Four Strategies First-Home Buyers Are Using to Get into the Market

For many first-home buyers, getting onto the property ladder remains challenging, although the nature of that challenge has changed.

Property prices are currently weaker in a number of markets, listings have increased and buyers generally have more time and negotiating power than they did during the boom.

Yet affordability remains stretched.

Years of rising property values, relatively high mortgage repayments, expensive rents and tighter lending conditions have made it difficult for many Australians to save a deposit and qualify for the loan they need.

That means first-home buyers are becoming more flexible about where they buy, what they buy and even who they buy with.

1. Looking at different locations and property types

Many first-home buyers begin their search with a clear picture of where they want to live, only to discover that the homes in their preferred suburbs are beyond their budget.

The common response has been to look further afield, although that doesn't have to mean moving to a distant outer suburb with limited infrastructure, employment opportunities or long-term growth prospects.

In many cases, the better compromise may be a smaller property in a more desirable location.

An apartment, villa unit or townhouse in an established suburb may provide better access to employment, transport, shops and lifestyle amenities than a larger house on the urban fringe.

Of course, cheaper does not automatically mean better value.

Some affordable properties are cheap because they have serious drawbacks, including oversupply, poor owner-occupier appeal, high owners corporation costs or a location with limited potential for capital growth.

First-home buyers should therefore consider both affordability and the property’s longer-term prospects.

The first property does not need to be the dream home. It should, however, be a sound asset that provides a secure base from which the owner can build equity and move forward.

2. Rentvesting

Rentvesting has become a popular option for buyers who cannot afford to purchase in the suburb where they want to live.

The strategy involves renting in a location that suits your lifestyle while buying an investment property in an area that suits your budget and financial objectives.

This can allow a buyer to enter the market without moving a long distance from work, family or their established social network.

The rent received from the investment property also helps meet the cost of ownership, while the buyer may benefit from capital growth over time if they have chosen the right property.

However, rentvesting is not simply a matter of buying the cheapest property available.

A first investment should be selected according to its long-term growth prospects, local demographics, scarcity, owner-occupier appeal and the buyer’s overall financial plan.

There are also tax, finance and cash flow implications to consider. Rentvestors continue paying rent themselves while covering any shortfall between the rental income and the expenses associated with owning their investment.

It is worth remembering that investment properties are generally ineligible for first-home-buyer owner-occupier assistance, so professional advice should be obtained before choosing this strategy.

3. Buying with someone else

Buying with a partner has always been common, but some first-home buyers are now purchasing with siblings, parents, relatives or friends.

Pooling deposits and incomes can increase borrowing capacity and allow the buyers to share loan repayments and other ownership costs.

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This can make home ownership possible sooner, although the arrangement needs to be treated as a financial partnership rather than an informal understanding.

Before purchasing, the parties should agree on how the deposit, mortgage repayments, maintenance costs and improvements will be funded.

They should also determine what happens if one owner wants to sell, loses their income, enters a new relationship or cannot meet their share of the repayments.

The ownership structure matters as well.

Joint tenants generally own the property together, with the surviving owner automatically receiving the other person’s interest if one owner dies.

Tenants in common can hold separate and potentially unequal shares, allowing each owner’s interest to be dealt with under their estate plan.

A properly drafted co-ownership agreement and independent legal advice for everyone involved can prevent considerable stress later.

4. Using government support

Federal and state governments provide several forms of assistance that may help eligible buyers enter the market with a smaller deposit or lower upfront costs.

The Australian Government 5% Deposit Scheme allows eligible first-home buyers to purchase an owner-occupied home with a deposit starting from 5% without paying lenders mortgage insurance.

From 1 July 2026, the scheme has no income caps, no waiting list and unlimited places, although buyers must satisfy the lender’s credit requirements and purchase within the applicable property price cap.

Eligible single parents and legal guardians may be able to purchase with a deposit starting from 2%.

The Help to Buy Scheme offers a different form of assistance. Under this shared equity arrangement, an eligible buyer contributes a minimum deposit of 2%, while the Australian Government can contribute up to 30% of the purchase price of an existing home or 40% of a new home.

This reduces the size of the buyer’s mortgage, but the government receives a corresponding share of the property’s future value when its equity is repaid or the home is sold.

Another option is the First Home Super Saver Scheme, which allows eligible buyers to withdraw qualifying voluntary superannuation contributions, together with associated earnings, to help fund a deposit.

First Home Owner Grants and stamp duty concessions are also available, although the eligibility rules, property limits and benefits vary between states and territories.

Importantly, some forms of government assistance cannot be combined, while others are only available for owner-occupied homes or newly built properties.

Buyers should check the current rules before signing a contract because these schemes and thresholds change over time.

A softer market does not remove the risks

Today’s softer market may give first-home buyers more choice, more time to complete their due diligence and a stronger position when negotiating with vendors.

However, weaker conditions should not encourage buyers to purchase simply because a property has been discounted.

A poorly located or unsuitable property can remain a poor asset even if it is bought below the vendor’s original asking price.

The first step should be to understand your borrowing capacity, establish a realistic budget and decide which compromises you are prepared to make.

The goal should be to purchase a property you can afford to hold and which will continue meeting your needs after the excitement of becoming a homeowner has passed.

For some buyers, that will mean purchasing a smaller home in a better suburb. For others, it may involve rentvesting, buying with someone else or using one of the government assistance schemes.

Each strategy has its own benefits and risks, which is why the right approach will depend on the buyer’s income, lifestyle, future plans and financial position.