If you're trying to buy your first home in Melbourne in 2026, the landscape is different to what it was even 18 months ago. Interest rates have started moving, government schemes have expanded, and the stamp duty rules have quietly shifted in your favour.
Here are the five things every Melbourne first home buyer needs to understand before making an offer.
1. The First Home Guarantee Scheme Has Expanded
The Federal Government's Home Guarantee Scheme now covers a broader range of buyers and price points. Under the First Home Guarantee, eligible buyers can purchase with as little as 5% deposit without paying Lenders Mortgage Insurance (LMI) — because the government guarantees up to 15% of the loan.
Key eligibility criteria:
- Australian citizen or permanent resident
- Income cap: $125,000 (singles) or $200,000 (couples)
- Property price cap: $800,000 in Melbourne metropolitan area
- Must be owner-occupied (not investment)
The guarantee is allocated via participating lenders, and places fill quickly each financial year. Speak to an accredited broker early — not all lenders offer this scheme, and the right lender matters.
2. Victoria's Stamp Duty Concessions Are Worth Understanding
Victoria currently exempts first home buyers from stamp duty on properties valued up to $600,000, and offers a partial concession on properties between $600,000 and $750,000.
What this means in practice:
- $580,000 property: $0 stamp duty (full exemption)
- $680,000 property: approximately $9,600 (discounted from ~$33,000)
- $760,000 property: full stamp duty applies — around $41,800
The concession applies to established homes, off-the-plan purchases, and vacant land (different rules apply for each). Your conveyancer will confirm eligibility, but your broker can factor this into your upfront cost calculations early.
3. Your Borrowing Power Is Calculated at a Buffer Rate
When you apply for a home loan, lenders don't assess your ability to repay at today's rate. They add a serviceability buffer — currently 3% above the assessment floor — to stress-test your application.
If the variable rate is 6.2%, your application is assessed at approximately 9.2%. This significantly reduces your maximum loan size compared to what the repayment calculator shows.
Practical implication: If you're approved for $650,000, don't assume that's what you'll comfortably pay today. It's the stress-tested maximum. Your broker can run the real numbers to show you a range that works long-term — not just the ceiling.
4. Pre-Approval Is Not Unconditional Approval
One of the most common mistakes first home buyers make is treating pre-approval (also called indicative or conditional approval) as a guaranteed loan.
Pre-approval typically means the lender has assessed your income, expenses, and credit file — but has not yet valued the specific property. If the property valuation comes in lower than the purchase price, the lender may reduce the loan amount.
In a competitive auction market like Melbourne's inner suburbs, this can create real problems if you've bid at the limit of your pre-approval. Always leave a buffer between your pre-approval amount and your maximum bid.
5. The Type of Property Matters for Finance
Not all Melbourne properties are equally lendable. Lenders apply tighter rules to:
- Studio apartments (some lenders won't lend at all)
- Serviced apartments and hotel-style buildings
- Properties above commercial premises
- Small land lots under 200sqm
- Certain postcodes in high-density areas
A house on a standard block in Melbourne's southeast suburbs is straightforward to finance. An off-the-plan apartment in the CBD with a 14sqm study nook is not. Your broker should flag these issues before you sign a contract, not after.
Getting Started
The single best thing you can do is speak to a broker before you start searching. Understanding your actual borrowing power, which schemes you qualify for, and what types of property to avoid will save you months of wasted inspections.
At Lending Financial Group, we work with Melbourne buyers across every stage — from first enquiry to settlement. Book a free call and we'll map out exactly where you stand.