First Time Buyer Challenges and How to Get Around Them

Proving Your Income When You're Self-Employed

Most lenders want two years of tax returns and financials, but that timeline doesn't work when you've recently gone out on your own or when your ABN income varies between jobs. Some lenders will assess painter income using just one year of returns if your business has solid contracts ahead, and a handful will look at bank statements showing regular deposits instead of waiting for the ATO to catch up. The assessment method changes the amount you can borrow and which deposit schemes you can access.

Consider a painter who's been contracting for 18 months with regular commercial clients. Their tax return for the first year shows $62,000, but the current year is tracking closer to $78,000 based on signed quotes and deposit patterns in their account. A bank statement lender might assess at 80% of the higher figure and approve a loan that a standard lender would reject outright. That difference can be $60,000 to $80,000 in borrowing capacity depending on other debts and expenses. Working with a broker who knows which lenders accept trade-specific income evidence changes what you can afford to buy.

You'll need an accountant's letter confirming your year-to-date income, recent BAS statements, and at least six months of business bank statements showing consistent deposits. Some lenders also want a signed contract pipeline or a letter from your main client confirming ongoing work. If you've moved from wages to self-employment in the last 12 months, expect lenders to either decline the application or assess you at a lower income figure until you hit the two-year mark. That's where finance for tradies structures that account for irregular income become worth the effort.

The Deposit Problem When Savings Don't Add Up Fast Enough

You need a genuine deposit that you've saved over at least three months, but if you've been paying rent and running a ute, that timeline stretches out. Gift deposits from family are allowed under most first home schemes, but the lender will want a signed declaration that the money doesn't need to be repaid. Some lenders cap gifted funds at 5% or 10% of the purchase price, others allow the entire deposit to be gifted as long as you're covering the settlement costs and first few mortgage payments from your own account.

Under the Australian Government 5% Deposit Scheme, you can buy with just 5% down and avoid paying lenders mortgage insurance. The scheme has no income cap and no annual limits on the number of approvals, but you need to apply through a participating lender and the property has to fall under the price cap for your state. Painters working in regional areas have an advantage because the caps are often higher outside capital city zones, and the dollar goes further. A painter buying in regional Victoria can access the scheme on properties up to $650,000, compared to $950,000 in Melbourne and regional centres. That regional cap still covers most of the market in towns like Ballarat, Bendigo, and Geelong.

If you're using a 5% deposit, expect the lender to scrutinise your savings history and living expenses more closely than they would with a 20% deposit. They want to see that you can manage mortgage repayments without falling behind, and that means proving you've been paying rent or saving consistently for at least three months. A history of missed phone bills or overdrawn accounts will delay or sink the application even if your income is solid.

First Home Buyer Stamp Duty Concessions by State

Stamp duty can add $15,000 to $30,000 to the upfront cost depending on where you're buying, but most states offer full or partial exemptions for first home buyers. The rules differ by state, and the savings are significant enough that they change the suburbs you can afford.

In New South Wales, you'll pay no stamp duty on properties up to $800,000 and a reduced rate on homes between $800,000 and $1,000,000. Victoria offers a full exemption on properties up to $600,000 and a concession up to $750,000. Queensland removed stamp duty entirely on new homes from May 2025 with no price cap, but the concession on established homes is capped and phases out at $800,000. Western Australia now applies a single statewide threshold with no duty on homes up to $600,000 and a concessional rate between $600,000 and $800,000, regardless of whether you're in Perth or a regional area.

The concession usually requires you to move into the property within 12 months of settlement and live there for at least 12 months continuously. If you buy in NSW and then take a long-term job interstate before the 12 months is up, the state can claw back the exemption and bill you for the full duty amount. That's not theoretical - it happens when buyers don't notify the revenue office or assume a short-term work relocation doesn't count. Read the residency clause in your state's first home buyer concession before you sign anything.

If you're buying a new home or planning a land-and-build purchase, the grants and concessions stack differently than they do for established homes. South Australia offers a $15,000 grant plus full stamp duty relief on new builds with no price cap. Queensland gives you $15,000 and zero stamp duty on new homes. Tasmania lifted its grant to $20,000 for new builds from July 2026, though that increase is still subject to final legislation. The Northern Territory offers $50,000 for new home purchases under the HomeGrown Territory Grant, which runs until September 2027. Painters willing to buy new or build can access significantly more support than those chasing established homes in the same price range.

Why Pre-Approval Matters More for Self-Employed Buyers

A pre-approval tells you what you can borrow before you start looking at properties, and it gives real estate agents confidence that you can settle if your offer is accepted. For painters and other self-employed buyers, the pre-approval process takes longer because lenders need to verify your income using tax returns, BAS statements, and accountant letters rather than a payslip.

Pre-approval is conditional. The lender has assessed your income and debts, but they haven't valued the property yet. If the property comes in under the purchase price or if the lender finds something in the building report they don't like, they can reduce the loan amount or decline to settle. That's why you need a valuation clause in your contract and why you don't drain your savings account the day after your offer is accepted.

Some lenders issue pre-approvals that last 90 days, others stretch to six months. If your approval expires before you find a property, you'll need to reapply with updated financials. If your income drops or you take on new debt during that window, the lender can reduce your borrowing capacity or withdraw the approval entirely. Keep your financial position stable between pre-approval and settlement - don't buy a new ute on finance or max out a credit card while the loan is being assessed. For more on how the home loans for tradies assessment process works when your income doesn't fit the standard employment model, speak to a broker before you apply.

Variable Rate vs Fixed Rate for First Home Buyers

You'll choose between a variable rate that moves with the market, a fixed rate that locks in for one to five years, or a split loan that combines both. Painters with irregular income often prefer variable rates because they allow extra repayments without penalty and come with offset accounts that reduce interest on your daily loan balance. If you park your working capital in an offset account linked to your mortgage, every dollar in that account reduces the amount of interest you're charged without locking the funds away.

Fixed rates remove repayment uncertainty for the fixed period, but they come with restrictions. Most fixed loans limit extra repayments to $10,000 or $20,000 per year, and if you need to break the loan early because you're selling or refinancing, the lender will charge break costs that can run into thousands of dollars. For a first home buyer who's likely to refinance or move within a few years, those restrictions add up.

A split loan lets you fix part of the balance for rate certainty and keep the rest variable for flexibility. You might fix 50% at the current rate and leave 50% variable with an offset account attached. That structure works when you want predictable repayments but you're also building savings or expecting lump sum payments from completed jobs that you want to throw at the loan. The downside is that you're managing two loans with two sets of terms, and some lenders charge higher rates or additional fees on split structures.

There's no universal right answer. Your choice depends on whether you value flexibility or certainty more, and whether you're likely to have surplus cash to park in an offset or put toward extra repayments. If you're not sure, start with a variable loan that includes an offset account and redraw facility - you can always fix part of the balance later if rates start climbing.

Lenders Mortgage Insurance and How to Avoid It

Lenders mortgage insurance is a one-off premium charged when your deposit is less than 20% of the property value. The premium typically ranges from 1% to 4% of the loan amount depending on your deposit size and the lender's risk assessment. On a loan of $500,000 with a 10% deposit, LMI might cost $15,000 to $20,000. That cost is usually added to your loan balance rather than paid upfront, but it still increases your total debt and your ongoing repayments.

LMI protects the lender if you default, not you. You're paying for insurance that covers the bank's loss, and you'll never see a benefit from that premium unless you're comparing it to the alternative of waiting another two years to save a 20% deposit. For some buyers, paying LMI and getting into the market sooner makes sense because property prices and rents are rising faster than they can save. For others, especially those buying in flat or falling markets, waiting and avoiding the premium is the better play.

The Australian Government 5% Deposit Scheme eliminates LMI if you're eligible. The government guarantees the gap between your 5% deposit and the 20% threshold, so the lender doesn't charge you the premium. The scheme works with most major lenders and applies to new and established homes as long as the property is under the price cap and you're buying as an owner-occupier. Painters using this scheme can save the entire LMI cost, which might be $20,000 or more depending on the purchase price, and redirect that saving toward furniture, tools, or keeping a buffer in the offset account.

Some lenders also offer LMI waivers for specific occupations or through family guarantee arrangements, but these aren't common for tradies unless you're working in a sector the lender considers low-risk. A family guarantee, where a parent uses their property as security to cover part of your deposit, can help you avoid LMI, but it puts their home at risk if you default. That's a significant ask and one that needs independent legal advice before anyone signs.

Ongoing Costs That Catch First Home Buyers Out

The mortgage repayment is just the start. You'll also pay council rates, water rates, building insurance, contents insurance, and strata fees if you're buying a unit. For a standalone house, budget $2,000 to $4,000 per year for rates and insurance depending on the area and the rebuild cost. For a unit, add strata fees that might run $1,000 to $2,000 per quarter depending on the building's age and shared facilities.

Maintenance is the cost that new buyers underestimate. A roof repair, hot water system replacement, or fence rebuild can cost $3,000 to $8,000, and those jobs don't wait for a convenient moment. If you're buying an older property because it's cheaper upfront, factor in a maintenance buffer of at least $5,000 in the first year. Painters have an advantage here because you can handle some of the cosmetic work yourself, but structural repairs and major systems still need licensed contractors and cash you might not have if you've spent everything on the deposit.

If you're buying with a 5% deposit and no LMI under the government scheme, your loan balance is 95% of the property value. That leaves almost no equity buffer if prices drop or if you need to sell quickly. Your monthly repayment will also be higher than it would be with a 20% deposit, and the lender will assess your application assuming you can handle that repayment plus all your other living costs without falling behind. Keep three to six months of mortgage repayments in your offset or savings account as a buffer for gap periods between jobs or unexpected costs.

Choosing Between Established Homes and New Builds

Established homes are often cheaper to buy than new builds in the same area, but they don't qualify for the first home owner grants available in most states. New builds and land-and-build packages unlock the grant - $10,000 in NSW and Victoria, $15,000 in Queensland and South Australia, $20,000 in Tasmania, and $50,000 in the Northern Territory. If the grant plus stamp duty savings on a new build add up to $25,000 or more, that can cover most or all of your deposit on a property under the 5% deposit scheme.

New builds take longer to settle, sometimes 12 to 18 months depending on the builder's schedule and the contract terms. That delay gives you more time to save and prepare, but it also exposes you to price changes if the lender revalues the property at completion and it comes in lower than the contract price. Some builders require a 5% or 10% deposit on signing the building contract, which sits in trust until the build is finished. You'll need that deposit saved separately from your home loan deposit, or you'll need to structure the finance so the builder's deposit is covered by the lender.

Established homes let you move in faster, sometimes within 30 to 60 days of your offer being accepted. You can inspect the property, check for defects, and know exactly what you're buying before you settle. The trade-off is that you'll pay stamp duty at the standard first home buyer concession rate rather than the enhanced concessions available on new builds in states like Queensland and South Australia, and you won't receive a grant unless you're in a state that still offers one for established homes, which most no longer do.

If you're buying in a regional area where land is cheaper and builders are quoting reasonable timeframes, a new build can stretch your budget further and give you a modern, low-maintenance home that won't need immediate repairs. If you're buying in an inner or middle-ring suburb where new stock is limited and established homes are selling below replacement cost, the established market is usually the better value even without the grant.

Call one of our team or book an appointment at a time that works for you. We'll walk through your income, your deposit, and which state schemes and lender structures apply to your situation without the runaround.

Frequently Asked Questions