Information Centre · Property & Conveyancing
First Home Buyers in Victoria: A Complete Legal Guide
A practical Victorian guide for first home buyers — choosing the right property, finance pre-approval, deposits and contracts, Section 32 disclosure, building and pest inspections, auctions versus private sales, cooling-off rights, stamp duty concessions, the First Home Owner Grant, off-the-plan purchases, settlement, insurance, common mistakes and when to get legal advice.
Key points
- First home buyer eligibility requires the buyer (and any partner) to have never held a relevant interest in residential property in Australia, to be at least 18, to buy at a dutiable value of $750,000 or less and to occupy the home as their principal place of residence for at least 12 continuous months commencing within 12 months of settlement.
- The Victorian first home buyer duty exemption removes land transfer duty entirely on a PPR purchase up to $600,000; a tapered concession reduces duty between $600,001 and $750,000; above $750,000 no FHB concession applies.
- The First Home Owner Grant is $10,000 for eligible buyers of new homes valued at $750,000 or less — established homes do not qualify, but off-the-plan and newly built dwellings do, and the grant combines with the duty exemption.
- Cooling-off under section 31 of the Sale of Land Act 1962 (Vic) gives a buyer 3 clear business days to terminate a residential private sale contract (with a small forfeiture); cooling-off does NOT apply to auctions or to private sales within 3 business days of a publicly advertised auction.
- Finance pre-approval, a Section 32 review by a lawyer and pre-purchase building and pest inspections should all be completed before bidding at auction or signing a private sale contract — auction contracts are unconditional from the fall of the hammer.
- Building insurance should be in place from contract day (not settlement); the Home Guarantee Scheme allows eligible first home buyers to purchase with as little as a 5% deposit without Lenders Mortgage Insurance.
Buying a first home in Victoria is one of the largest financial and legal decisions a person makes. The transaction involves a binding contract that runs to dozens of pages, a vendor's statement that incorporates another large set of documents by reference, a long chain of statutory disclosures and deadlines, several government taxes and concessions, finance, insurance, inspections and a final electronic settlement that transfers a substantial sum and a new title. Done well, the legal process is invisible and the buyer takes the keys on settlement morning without incident. Done badly, it produces buyer defaults, lost deposits, defect disputes and litigation that can take years to unwind.
This guide is the principal first home buyer reference in the Parke Lawyers Information Centre. It sits beneath our pillar guide on property law in Victoria and works alongside our dedicated guides on Section 32 vendor statements, stamp duty and land transfer duty and off-the-plan property purchases. It also complements our practical guides on buying property in Victoria and selling property in Victoria.
Duty thresholds, concessions, grants and statutory deadlines described below reflect the position as at June 2026. Confirm current figures with the State Revenue Office of Victoria and your lawyer before relying on any specific statement.
Buying your first home in Victoria
A first home purchase in Victoria is a regulated transaction. The principal sources of law are the Sale of Land Act 1962 (Vic), the Transfer of Land Act 1958 (Vic), the Property Law Act 1958 (Vic), the Duties Act 2000 (Vic), the First Home Owner Grant and Home Buyer Schemes Act 2000 (Vic), the Owners Corporations Act 2006 (Vic) and the Building Act 1993 (Vic), together with the regulations and SRO rulings made under those Acts. The State Revenue Office of Victoria administers duty and the FHOG; Land Use Victoria administers the Torrens title register; consumer disputes about defective sales are usually agitated in the Magistrates' Court, the County Court or VCAT.
The order of operations matters. A first home buyer who secures finance pre-approval, reviews Section 32 documents and inspects the property before bidding has a structured choice. The same buyer who bids at auction without those steps is exposed to immediate, unconditional commitment. The legal advice in this guide is intended to be read before — not after — a signature. Buyers who already have an unconditional contract should engage their lawyer immediately so settlement and statutory deadlines are not missed.
Choosing the right property
The right first home is the home the buyer can complete, occupy and afford to keep for at least the medium term. That sounds obvious — but a surprising number of first home defaults arise from over-extending on a property the buyer admires but cannot service when interest rates rise. Choose the property by reference to: the buyer's borrowing capacity (with a margin for rate increases of 200 to 300 basis points); the suburb and the local market trend; transport, employment and lifestyle requirements over the next 5 to 10 years; the dwelling type (house, townhouse or apartment) and its ongoing maintenance burden; owners corporation fees for strata properties; school zoning if relevant; and the 12-month PPR occupancy requirement for the FHB duty exemption and FHOG.
Legal due diligence on the chosen property starts before the offer. Read the Section 32, confirm the zoning and overlays at the relevant council, ask the vendor about building works in the last seven years (and whether permits exist), check the title for easements and covenants, inspect for visible defects and arrange a professional building and pest inspection. A buyer's lawyer can review the Section 32 and contract within 48 hours; for an off-the-plan or unusual title, allow longer.
Finance pre-approval
Finance pre-approval is a written indication from a lender that, subject to valuation and final checks, they will lend the buyer up to a specified amount on specified terms. Pre-approval is essential before bidding at auction and strongly recommended before signing a private sale contract — even one with a subject-to-finance clause. The pre-approval process involves the lender assessing income, expenses, existing debts, credit history, deposit savings and the buyer's overall serviceability against current interest rates and a buffer rate. Most lenders apply a serviceability buffer of around 3 percentage points above the actual rate.
Pre-approval typically lasts 3 to 6 months. If the buyer does not find a property within that period, the pre-approval must be refreshed — which may not produce the same approved amount if circumstances have changed. Common reasons a pre-approved buyer is later declined include failed valuation (the bank values the property at less than the contract price), changes in employment or income, new debts taken on between pre-approval and final approval (avoid taking on car loans, large credit card balances or buy-now-pay-later accounts during the process), and changes to lender policy.
The Home Guarantee Scheme (administered by Housing Australia) allows eligible first home buyers to purchase with a deposit as low as 5% without paying Lenders Mortgage Insurance. The Commonwealth guarantees up to 15% of the loan to the lender. Income caps, property price caps and place limits apply. The Family Home Guarantee allows eligible single parents to purchase with a 2% deposit; the Regional First Home Buyer Guarantee provides similar relief in regional areas. Eligibility is checked by the participating lender — not the buyer directly — and the scheme is competitive.
Deposits and contracts
A standard Victorian residential contract requires a deposit of 10% of the purchase price on signing. The deposit is paid to the vendor's solicitor or estate agent and held in a trust account until settlement, when it is released to the vendor as part of the purchase price. Some private sale contracts negotiate a lower deposit (commonly 5%) — this is purely contractual. Auction contracts require the full deposit (usually 10%) to be paid on the day of the auction, typically by EFT or bank cheque immediately after the fall of the hammer.
A deposit bond or bank guarantee is an alternative to a cash deposit. The bond is a financial product that guarantees the deposit to the vendor; the buyer pays a fee (typically 1.0% to 1.5% of the deposit value per year of term). The vendor is not obliged to accept a deposit bond unless the contract permits it; many do, particularly on off-the-plan sales. The buyer must still pay the full deposit (in cash) at settlement, with the bond expiring on payment.
The contract of sale itself is the Law Institute / REIV standard contract for an established home, or a developer contract for off-the-plan. Either way, the buyer's lawyer should review the contract before signing. The standard contract is generally fair; developer contracts almost always shift further risk to the buyer (sunset clauses, plan variation rights, default provisions, deposit forfeiture clauses). Amendments to the standard contract (particularly in private sales) are common — the lawyer checks that they are reasonable and properly drafted.
Understanding the Section 32
The Section 32 vendor statement is the buyer's most important pre-contractual document. It is regulated by section 32 of the Sale of Land Act 1962 (Vic) and must be given to the buyer before they sign the contract. Required disclosures include: registered and certain unregistered easements and covenants; mortgages and other charges; rates, taxes and other outgoings; planning zone and overlays; building permits issued in the past seven years; owner-builder works; particulars of any growth areas infrastructure contribution; whether the land is in a bushfire-prone area; details of services connected to the land; and (for strata properties) full owners corporation information including the rules, current budget, insurance and minutes of recent meetings.
The vendor is responsible for the accuracy of the Section 32 even though it is drafted by their lawyer or conveyancer. A defective, false or materially incomplete statement gives the buyer a right to rescind the contract under section 32K — subject to a vendor defence that the error was honest and reasonable and that the buyer is substantially as well off as if the error had not been made. The defence is interpreted narrowly. A buyer's lawyer who identifies a defective Section 32 before settlement is in a powerful negotiating position.
Cross-check the Section 32 against independent searches — a current title search from Land Use Victoria, a planning certificate from the relevant council, a 149 / land information certificate, and (for strata) an owners corporation certificate ordered directly. Confirm every attachment referenced in the Section 32 is actually attached. For more detail, see our dedicated Section 32 guide.
Building and pest inspections
Victoria operates a caveat emptor regime for residential sales — the buyer takes the property as it stands, subject only to the disclosures actually made in the Section 32 and any express representations or warranties in the contract. There is no implied warranty of soundness, no warranty of fitness for habitation and no implied obligation on the vendor to identify defects. The buyer's protection is to inspect before signing.
A pre-purchase building inspection by a qualified building consultant (typically a registered building practitioner or building inspector) covers structural integrity, water ingress and damage, roof condition, electrical safety, plumbing and drainage, evidence of unapproved alterations, asbestos, and the general state of finishes and services. A pest inspection (sometimes combined) covers termites, borers and other timber-destroying organisms. Both should be undertaken before bidding at auction and before signing a private sale contract. Combined inspections typically cost $400 to $800.
If the inspection identifies serious defects, the buyer's options depend on the stage of the transaction. Before signing: walk away or negotiate a price reduction. After signing within cooling-off: cool off (forfeiting the small statutory penalty). After signing outside cooling-off but before settlement: limited options, principally a Section 32K rescission if the defects relate to undisclosed matters, a damages claim for misrepresentation, or negotiation. After settlement: the buyer wears the cost unless the defects amount to fraud or active concealment.
Auctions versus private sales
Two principal sale formats operate in Victoria: public auction and private sale (also called private treaty). The legal consequences differ substantially.
At auction, the property is offered publicly to bidders who compete openly. The auctioneer accepts bids and, if the reserve is met, sells at the fall of the hammer. The highest bidder signs the contract and pays the deposit on the day. There is no cooling-off period, no subject-to-finance protection and no opportunity for further negotiation. All due diligence — Section 32 review, building and pest inspection, finance pre-approval — must be completed before bidding. The Section 32 must be available for inspection at the auction venue for at least 30 minutes before bidding starts.
A private sale is a negotiated transaction. The vendor advertises the property at a price (or price range); the buyer makes an offer; the parties negotiate; once agreed, the contract is signed. Statutory cooling-off of 3 clear business days applies (subject to exceptions). Conditional offers — subject to finance, subject to inspection, subject to sale of the buyer's existing home — are possible but depend on the vendor's willingness to accept them. In a competitive market, unconditional offers are common; in a slower market, conditions are more negotiable.
A common trap is the "private sale" contracted within 3 clear business days before or after a publicly advertised auction — these do NOT attract cooling-off, because the auction exception applies. A buyer who negotiates with the vendor before the auction date, or within 3 days afterwards, must treat the transaction as unconditional.
Cooling-off rights
Section 31 of the Sale of Land Act 1962 (Vic) gives a residential buyer 3 clear business days from the day of signing in which to terminate the contract. To exercise the right, the buyer (or their lawyer) must give written notice to the vendor or vendor's agent within the period. The buyer forfeits $100 or 0.2% of the price (whichever is greater) but is otherwise released from the contract and entitled to the return of the balance of the deposit.
Cooling-off does NOT apply in these situations: where the property was sold at public auction; where the contract was signed within 3 clear business days before or after a publicly advertised auction; where the buyer is an estate agent or corporate body; where the property is used primarily for industrial or commercial purposes; or where the land is more than 20 hectares used primarily for farming. The cooling-off right is also waived (or shown to be inapplicable) by a "section 31 notice" — a separate written acknowledgment by the buyer.
Cooling-off is a backstop, not a substitute for due diligence. The window is short, the forfeiture is real, and many buyers find that 3 business days is not enough time to organise a thorough building inspection or re-think a complex contract. Get legal advice before signing — not within cooling-off.
Stamp duty concessions
Land transfer duty (universally still called stamp duty) is a Victorian state tax on the transfer of dutiable property. It is calculated on a sliding scale based on the dutiable value of the property, which for an established home is essentially the contract price. The top marginal rate is 6.5% above $2 million; rates are lower for less expensive properties. For a typical first home in the $500,000 to $900,000 range, duty at the standard rate ranges from approximately $21,970 to $49,070 — a significant cost.
The Victorian first home buyer duty exemption removes duty entirely on a PPR purchase with a dutiable value of $600,000 or less. Between $600,001 and $750,000, a tapered concession applies on a sliding scale (the saving falls to zero at $750,000). Above $750,000, no FHB concession applies; the buyer pays standard duty (reduced by the PPR concession of up to $3,100 if the property is under $550,000 — by definition not available above $750,000).
The off-the-plan concession reduces dutiable value by the value of construction performed on or after the contract date — see our off-the-plan guide and our stamp duty guide for detail. The interaction is critical: an off-the-plan contract priced above $750,000 may have a dutiable value below the FHB threshold once the off-the-plan concession is applied. First home buyers should always model the interaction before signing.
Foreign purchaser additional duty of 8% applies to acquisitions by foreign persons. The absentee owner surcharge applies to land tax on properties owned by absentee owners. Neither affects most first home buyers, but couples in which one partner is a foreign person need tailored advice — the foreign duty applies on the foreign partner's share and can substantially increase total duty.
First Home Owner Grant
The First Home Owner Grant (FHOG) is a $10,000 grant payable to eligible first home buyers acquiring or building a new home valued at no more than $750,000. It is administered by the State Revenue Office of Victoria under the First Home Owner Grant and Home Buyer Schemes Act 2000 (Vic).
"New home" is defined narrowly: a home that has not previously been sold as a place of residence and has not been occupied as a place of residence for a continuous period of more than 5 months. Off-the-plan apartments, newly built houses on greenfield land, substantially renovated homes (where the renovation is significant enough to constitute a new home) and house-and-land packages with new construction all qualify. Established homes (even if recently renovated) do not qualify.
Eligibility for the FHOG mirrors the FHB duty exemption: the applicant (and partner, if any) must never have owned residential property in Australia; the applicant must be at least 18; the applicant must occupy the home as their PPR for at least 12 continuous months commencing within 12 months of settlement (or completion, for a build); the home must be valued at $750,000 or less; and at least one applicant must be an Australian citizen or permanent resident.
The FHOG is typically applied for through the lender or the buyer's solicitor and paid at settlement (for a contract to purchase) or after completion (for an owner-builder or progressive payment build). Failure to satisfy the 12-month occupancy requirement results in the SRO demanding repayment of the grant — with interest and potentially penalty tax.
Off-the-plan purchases
Off-the-plan purchases — typically apartments or townhouses bought before completion — present specific considerations for first home buyers. The off-the-plan stamp duty concession can dramatically reduce dutiable value, often bringing higher-priced contracts into the FHB exemption range. The FHOG is available on new off-the-plan dwellings up to $750,000. Construction times are long, and finance pre-approvals must be refreshed before settlement (typically 12 to 36 months after contract).
The risks are different too: sunset clauses, plan variations, valuation shortfalls and developer insolvency. For a first home buyer with limited equity and a stretched budget, these risks deserve careful consideration before signing. Our dedicated off-the-plan guide covers the legal framework in detail; this guide highlights the points that matter most for first home buyers.
Particular FHB-specific points on off-the-plan: maintain finance pre-approval through construction (refresh every 3 to 6 months); plan for the possibility that completion is 6 to 18 months later than the original estimate; confirm that any owners corporation budget and rules are acceptable before signing; do not assume the display suite finishes are the finishes you will receive — the specifications in the contract govern; and respond promptly to any section 9AC plan amendment notice (you have only 14 days to rescind on a material amendment that reduces value by more than 5%).
Settlement process
Settlement is the legal completion of the sale — transfer of title from vendor to buyer, payment of the balance of the purchase price, discharge of vendor mortgages and registration of the buyer's new mortgage. Victorian residential settlements are conducted electronically through PEXA (Property Exchange Australia). The buyer's solicitor or conveyancer and the lender are members of the PEXA workspace; the parties exchange funds, lodge documents and complete settlement in real time on a scheduled day and time.
The settlement timeline for an established home is usually 30, 60 or 90 days from contract — whichever is specified. For off-the-plan, settlement is timed to registration of the plan of subdivision plus a contractual notice period (commonly 14 days). The buyer's lawyer manages the process: ordering rates and water adjustments, calculating duty, lodging the duty payment and any FHB / FHOG application, preparing transfer documents, liaising with the lender on final approval and loan documents, and coordinating the PEXA workspace.
On settlement day, the lender releases loan funds into PEXA, the buyer's contribution is added, the price is transferred to the vendor (less the deposit already held), duty and any FHOG are processed, the existing mortgage is discharged, the new mortgage is registered, the transfer is registered, and the keys are released (typically through the estate agent). A pre-settlement inspection should be conducted 1 to 5 days before settlement — if defects are identified, the lawyer negotiates a remedy before settlement (rectification, retention or, in serious cases, delay).
Insurance
Building insurance should be in place from the day of signing the contract — not from settlement. Although risk traditionally passed at settlement under the old common law rule, the standard Victorian contract increasingly passes risk to the buyer from contract day, and the buyer has an insurable interest from contract even where contract risk remains with the vendor. The buyer should never rely on the vendor's insurance policy: the policy may have lapsed, the cover may be inadequate, the vendor may have no incentive to claim, and the buyer is not a beneficiary.
For strata properties (apartments, units, townhouses within an owners corporation), the owners corporation insures the building under a strata insurance policy. The buyer does not need separate building insurance, but should arrange contents insurance from settlement. A copy of the strata insurance policy and currency certificate is part of the owners corporation information in the Section 32.
Mortgage protection insurance (covering loan repayments if the buyer loses income), income protection insurance, life insurance and total and permanent disability (TPD) insurance are all worth considering. The cost should be built into the buyer's monthly budget alongside the mortgage repayment. A first home buyer taking on a 30- year loan is making a long-term commitment; insurance is part of managing the risk.
Common mistakes
The most common first home buyer mistakes recur with depressing regularity:
- Bidding without pre-approval. Auction contracts are unconditional. Without finance pre-approval, the bidder risks defaulting and losing the deposit (plus damages).
- Skipping the Section 32 review. Saving $500 on legal fees can cost $50,000 on undisclosed easements, defects or planning overlays.
- Underestimating costs. Duty, legal fees, inspections, lender fees, LMI, insurance, rates adjustments and moving costs can total $10,000 to $40,000 on top of the deposit.
- Failing to verify FHB eligibility. A partner who has owned investment property disqualifies the household; check before signing, not at settlement.
- Signing reservation documents that are binding. A "reservation" that imposes forfeiture is in substance a contract. Have any reservation document reviewed.
- Missing the cooling-off window. 3 clear business days from signing — and the right does not apply at all to auction purchases or contracts signed within 3 days of an auction.
- Choosing the property on emotion. The right first home is the home the buyer can complete and afford to keep, not the home that scored highest on the open-day visit.
- Failing to maintain finance pre-approval. Finance approvals lapse in 3 to 6 months. Off-the-plan settlements years away need fresh approvals — and lending policy may have tightened in the interim.
- Not arranging building insurance from contract. Risk may have passed before settlement; in any case the buyer has an insurable interest from contract.
- Failing to plan for the 12-month PPR occupancy. The FHB exemption and FHOG require continuous PPR occupation for 12 months commencing within 12 months of settlement. A buyer who plans to rent the property out from settlement is not eligible.
Practical checklist
A first home buyer's working checklist, in roughly the order events occur:
- Save the deposit and ensure deposit funds are clearly identifiable (lenders need to see genuine savings).
- Obtain finance pre-approval; understand the maximum borrowing capacity and the realistic budget after costs.
- Confirm eligibility for the first home buyer duty exemption / concession and FHOG with your lawyer or accountant.
- Investigate the Home Guarantee Scheme through a participating lender.
- Identify the target property and arrange a building and pest inspection.
- Request and read the Section 32 vendor statement before making any offer or bidding.
- Engage a property lawyer or conveyancer to review the Section 32 and contract before signing.
- Negotiate any contract amendments through your lawyer — including subject-to-finance or other conditions if possible.
- For auction, attend with finance pre-approval, deposit funds available, contract reviewed and inspections complete; set a firm walk-away limit.
- For private sale, sign the contract knowing 3 business days' cooling-off applies (unless caught by the auction exception).
- Arrange building insurance from contract day.
- Submit FHB and FHOG applications through your lawyer or lender.
- Refresh finance approval if settlement is more than 3 months away.
- Attend a pre-settlement inspection 1 to 5 days before settlement; raise any issues immediately.
- Settle through PEXA; collect keys and confirm contents insurance is in place from settlement.
- Occupy as PPR for at least 12 continuous months commencing within 12 months of settlement.
- Retain all settlement documents — duty notice of assessment, transfer of land, mortgage documents and FHOG approval — for tax and audit purposes.
When to obtain legal advice
Engage a property lawyer before signing — including before bidding at auction. The cost of a pre-purchase Section 32 and contract review is a few hundred dollars. The cost of fixing a problem after signing — undisclosed defects, an ineligible FHB claim, a missed cooling-off window, an unfavourable contract amendment — is invariably orders of magnitude larger. Many problems become visible only on the lawyer's first review of the documents.
Specific circumstances where early legal advice is particularly valuable include: off-the-plan purchases; related-party transfers (a parent helping a child); joint purchases with someone who is not a first home buyer; purchases involving a self-managed superannuation fund; purchases involving foreign persons; properties with owner-builder works in the last seven years; properties with unusual easements, covenants or planning overlays; and any contract that has been materially amended from the standard form.
Parke Lawyers' property and conveyancing team acts for first home buyers across Melbourne and regional Victoria. We review Section 32 statements and contracts before signing, advise on FHB and off-the-plan concessions and the FHOG, manage settlement through PEXA and act on any disputes that arise. See our conveyancing and property services page, contact Julian McIntyre directly, or read our related guides on easements, restrictive covenants and owners corporation disputes.
Frequently Asked Questions
Who counts as a first home buyer in Victoria?
For Victorian state taxation purposes, a first home buyer is a natural person who has never held a relevant interest in residential property anywhere in Australia (whether as an owner-occupier or investor), and whose spouse or domestic partner has not held such an interest either. They must be at least 18 (with limited exceptions), purchase a home valued at no more than $750,000 to access the duty concession, and occupy the home as their principal place of residence (PPR) for a continuous period of at least 12 months commencing within 12 months of settlement. Holding only a non-residential interest, or having previously held a residential interest that was sold many years ago, does not preserve first home buyer status — the test is strict.
What is the first home buyer stamp duty exemption in Victoria?
The Victorian first home buyer duty exemption removes land transfer duty entirely on a PPR purchase with a dutiable value of $600,000 or less. Between $600,001 and $750,000, a tapered concession applies — duty is reduced on a sliding scale so that the saving falls to zero at $750,000. Above $750,000, no first home buyer concession is available; the standard PPR concession or full duty applies depending on circumstances. Duty savings can exceed $30,000 for an eligible $600,000 purchase, making first home buyer eligibility one of the single most valuable rights in a Victorian residential transaction.
What is the First Home Owner Grant in Victoria and is it still available?
The First Home Owner Grant (FHOG) is a $10,000 cash grant administered by the State Revenue Office of Victoria for eligible first home buyers acquiring or building a new home valued at no more than $750,000. Critically, the grant only applies to new homes — newly built, substantially renovated or off-the-plan dwellings that have not previously been sold as a place of residence or occupied for more than five months. Established (existing) home purchases do not attract the FHOG, even if they otherwise meet first home buyer criteria. The grant can be paid at settlement (where the lender or solicitor lodges the application) or after settlement once construction completes.
Can I use the duty exemption and the FHOG together?
Yes. The first home buyer duty exemption (or tapered concession) and the FHOG are separate measures with separate eligibility tests. A first home buyer of a new home valued at $600,000 or less can receive both — saving over $30,000 in duty and receiving the $10,000 grant. A first home buyer of an established home receives the duty exemption but not the grant. A first home buyer of a new home above $750,000 receives neither under these specific schemes (the off-the-plan concession may still bring the dutiable value below the cap).
What is the difference between dutiable value and contract price?
Dutiable value is the figure on which land transfer duty is calculated. For an established home, dutiable value is almost always the contract price. For an off-the-plan purchase, dutiable value is reduced by the off-the-plan concession — broadly, the value of construction performed on or after the contract date is excluded. This means an off-the-plan apartment with a contract price of $700,000 may have a dutiable value of (say) $400,000, which brings it under the first home buyer threshold and qualifies it for the full exemption. The interaction between the off-the-plan concession and first home buyer eligibility is a critical planning point.
Why do I need finance pre-approval before house-hunting?
Finance pre-approval (also called conditional approval or approval in principle) is a lender's written indication that, subject to valuation and final checks, they will lend the buyer up to a specified amount. It establishes the buyer's budget, demonstrates seriousness to vendors and agents, and — most importantly — protects against committing to a contract the buyer cannot complete. Auction and post-auction private sale contracts are unconditional from the fall of the hammer: there is no cooling-off and no subject-to-finance protection. Bidding without pre-approval risks default, deposit forfeiture and a damages claim. Pre-approval typically lasts 3 to 6 months and may need to be refreshed before settlement.
What is Lenders Mortgage Insurance and when does it apply?
Lenders Mortgage Insurance (LMI) protects the lender (not the buyer) where the loan-to-value ratio (LVR) exceeds 80% — that is, the deposit is less than 20% of the purchase price. The buyer pays the LMI premium, which can range from a few thousand dollars to over $20,000 depending on price and LVR. LMI is usually capitalised into the loan. The federal Home Guarantee Scheme allows eligible first home buyers to purchase with a 5% deposit without paying LMI; the Commonwealth guarantees up to 15% of the loan to the lender. Eligibility is income-tested, property-price-capped and limited to a number of places each year.
What is a Section 32 vendor statement and why does it matter?
A Section 32 (vendor's statement under section 32 of the Sale of Land Act 1962 (Vic)) is the pre-contractual disclosure document the vendor must give the buyer before signing. It discloses title, easements, covenants, mortgages, planning zone and overlays, building permits issued in the last seven years, owner-builder works, owners corporation information, services, outgoings and (where relevant) bushfire designation. A defective, false or incomplete Section 32 gives the buyer a right to rescind before settlement under section 32K of the Act. A buyer's lawyer reviews the Section 32 against independent searches — the cost of review is trivial compared with the cost of buying a property with undisclosed defects.
What is the cooling-off period for residential property in Victoria?
Section 31 of the Sale of Land Act 1962 (Vic) gives a buyer of residential land 3 clear business days from the day the contract is signed to terminate the contract. To terminate, the buyer (or their representative) must give written notice to the vendor or vendor's agent within the cooling-off period. If they cool off, the buyer forfeits $100 or 0.2% of the price, whichever is greater. Cooling-off does NOT apply where the property is bought at public auction, within 3 clear business days before or after a publicly advertised auction, where the buyer is an estate agent or corporate body, where the property is used primarily for industrial or commercial purposes, or where the property is more than 20 hectares used primarily for farming.
Do I get a cooling-off period at auction?
No. Properties sold at public auction are not subject to statutory cooling-off, nor are private sales contracted within 3 clear business days before or after a publicly advertised auction. The fall of the hammer creates a binding, unconditional contract. The buyer must have completed all due diligence — Section 32 review, building and pest inspections, finance pre-approval, deposit funds — before bidding. There is no walking back from an auction purchase except in very narrow circumstances (a defective Section 32 entitling rescission under section 32K, or a misrepresentation supporting a damages or rescission claim).
Should I get a building and pest inspection before signing?
Yes. A pre-purchase building inspection by a qualified building consultant identifies structural defects, water damage, illegal additions, asbestos, roof condition, electrical safety and other physical risks. A pest inspection identifies termites and other timber-destroying organisms. Both should be undertaken before signing a private sale contract and before bidding at auction — there is no implied warranty of soundness in a residential sale (caveat emptor), and the buyer takes the property as it stands subject to any contractual representations. Inspections typically cost $400 to $800 combined. The cost of skipping them is paid in defect repairs after settlement.
What deposit do I need to sign a contract?
A standard Victorian residential contract requires a deposit of 10% of the purchase price on signing, paid into the vendor's solicitor's or agent's trust account and held pending settlement. Some private sale contracts negotiate a lower deposit (often 5%) — this is purely contractual and depends on the parties' agreement. Auction contracts require the full deposit (usually 10%) to be paid on the day of the auction. The deposit is at risk of forfeiture on buyer default; on developer or vendor default, the deposit is refundable with interest. Some buyers use a deposit bond or bank guarantee instead of cash — these must be acceptable to the vendor.
What is the off-the-plan concession and how does it help first home buyers?
The off-the-plan concession reduces the dutiable value of an off-the-plan strata purchase by the value of construction performed on or after the contract date. For first home buyers, this can bring a contract that would otherwise be above the $600,000 / $750,000 cap below the threshold and into the duty exemption or tapered concession. For example, a $700,000 off-the-plan apartment with $300,000 of post-contract construction has a dutiable value of $400,000 — eligible for the full first home buyer exemption. Between 21 October 2024 and 20 October 2026, a temporary expansion makes the off-the-plan concession available to all off-the-plan strata purchasers with no price cap (a separate measure from first home buyer relief).
How does settlement work for a first home buyer?
Settlement is the legal completion of the sale. In Victoria, residential settlements are conducted electronically through PEXA (Property Exchange Australia). On settlement day, the buyer's lender releases loan funds, the buyer's solicitor or conveyancer pays the balance of the purchase price (less deposit) and duty, the title transfers from vendor to buyer (with any vendor mortgage discharged and the buyer's new mortgage registered), and the keys are released. Settlement typically occurs 30 to 90 days after contract for an established home; longer for off-the-plan. The buyer should attend a pre-settlement inspection 1 to 5 days before settlement to confirm the property is in the same condition as at contract.
What insurance do I need from contract day?
From the day of signing (not settlement), the buyer should have building insurance in place over the property. Although risk traditionally passes at settlement, Victorian contracts increasingly place risk on the buyer from contract date — and even where risk remains with the vendor, the buyer has an insurable interest from contract and should not rely on the vendor's policy. Strata (apartment) buyers do not need separate building insurance — the owners corporation insures the building — but they should arrange contents insurance from settlement. Mortgage protection insurance, income protection and life insurance are also worth considering when taking on a long-term mortgage commitment.
What is the difference between buying at auction and private sale?
An auction is a public sale where bidders compete and the property sells (or passes in) at the fall of the hammer. There is no cooling-off, the contract is unconditional, the deposit is payable on the day, and all due diligence must be done before bidding. A private sale is a negotiated transaction between vendor and buyer; the contract is signed after agreement and is subject to 3 business days' cooling-off (with the small forfeiture) unless within 3 business days of a publicly advertised auction. Private sale contracts can sometimes be made subject to finance, building inspection or other conditions — though many vendors resist conditional offers.
Can I make an offer subject to finance or inspection?
Yes, but only by negotiation. A subject-to-finance clause makes the contract conditional on the buyer obtaining loan approval within a specified period (typically 14 to 21 days). A subject-to-inspection clause allows the buyer to terminate if a building or pest inspection identifies issues. Vendors and selling agents often resist these clauses in a competitive market, and they are rare at or shortly after auction. Where included, the clauses must be carefully drafted — a poorly drafted subject-to-finance clause may not protect the buyer who cannot get finance. A property lawyer should draft or review any such clauses.
What are the main costs of buying a first home?
Beyond the deposit and loan, first home buyers should budget for: land transfer duty (subject to FHB exemption or concession); legal or conveyancing fees ($1,500 to $3,500); building and pest inspections ($400 to $800); loan establishment and valuation fees ($300 to $1,000); Lenders Mortgage Insurance if LVR exceeds 80%; council and water rates adjustments at settlement; first-year insurance; moving costs; and immediate property maintenance. The total can easily reach $10,000 to $40,000 on top of the deposit. The FHOG of $10,000 partly offsets this for new home purchases.
What are the most common first home buyer mistakes?
Common mistakes include: bidding at auction without finance pre-approval, contract review or inspections; skipping the Section 32 review to save legal fees; underestimating purchase costs (duty, fees, insurance, moving); failing to verify FHB eligibility (e.g. a partner who has owned property); signing reservation documents that are in substance binding; missing the 3-day cooling-off window on a private sale; choosing a property based on emotion rather than long-term plan; failing to plan for the 12-month PPR occupancy requirement; and not arranging building insurance from contract date.
Do I need a lawyer or can I use a conveyancer?
Both lawyers and licensed conveyancers can act on a residential property purchase in Victoria. A licensed conveyancer is regulated under the Conveyancers Act 2006 (Vic) and handles standard transactions competently. A property lawyer is admitted to legal practice, can also advise on related legal issues (title disputes, contract amendments, owners corporation rules, family law transfers, finance documents, leasing, capacity issues, complex due diligence), and can litigate if the transaction goes wrong. For a straightforward established home in a non-complex location, a conveyancer is usually adequate. For off-the-plan, complex titles, related-party transfers, large purchases, commercial elements, complex finance or any unusual feature, a lawyer is preferable.
What happens at the pre-settlement inspection?
The pre-settlement inspection (usually 1 to 5 days before settlement) allows the buyer to confirm that the property is in the same condition as at the date of contract, that all fixtures and chattels included in the sale are present, and that any agreed repairs have been carried out. The inspection is typically arranged by the selling agent. If the inspection reveals damage or missing items, the buyer's solicitor raises the issue with the vendor immediately — options include vendor rectification before settlement, a retention from the price at settlement, or (in serious cases) a delay or rescission. Once settlement occurs, the buyer's leverage is largely gone.
Do I have to live in the home myself to keep the duty concession?
Yes. The first home buyer duty exemption and concession require the buyer to occupy the home as their principal place of residence for at least 12 continuous months commencing within 12 months of settlement. The same residency requirement applies to the FHOG. If the buyer fails to meet the residency requirement, the SRO reassesses duty at the full rate and demands repayment of the grant. Limited exceptions exist (e.g. for ADF members), but the general rule is strict. First home buyers who plan to rent out the property cannot access these benefits.
Can two first home buyers buy together?
Yes — and they can each share in the duty exemption / concession and the FHOG (one grant per home, not per buyer). Both buyers must individually satisfy the FHB criteria (never owned residential property, will occupy as PPR). If only one of two joint buyers is a first home buyer, the partial benefit available depends on the percentage of relevant interest each takes; in many cases the non-FHB partner disqualifies the household from the duty exemption. Couples in this position should obtain advice before signing — sometimes the non-FHB partner is left off title to preserve the exemption (with its own legal and financial trade-offs).
When should I engage a property lawyer in the first home buying process?
Engage a property lawyer before signing a contract — including before bidding at auction. A pre-purchase contract and Section 32 review costs a few hundred dollars and frequently identifies issues that save the buyer many thousands. Once the contract is signed, the lawyer manages the conveyancing process through to settlement: liaising with the lender, calculating duty, lodging the FHB and FHOG applications, ordering settlement adjustments, conducting PEXA settlement and registering the new title. Engaging a lawyer late in the process — after signing — limits what they can do; many problems become visible only on the lawyer's first review.
Where can I get specialist first home buyer advice in Victoria?
Parke Lawyers' property and conveyancing team acts for first home buyers across Melbourne and regional Victoria. We review contracts and Section 32 statements before signing, advise on FHB and off-the-plan concessions and the FHOG, manage settlement through PEXA, and handle any disputes that arise. Fees are fixed and quoted up-front. See our property law pillar and dedicated guides on Section 32, stamp duty and off-the-plan purchases for the underlying detail, or contact Julian McIntyre directly.
Property & Conveyancing
Buying your first home in Victoria? Get the contract reviewed before you sign.
Parke Lawyers reviews Section 32 statements and contracts for first home buyers, advises on stamp duty concessions and the FHOG, and manages settlement through PEXA across Victoria.
This article is general information only and does not constitute legal advice. Please obtain advice tailored to your circumstances.