may also influence the structure of the loan and deposit requirements.

5. Loan Serviceability and Borrowing Power

Lenders calculate serviceability to determine whether the proposed loan amount is suitable based on current income and financial obligations. This includes everyday living expenses, current debts, number of dependents, and expected loan repayments. Rather than relying solely on a static figure, lenders apply stress tests to ensure that repayments remain manageable even if interest rates rise in the future. 

This helps reduce the risk of financial strain in the long term. Online tools such as borrowing power calculators can provide an initial guide, but tailored advice is often more accurate. A professional can assist in evaluating how much can be borrowed comfortably and help structure the loan to suit financial goals.

Understanding the eligibility checks involved in securing a first home buyer loan is essential in preparing for property ownership. Each factor plays a part in building a strong application, from verifying income and employment to reviewing credit and confirming scheme eligibility. The process is about meeting minimum criteria and showing financial readiness and awareness of long-term obligations. Consulting a lending expert or using a trusted home loan platform offers personalised guidance to help first-time buyers move confidently toward homeownership.