Avoid These 7 First Home Buyer Mistakes

Your first property purchase involves more moving parts than most dentists expect.

The difference between a smooth settlement and a delayed one often comes down to preparation. Your clinical training has taught you to work systematically through procedures, and that same methodical approach applies here. The challenge is knowing which steps matter most and in what order they need to happen.

This checklist walks through the specific preparation points that affect dentists buying their first home, particularly around deposit sources, loan structure decisions, and the profession-specific options available to you.

Starting With Your Deposit Position

Your deposit amount determines which loan products you can access and whether you'll pay Lenders Mortgage Insurance.

Most dentists we work with have been accumulating savings while paying off HECS debt, which means deposit size varies considerably. A 10% deposit opens up more lender options than 5%, but both are workable if structured correctly. The key question is whether your deposit is genuinely saved or comes from a family gift, because lenders treat these differently.

Consider a general dentist who has saved $40,000 over three years while working as an associate. That amount works as a 10% deposit on a property around the median price in many suburban areas. If your deposit includes a gift from parents, you'll need a signed statutory declaration confirming the funds are not a loan. Some lenders require the gift to be in your account for three months before application, while others accept it immediately if properly documented.

The low deposit options available to dentists often include LMI waivers that aren't advertised to the general public. These can reduce your upfront costs substantially, particularly if you're buying with less than 20% deposit.

Checking Your First Home Buyer Eligibility

First home buyer status unlocks stamp duty concessions and government guarantee schemes, but the eligibility rules are specific.

You need to be purchasing your first property and intending to live in it as your principal place of residence. If you've owned property overseas, or if you've previously held an investment property in Australia, you generally won't qualify. The concessions also have price caps that vary by state. In New South Wales, for example, stamp duty relief phases out above certain thresholds.

The First Home Loan Deposit Scheme allows eligible buyers to purchase with a 5% deposit without paying LMI, but places are limited each financial year. For dentists buying in regional areas, the Regional First Home Buyer Guarantee may offer another pathway. Both schemes have income caps, though these are high enough that most early-career dentists qualify.

Your eligibility for these schemes should be confirmed before you start attending inspections, because it affects your budget and how you structure your offer.

Structuring Your Loan Before You Apply

The loan structure you choose now affects your repayment flexibility for years ahead.

A common question is whether to fix part of your rate or keep everything variable. The answer depends on your income stability and whether you expect to make additional repayments. If you're an associate on a stable income, fixing a portion gives you repayment certainty. If you're moving toward practice ownership or expect your income to increase, a variable loan with an offset account gives you more flexibility to pay down the balance faster.

An offset account works like a transaction account linked to your loan. Every dollar in the offset reduces the balance on which you pay interest, which can save you thousands over the life of the loan. For dentists who accumulate cash for tax purposes or have irregular income from multiple practices, an offset often outperforms a redraw facility because the funds remain accessible without requiring lender approval.

Understanding What Pre-Approval Actually Covers

Pre-approval confirms your borrowing capacity and locks in certain loan terms, but it's conditional.

When you apply for loan pre-approval, the lender assesses your income, existing debts, and credit file. For dentists, income verification usually involves payslips if you're an associate, or tax returns and practice financials if you're a principal or contractor. Pre-approval is valid for three to six months depending on the lender, and it gives you a confirmed borrowing limit when you make an offer.

What pre-approval doesn't cover is the property itself. Once you find a property and go under contract, the lender will order a valuation to confirm the property is worth what you're paying. If the valuation comes in lower than the purchase price, you'll need to cover the shortfall or renegotiate. This is why it's important to research recent sales in the area before making an offer.

Pre-approval also doesn't guarantee final approval if your financial situation changes. Taking on new debt, changing jobs, or missing repayments between pre-approval and settlement can affect the final outcome.

Knowing Which Costs Sit Outside the Loan

Your deposit isn't the only upfront cost you need to cover.

Stamp duty, conveyancing fees, building and pest inspections, and lender establishment fees all need to be paid from your own funds. In most states, first home buyers receive stamp duty concessions or full exemptions below certain price thresholds, but you'll still need to budget for the other costs. Conveyancing typically costs between $1,500 and $2,500 depending on the complexity of the contract, and building inspections add another $500 to $800.

If you're using the First Home Super Saver Scheme, the funds you've contributed to your super can be withdrawn to cover deposit and settlement costs, but the withdrawal needs to be timed correctly. The process takes several weeks, so you need to lodge your application well before settlement.

Avoiding These Application Mistakes

Small errors in your loan application can delay approval or reduce your borrowing capacity.

One of the most common issues we see is undeclared credit limits. Even if you don't carry a balance on your credit card, the lender assumes you could draw the full limit and factors that into their serviceability calculation. If you have a $10,000 credit card limit you never use, closing it before applying can increase your borrowing capacity by $50,000 or more, depending on the lender's assessment rate.

Another issue is inconsistent employment history. Lenders prefer to see at least six months in your current role, though for dentists this can be waived if you're moving between associate positions in similar practices. If you've recently changed jobs, keep payslips and employment contracts from both roles to demonstrate continuity of income.

Buy Now Pay Later accounts like Afterpay or Zip are treated as credit commitments, even if the balance is small. Closing these accounts before applying removes them from the serviceability calculation.

Choosing Between Fixed and Variable Rates

Your rate type affects both your repayment amount and your flexibility to make changes.

Fixed rates lock in your repayment for a set term, usually one to five years. This protects you if rates rise, but it also means you'll pay break costs if you want to refinance or sell before the fixed term ends. Variable rates move with the market, which means your repayment can increase or decrease, but you have the flexibility to make extra repayments or refinance without penalty.

Many dentists split their loan, fixing a portion for stability and keeping the rest variable for flexibility. As an example, fixing 50% of a loan at current rates gives you predictable repayments on half your balance, while the variable portion allows you to make lump sum repayments when you have surplus income. This approach balances certainty with adaptability, which suits most early-career dentists whose income increases over time.

The home loans for general dentists page covers rate options and profession-specific discounts in more detail.

Your loan structure should reflect how you expect your financial situation to change over the next few years, not just where you are today. A structure that works for an associate in their first year of practice may not suit a principal three years later, so build in flexibility where you can.

Call one of our team or book an appointment at a time that works for you. We'll walk through your deposit position, confirm your first home buyer eligibility, and structure a loan that fits your current role and where you're headed.

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