Key takeaways
- The most common mistake isn't the one buyers worry about. It's not skipping a building inspection, most do those. It's underestimating the all-in cash needed at settlement.
- Pre-approval expires in 90 days, but most buyers don't realise the lender can re-assess if your financial situation changes meaningfully.
- Auctions skip cooling-off in every state. Showing up to bid without a building report and unconditional finance is the single fastest way to ruin yourself financially.
- Stretching to the absolute borrowing maximum leaves no buffer. A 0.5% rate move can flip a comfortable mortgage into mortgage stress.
- School catchments and flood overlays are address-specific, not suburb-specific. The street next door can be in a different catchment or under the flood line.
In this guide13 sections
The selling agent works for the vendor; that’s their job. Most first home buyer mistakes come from optimism or rush, and a plan covering the all-in cash, finance and checks keeps your price grounded in your own numbers.
Most of these are preventable in an afternoon
None of the mistakes below need expert help to avoid. They need a checklist and the discipline to follow it. We’ve packed each one into a single “mistake → fix” pair you can scan in 30 seconds.
The 10 mistakes (and the simple fix for each)
1. Underestimating the all-in cash needed
The mistake: You save a 20% deposit, then discover at settlement that stamp duty, conveyancing, building inspection, and lender fees add another $25K to $40K you don’t have.
The fix: Budget the deposit + 5% on top for ancillary costs. Use our Stamp Duty Calculator to lock in the biggest single number.
Quick estimate
Stamp duty calculator
Estimated stamp duty
$25,687
3.67% effective rate on $700,000
This is a simplified estimate using current state brackets. For an exact figure factoring in foreign-buyer surcharges, off-the-plan concessions, or pensioner rebates, use the full calculator
2. Skipping pre-approval (or letting it go stale)
The mistake: You shop without pre-approval, then your offer is rejected because you can’t prove finance. Or your 90-day pre-approval expired and you didn’t renew before bidding.
The fix: Get pre-approval before any open homes. It’s free, takes 1 to 2 weeks, and lasts 90 days. Renew if you’re still searching past the expiry.
3. Borrowing the absolute maximum the bank will lend
The mistake: The bank approves you for $850K, so you buy at $850K. Your repayments swallow 38% of your take-home pay. A 0.5% rate rise pushes you into mortgage stress.
The fix: Stress-test your repayments at 2% above today’s rate. If they exceed 30% of your take-home pay at the stress-test rate, buy less.
4. Bidding at auction without unconditional finance
The mistake: You attend an auction with pre-approval, win at $50K above the bank’s valuation, and your finance gets cut back. You’re bound by the contract with no cooling-off, and no funding gap solution.
The fix: Before auction, get the bank to formally value the specific property and confirm finance up to the auction ceiling. If the valuation doesn’t support your max bid, lower your max bid.
5. Skipping building & pest to save $600
The mistake: Inspection costs $500 to $900. You skip it to save money or speed things up. Three months in, you discover $40K of structural repairs the report would have caught.
The fix: Always commission building & pest. For auctions, do it before bidding (you can’t back out after). See our building & pest inspection guide.
6. Buying on suburb reputation, not address-level data
The mistake: “This suburb has good schools”, but your specific address is in a different school catchment, or the block backs onto a flood-prone creek you didn’t notice.
The fix: For each shortlisted property, check (1) the official school catchment finder for the address, and (2) the council flood overlay map for the specific lot. Don’t rely on suburb averages.
7. Missing first home buyer scheme deadlines
The mistake: You’re pre-approved for the 5% Deposit Scheme but don’t sign a contract within the 90 days the pre-approval allows. Or you sign a contract one day after a stamp duty concession changes.
The fix: Get scheme pre-approval when you’re ready to make offers, not months ahead. Places have been unlimited since 1 October 2025, so there’s no round to beat. Confirm your state’s stamp duty concession is in force at the contract date.
8. Buying an apartment without reading strata records
The mistake: The apartment looks fine but the strata report shows a $50K special levy due in 6 months for waterproofing works.
The fix: Always commission a strata report ($200 to $400) before signing. Read the sinking fund balance, recent and upcoming special levies, AGM minutes, and any active disputes.
9. No emergency buffer at settlement
The mistake: Every dollar goes into the deposit and purchase costs. You move in with $500 in savings. Six weeks later the hot water system dies and you can’t cover the $4K repair.
The fix: Hold back at least 2 months of mortgage repayments and $5K of cash buffer for repairs. Don’t deplete your savings to the deposit minimum.
10. Treating the selling agent as your friend
The mistake: The agent is friendly and helpful. You share your maximum budget and your move-in deadline in casual conversation. The agent uses both to extract a higher price.
The fix: Be polite but professional. The selling agent is paid by the vendor and works for the vendor, they have a legal obligation to extract the best price for the seller. Never share your top number, your urgency, or your fall-back plan.
The pattern across all 10
Most first home buyer mistakes come from optimism (assuming the best case will happen) or rush (skipping a step to move faster). A two-week delay to do due diligence costs nothing. A bad purchase costs years.
Next steps
- Build the all-in cash budget using our deposit guide.
- Get pre-approval (free, 90-day validity) before your first open home.
- For each shortlisted property: school catchment check, flood overlay check, building & pest, strata report (if apartment).
- Stress-test repayments at +2% rates using the Mortgage Calculator.
- Read our cooling-off period guide before signing any contract.
Common questions
What's the most common first home buyer mistake?
Underestimating the cash needed at settlement. Most first home buyers focus on the deposit (which they save diligently) but forget that stamp duty, conveyancing, building inspections, lender fees, and council adjustments add another 5% on top. On a $700K home with no first home buyer concession, that's an extra $35K beyond the deposit.
Can I lose my deposit if I pull out of a contract?
Within the cooling-off period (2 to 5 business days in most states for private treaty; WA and Tasmania have none), you lose only a small amount and get the rest of the deposit back: 0.25% of the price in NSW and the ACT, up to 0.25% in Queensland, the greater of $100 or 0.2% in Victoria, at most $100 in SA, and nothing in the NT. After cooling-off ends, the deposit is at risk. At auction, there's no cooling-off, the deposit is at risk from the moment the hammer falls.
How much should I borrow as a first home buyer?
Less than your maximum. A common rule of thumb is to keep loan repayments below 30% of gross household income, even if the lender will approve more. The bank's max-borrow figure assumes today's rates and your current expenses; both can change after you settle.
Should I get my own conveyancer or use the seller's?
Always get your own. Conveyancing for the buyer and conveyancing for the seller are different roles with different obligations. The seller's conveyancer represents the seller's interests; you need someone whose only obligation is to you.
What's the biggest mistake at auction?
Going in without unconditional finance. At auction, the contract is binding immediately and there's no cooling-off. If your finance falls through after auction (because the bank's valuation comes in below your purchase price, for example), you've still bought the house, and may forfeit your deposit if you can't settle.
Is it a mistake to buy at the top of the market?
Less of a mistake than people think, if you hold for 7+ years. The bigger mistake is buying at a price you can't comfortably hold through a downturn. Markets recover; forced sales don't get the recovery price.
Keep reading
- First Home Buyer Guide (National)Every first home buyer step, with state-by-state schemes.
- How Much Deposit Do You Need?5%, 10%, 20%, the full picture including all-in cash needed.
- Building & Pest InspectionWhat inspections cover, what they don't, and when to commission.
- Cooling-Off Period by StateYour right to rescind, state by state, and when it doesn't apply.
- Property Auction GuideHow to bid, when to walk away, and the pre-auction homework.