First Time Buyer Advice: Everything You Need to Know

Buying your first home in Richmond means understanding which schemes genuinely reduce upfront costs and which loan structures suit your circumstances.

Richmond sits 3 kilometres from the CBD with a median house price between $1,150,000 for two-bedroom homes and $1,552,500 for three-bedroom properties, and unit prices ranging from $413,500 for one-bedroom apartments to $650,751 for two-bedroom units. The suburb is 58% renter-occupied, which reflects the strong proportion of buyers entering the market from rental properties. Knowing which federal and state programs apply to your purchase price, and how to structure a home loan to avoid unnecessary costs, determines whether your deposit stretches far enough.

How the Australian Government 5% Deposit Scheme Works

The Australian Government 5% Deposit Scheme allows eligible first home buyers to purchase with a 5% deposit, with Housing Australia guaranteeing the difference between the deposit and 20% of the property value. No income caps apply, no annual place limits apply, and no Lenders Mortgage Insurance is payable.

For Victoria, the price cap is $950,000 for capital city and regional centres, and $650,000 for other areas. Richmond falls under the capital city classification, which means properties up to $950,000 qualify. Most one-bedroom and some two-bedroom units in Richmond sit within this cap, while the majority of houses exceed it.

Consider a buyer purchasing a two-bedroom unit at $650,000. With a 5% deposit of $32,500, the scheme covers the remaining 15% without requiring LMI. This removes a cost that would otherwise add approximately $20,000 to $25,000 to the upfront expense. Applications are made through a participating lender panel and cannot be made directly to Housing Australia. Your broker confirms which lenders on the panel offer the loan features you need, as not all participating lenders provide offset accounts or split rate structures.

Victorian Stamp Duty Concessions for First Home Buyers

Victoria provides a full stamp duty exemption on properties valued up to $600,000, and a sliding scale concession on properties valued from $600,001 to $750,000. Standard rates apply above $750,000. The concession applies to both new and established homes where the property will be the buyer's principal place of residence.

For a two-bedroom unit purchased at $650,000 in Richmond, the buyer pays duty on the amount above $600,000 only, calculated on a concessional sliding scale. The saving compared to standard duty rates is approximately $30,000. A three-bedroom house purchased at $1,550,000 attracts full standard duty with no concession, as the property value exceeds $750,000.

The buyer must move in within 12 months of settlement and reside there for at least 12 months. If you plan to rent the property out immediately or sell within the first year, the concession does not apply and duty is recalculated at standard rates. This residence requirement applies to the stamp duty concession but not to the federal deposit scheme, which has separate occupancy rules set by the participating lender.

First Home Owner Grant Eligibility in Victoria

Victoria's First Home Owner Grant is $10,000 for new homes valued up to $750,000. The grant does not apply to established homes. Richmond's housing stock is predominantly older terrace houses and established apartment buildings, which means most purchases in the suburb do not qualify for the grant.

If you purchase an off-the-plan apartment in Richmond with a contract value under $750,000, the grant applies. The developer confirms the contract date and property classification when you exchange. The grant is paid at settlement and can be applied directly to reduce the deposit required from your own savings, though most lenders calculate serviceability based on the loan amount after the grant is deducted.

Choosing Between Fixed and Variable Interest Rates

First home buyers frequently ask whether to fix their rate, leave it variable, or split the loan. A fixed rate locks your repayment amount for a set term, typically one to five years. A variable rate moves with the lender's changes and allows full access to offset accounts and unlimited additional repayments.

A split structure divides the loan into two portions. You might fix 50% of the loan at current fixed rates and leave 50% variable with an offset account. This approach provides repayment certainty on half the debt while retaining flexibility on the other half. The variable portion benefits from any rate cuts and allows you to park savings in the offset to reduce interest without losing access to the funds.

Fixed rates generally do not permit offset accounts, and breaking a fixed rate early triggers break costs calculated on the difference between your fixed rate and the lender's current wholesale cost of funds. If you fix at 6.2% and rates fall to 5.5%, breaking the loan early to refinance or sell could cost several thousand dollars depending on the remaining fixed term and loan balance.

Structuring Your Deposit and Understanding Genuine Savings

Most lenders require genuine savings to demonstrate you can manage regular saving behaviour over at least three months. Genuine savings include funds accumulated in a bank account, term deposit, or shares. A single large deposit from the sale of an asset, tax refund, or inheritance does not qualify as genuine savings unless it has been held in your account for the required period.

Gift deposits are permitted under some loan policies. If a parent or family member contributes part of your deposit as a gift, the lender requires a statutory declaration confirming the funds are a gift and not a loan that must be repaid. The remaining portion of your deposit must still meet the genuine savings requirement. Some lenders accept a smaller genuine savings component if you are using the 5% deposit scheme, while others maintain standard requirements regardless of the scheme.

For a two-bedroom Richmond unit purchased at $650,000 using the 5% deposit scheme, you provide $32,500 as a deposit plus settlement costs of approximately $8,000 to $12,000 for conveyancing, building inspection, and transfer fees. Your genuine savings requirement is typically 5% of the purchase price, meaning $32,500 must have been accumulated over at least three months unless the lender's policy varies.

Pre-Approval and Loan Application Timing

Pre-approval confirms your borrowing capacity and the loan amount a lender will provide before you make an offer. It does not guarantee final approval, as the lender still assesses the specific property and your financial position at the time of formal application. Pre-approval is valid for three to six months depending on the lender.

In Richmond's active unit market, where Domain records 211 one-bedroom and 208 two-bedroom unit sales over the year to September 2026, buyers with pre-approval can move quickly when a suitable property becomes available. Auction clearance rates across Melbourne reached 68% in the second quarter of 2026, which indicates competitive bidding conditions. Pre-approval removes uncertainty about your budget ceiling and demonstrates to agents and vendors that your offer is supported by confirmed lending capacity.

The formal loan application occurs after your offer is accepted. The lender orders a valuation of the property and conducts final serviceability checks. If your income, employment, or credit position has changed since pre-approval, the lender reassesses your application based on current circumstances. This is why maintaining stable employment and avoiding new credit commitments between pre-approval and settlement matters.

How Offset Accounts and Redraw Facilities Differ

An offset account is a transaction account linked to your loan. The balance in the offset reduces the loan balance on which interest is calculated. If you have a $500,000 loan and $20,000 in your offset account, you pay interest on $480,000. The funds in the offset remain accessible at any time without restriction.

A redraw facility allows you to withdraw extra repayments you have made above the minimum required amount. If your monthly repayment is $3,000 and you pay $3,500, the additional $500 accumulates and can be redrawn. Some lenders charge redraw fees, impose minimum redraw amounts, or restrict how often you can access these funds. Others limit redraw availability if you switch to a fixed rate or if the loan is in arrears.

For first home buyers building an emergency buffer, an offset account provides clearer access and no withdrawal restrictions. Lenders typically offer offset accounts on variable rate loans but not on fixed rate portions. If you are comparing loan structures, confirm whether the offset is a full 100% offset or a partial offset that only reduces interest on a percentage of the balance held.

When LMI Waivers Apply for Professionals

Some lenders waive Lenders Mortgage Insurance for borrowers in specific professional categories, even when the deposit is below 20%. LMI waivers are available for certain professions under some lender policies. Doctors, dentists, and some lawyers may access loans for professional services with LMI waived on deposits as low as 10%.

These waivers do not apply automatically. The lender assesses your profession, registration status, and employment type. If you qualify, you can purchase a Richmond property without paying LMI and without using the 5% deposit scheme, which may provide more flexibility in loan features and lender choice. The waiver does not reduce the deposit required, it removes the insurance premium that would otherwise be added to your loan or paid upfront.

If you work in a qualifying profession and are considering a property above the $950,000 cap for the 5% deposit scheme, an LMI waiver at 10% deposit becomes the primary low-deposit pathway. For a Richmond house purchased at $1,550,000, a 10% deposit of $155,000 with LMI waived avoids an insurance cost that would otherwise exceed $40,000.

Call one of our team or book an appointment at a time that works for you to discuss which deposit scheme and loan structure aligns with your purchase price and financial position.

Frequently Asked Questions