Top tips to buy a house with the right home loan

How to choose a home loan structure that matches your budget

The loan structure you choose will determine how much flexibility you have and how quickly you reduce debt. Variable rate loans let you make extra repayments without penalty and often include an offset account, while fixed rate loans lock in certainty for a set period but usually limit your ability to pay extra. A split loan divides your borrowing between fixed and variable portions, giving you access to both.

Consider someone buying a unit in Fortitude Valley who wants to lock in part of their rate but keep access to an offset account for their savings. They might fix 60 per cent of the loan for three years and leave 40 per cent variable with a linked offset. That way, rental income or savings can reduce the variable portion's interest while the fixed portion stays predictable.

What deposit size actually gets you into the Queensland market

Most lenders prefer a 20 per cent deposit to avoid Lenders Mortgage Insurance, but you can purchase with less. The Australian Government 5% Deposit Scheme allows eligible first home buyers to purchase with as little as 5% of the property value, with Housing Australia guaranteeing up to 15 per cent to the lender. In Queensland, the property price cap is $1,000,000 in capital cities and regional centres including Gold Coast and Sunshine Coast, and $700,000 in other areas. No income caps apply under this scheme, and it removes the need to pay LMI when you meet the eligibility criteria.

If you have a larger deposit saved, you still benefit. A 15 per cent deposit will trigger LMI, but your premium will be lower than if you borrowed at 95 per cent. Your borrowing power also improves when you can show genuine savings over time.

Queensland stamp duty relief and how it stacks with federal schemes

Queensland offers a $15,000 first home owner grant for new homes valued under $750,000 for contracts signed from 1 July 2026. The grant does not apply to established homes. For stamp duty, a full transfer duty concession applies to new homes and vacant land with no price cap for contracts signed on or after 1 May 2025, reducing duty to nil on the residential land component. For established homes, the maximum first home concession deduction is $17,350 for properties valued up to $709,999, phasing out in $10,000 bands and reaching nil at $800,000 or more.

You can combine these state concessions with the Australian Government 5% Deposit Scheme or Help to Buy, provided you meet the eligibility criteria for each program. That means a first home buyer purchasing a new townhouse in Logan or Springfield could access the $15,000 grant, pay no stamp duty on the land component, and borrow with a 5 per cent deposit if they use a participating lender under the federal scheme.

Interest rate comparison and why the advertised rate is only part of the picture

An advertised variable rate might look appealing, but the ongoing rate after any honeymoon period ends is what you will be paying long term. Some lenders offer a discounted rate for the first year, then revert to a higher standard rate. Others provide a smaller discount but apply it for the life of the loan.

Rate discounts also depend on your loan to value ratio. Borrowing at 80 per cent LVR often attracts a better rate than borrowing at 90 or 95 per cent, even when both loans are with the same lender. When you compare home loan options, look at the comparison rate, which includes most fees, and ask what ongoing rate applies after the first 12 months. That tells you more than the headline figure.

Principal and interest versus interest only, and when each one makes sense

Principal and interest repayments reduce your loan balance every month, building equity and lowering the total interest you pay over the life of the loan. Interest only repayments keep your balance unchanged, which lowers your monthly repayment but means you are not reducing debt during that period.

Interest only can suit investors who want to maximise tax deductions and expect capital growth to do the heavy lifting. For owner occupiers, it is less common unless you need short term cash flow relief during a construction period or while on parental leave. After the interest only period ends, your repayments jump because you are then paying off the full balance over the remaining term.

How pre-approval gives you a clear budget before you start looking

Home loan pre-approval confirms how much a lender is willing to lend you before you sign a contract. It is not a guarantee, but it gives you a firm budget and shows agents and sellers that you can proceed quickly. Pre-approval usually lasts 90 days, though some lenders offer longer.

You will need to provide income evidence, a list of your assets and liabilities, and details of the type of property you plan to buy. The lender assesses your borrowing capacity based on your income, expenses, existing debts, and the serviceability buffer set by APRA. Once approved, you know your limit and can focus on properties within that range.

Offset accounts and how they reduce interest without locking up your savings

An offset account is a transaction account linked to your home loan. The balance in the offset reduces the amount of interest charged on your loan, without requiring you to make extra repayments. If you have a $400,000 loan and $20,000 in your offset, you only pay interest on $380,000.

Offset accounts work well if you keep a buffer for expenses, receive irregular income, or plan to use savings for renovations or investment later. Not all loan products include a full offset. Some lenders offer partial offsets that reduce interest by only 40 or 60 per cent of the account balance, so check the terms when comparing products.

What borrowing capacity really measures and how lenders calculate it

Borrowing capacity is not the same as how much deposit you have saved. It is the amount a lender will let you borrow based on your ability to service the loan. APRA requires all ADIs to assess new borrowers' capacity to service a home loan at an interest rate that is at least 3.0 percentage points above the loan product rate. That buffer has been in place since October 2021.

Lenders also apply a floor rate, which is the minimum rate they will use in serviceability calculations regardless of the actual product rate. Your income, existing debts, living expenses, dependents, and the loan term all feed into the assessment. From 1 February 2026, APRA activated a DTI lending limit, allowing each ADI to lend up to 20 per cent of new owner-occupier loans and up to 20 per cent of new investor loans to borrowers with a total DTI ratio of six times or greater. If your borrowing pushes you above that threshold, you may still be approved, but the lender's capacity to lend at high DTI ratios is capped across their portfolio.

Application process and what documents you will need to provide

A full home loan application requires proof of income, identification, and a clear picture of your financial position. For employees, that usually means recent payslips, tax returns, and employer confirmation. For self-employed buyers, lenders typically ask for two years of tax returns, financial statements, and sometimes a letter from your accountant.

You will also need to show your deposit source. Lenders want to see genuine savings held for at least three months, or evidence that gifted funds or equity from another property are available. Once you have a signed contract, the lender orders a valuation to confirm the property is worth what you are paying. Settlement usually happens 30 to 60 days after exchange, depending on the contract terms and whether you are building or buying established.

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