First Home Buyers Guide 2025: First Home Buyer Scheme, Financing & Conveyancing Tips for Buying Your First Home in Melbourne

You could be forgiven for thinking that the dream of home ownership in Melbourne is slipping away. Median house prices still hover close to the A$900,000 mark and interest rates remain higher than in the twenty teens. Yet 2025 brings a wave of new assistance programmes, a gradually easing cash-rate cycle and a property market that is finally showing signs of balance. Taken together, these factors create a window of opportunity for well-prepared first home buyers.

Melbourne market snapshot: prices, supply and sentiment

Melbourne closed the March quarter of 2025 with a median house value of A$895,000 and a median unit value of A$583,000. While those figures sit below the 2021 peak, PropTrack data show values rebounding 0.7 per cent in the first three months of the year the strongest capital city growth nationally. Listings volumes remain higher than in Sydney or Brisbane, giving buyers genuine choice and bargaining power.

Rental vacancy hovers near 1 per cent, so 'rent-vesting' buying on the fringe while staying closer to work still appeals. Investors are also off loading older stock ahead of new minimum standard rules, creating value pockets in Craigieburn, Pakenham and Werribee.

Government support: decoding the alphabet soup of schemes

Home Guarantee Scheme (HGS)

The flagship federal programme lets eligible buyers purchase with as little as a 5 per cent deposit while avoiding lenders mortgage insurance (LMI). In 2024-25 the First Home Guarantee offers 35,000 places, capped at A$800,000 for metropolitan Melbourne. From 1 July 2025 an extra 20,000 places will be released and both major parties have signalled a willingness to lift or remove the annual cap.

Regional First Home Buyer Guarantee

If Geelong, Ballarat or Bendigo is on your radar, the regional version of the scheme may suit. Price caps sit at A$650,000 for most Victorian regional areas, rising to A$800,000 in Geelong.

Family Home Guarantee

Single parents and legal guardians with dependants can buy with a 2 per cent deposit under this guarantee, provided they meet income thresholds. The 2025 Budget maintained 5,000 places a year.

Help to Buy shared-equity scheme

Scheduled to launch later in 2025, Help to Buy will see the Commonwealth take up to 40 per cent equity in a new build or 30 per cent in an existing home. Buyers need only a 2 per cent deposit and pay no LMI.

Victorian Homebuyer Fund

Closer to home, the Victorian Government continues its shared-equity fund, contributing up to 25 per cent of the purchase price in exchange for the same share of future capital gains. Participants need at least a 5 per cent deposit and must meet price caps aligned with the First Home Guarantee.

Grants, stamp duty relief and other Victorian sweeteners

First Home Owner Grant (FHOG) – A tax free A$10,000 payment when you buy or build a new home valued up to A$750,000.
Stamp-duty exemption / concession – Pay no duty on a principal place of residence up to A$600,000 and receive a sliding concession up to A$750,000.
Off-the-plan concession – Duty is calculated only on the unimproved land plus completed construction, potentially saving tens of thousands.
First Home Super Saver (FHSS) Scheme – Salary sacrifice up to A$15,000 per year (A$50,000 total) into super, then withdraw it for your deposit at the concessional tax rate.

How rising and falling interest rates affect your strategy

The cash-rate target is 4.10 per cent and the market expects another 0.25 per cent cut in May. Every quarter point cut trims roughly A$88 a month from repayments on a typical A$600,000 variable mortgage over 30 years. Lenders often move out of cycle and some have already shaved rates by up to 40 basis points to lure new customers. Locking in a split loan half variable, half fixed can give you insurance against future rises while still letting you benefit if rates fall further.

Remember: if you maintain the higher repayment after a rate cut, you chip away at the principal faster and cut years off your loan term.

Financing fundamentals: turning a deposit into a mortgage

Banks still apply a three percentage point serviceability buffer, so borrowing capacity remains tighter than it was pre 2022. Under the HGS, lenders cannot charge a higher interest rate than on equivalent unfunded loans, making policy backed products genuinely competitive.

Five practical strategies:

Boost your savings rate – channel tax refunds, bonuses and side hustle income straight into a high interest savings account.
Use the FHSS – its tax advantages can shave months off your savings timeline.
Avoid LMI where possible – the HGS or a parental guarantee can eliminate a cost that often exceeds A$25,000 in Melbourne.
Get pre-approval early – most lenders honour it for up to 90 days, giving you confidence at auctions.
Stress-test repayments – allow for at least one full percentage point above your actual rate.

Conveyancing 101: what happens after the handshake

Conveyancing is the legal transfer of property title from seller to buyer. In Victoria you can engage either a solicitor or a licensed conveyancer; fees in Melbourne typically range from A$600 to A$1,400 plus disbursements. A good professional will:

Review the Section 32 Vendor Statement and contract for hidden nasties such as unapproved structures or owners-corporation debts.
Order title, plan and council searches to confirm who really owns what.
Advise on special conditions, settlement timelines and cooling off rights.
Coordinate with your lender so that funds are available on settlement day.
Attend electronic settlement via PEXA and ensure the title is transferred correctly.

Conveyancing pitfalls first home buyers should avoid

Overlooking statutory checks is the number one error. A title search may list an easement that prevents you adding a pool later, or a building inspection might unearth asbestos in a 1970s brick veneer. Fixing these issues after settlement is far harder than negotiating repairs or a price discount beforehand.

Another trap involves the finance clause. If you have pre-approval under the HGS, ensure the clause allows enough time for Housing Australia sign off, which can add a few business days. Finally, confirm whether appliances are fixtures or chattels; buyers regularly assume the fridge or wall mounted TV is included when it is not.

Buying off the plan

Off the plan apartments remain popular with first timers chasing the FHOG. Pay close attention to sunset clauses, build timelines and owners corporation budgets. Remember that duty concessions apply only to the first sale after registration.

The roadmap: eight steps from dreaming to moving day

Set a realistic budget – include loan repayments, council rates, insurance and strata fees.
Research suburbs – balance lifestyle wants with scheme price caps.
Save and organise finance – deposit and pre-approval.
Apply for relevant schemes – HGS place reservation is usually through your lender.
Inspect and make an offer – private sale or brace for Saturday auction.
Engage your conveyancer – Section 32 review before signing if possible.
Go unconditional and settle – typically 30 to 90 days in Victoria.
Move in and meet the occupancy rules – live in the home for at least 6 to 12 months to keep your grant.

Frequently asked questions

What if I previously owned an investment unit? You may still qualify for the HGS if you have not owned property in the past ten years.

Can I combine the HGS with the Victorian Homebuyer Fund? No the federal guarantee cannot be used with a state shared equity scheme.

Do I pay interest on the government's equity under Help to Buy? No interest is charged, but you must repay the share when you sell or if your income exceeds the cap for two consecutive years.

Key takeaways

Secure an HGS place early in the financial year to avoid queues.
Use the FHOG and stamp duty concession together for new builds up to A$750,000.
Shop around lenders are discounting aggressively ahead of expected rate cuts.
Invest in a trusted conveyancer clearing legal hurdles early saves headaches later.

Ready to take the next step?

Buying your first home is exhilarating and complex, but you do not have to navigate it alone. Pearson Chambers Conveyancing specialises in guiding Melbourne first home buyers through every contract, search and settlement. Contact our friendly team today for clear advice and a free Section 32 contract review:

Phone: 03 9969 2405
Email: contact@pearsonchambers.com.au