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Buying your first home in Melbourne is an exciting milestone – but it’s also one of the biggest financial decisions you’ll make. Between saving a deposit, navigating the property market, and managing unexpected fees, the journey can feel overwhelming.
This guide breaks down the real costs of buying your first home in Victoria, so you can step into the process with confidence.
Contents
Why Buying a First Home Feels So Challenging
First home buyers in Melbourne often face:
- Deposit hurdles – pulling together 5–20% of the purchase price while paying rent.
- Conflicting advice – with banks, real estate agents, and family all giving different guidance.
- Hidden expenses – from stamp duty to moving costs, there’s more to budget for than just the property price.
- Emotional stress – constant open homes and auctions add pressure to an already big decision.
The True Costs Beyond the Purchase Price
When planning for your first home, think beyond the deposit. Here’s a breakdown of common expenses in Melbourne:
1. Deposit
Most lenders ask for at least 5-20% of the purchase price. On a $650,000 property, that’s between $32,500 and $130,000.
2. Stamp Duty
Victoria offers concessions and exemptions for eligible first home buyers on properties up to $750,000. If you don’t qualify, stamp duty could add tens of thousands to your upfront cost.
3. Lenders Mortgage Insurance (LMI)
If your deposit is less than 20%, you may need to pay LMI. Depending on the loan amount, this could be $10,000+.
4. Legal and Conveyancing Fees
Budget around $1,500–$3,000 for professional help with contracts, settlement, and property checks.
5. Inspections
Building and pest inspections typically cost $400–$800, but can save you from expensive surprises later.
6. Bank and Loan Fees
Application, valuation, and settlement fees often total $500–$1,500.
7. Moving and Setup Costs
From movers to furniture and utility connections, it’s easy to spend $5,000+ once you move in.
Example: Buying a $650,000 Property in Melbourne
- Deposit (10%): $65,000
- Stamp Duty: $0 (with concession) – $34,000 (without concession)
- LMI: $12,000 (if <20% deposit)
- Legal & Inspections: $3,000
- Moving & Setup: $5,000
Total upfront range: $70,000 – $119,000+
Practical Tips for First Home Buyers in Melbourne
- Check eligibility for stamp duty concessions – this can save thousands.
- Get pre-approval before house hunting, so you know your budget.
- Explore emerging suburbs – areas like Werribee, Melton, or Sunbury may stretch your dollar further.
- Factor in ongoing costs like rates, insurance, and maintenance.
- Don’t overextend – make sure repayments fit comfortably into your lifestyle.
Buying your first home in Melbourne isn’t just about the purchase price. When you understand the hidden costs and budget for them, you’ll be better prepared for the journey – and more confident when you find the right place.
Taking time to plan ahead means fewer surprises and a smoother path to home ownership.
FAQs
How much deposit do I need to buy my first home in Melbourne?
Most lenders require at least a 5–20% deposit. For example, a $650,000 property would need between $32,500 and $130,000. Some government schemes can help eligible buyers purchase with a smaller deposit.
Do first home buyers in Victoria pay stamp duty?
If you’re buying a property valued up to $600,000, you may be exempt from stamp duty. Concessions also apply for homes valued between $600,001 and $750,000. Above that, stamp duty applies in full.
What is Lenders Mortgage Insurance (LMI) and will I need it?
LMI is an insurance premium charged if your deposit is less than 20%. It protects the lender (not you) in case you default on repayments. For a $650,000 loan with a 10% deposit, LMI could cost $10,000–$15,000.
Should I get pre-approval before house hunting?
Yes. Pre-approval gives you a clear budget and makes you a stronger candidate when making offers or bidding at auctions. It also helps you avoid falling in love with properties outside your price range.
