The Deposit Isn’t the Hurdle Anymore: What First Home Buyer Borrowing Power Means for Your Clients
First home buyer borrowing power has overtaken the deposit as the biggest barrier to buying a first home in Australia. Schemes now let eligible buyers purchase with a 5% deposit, but higher rates mean many clients can’t borrow enough for the property they want. For advisers, that changes when the home loan conversation should start.
Why is borrowing power the biggest hurdle now?
More than 102,000 Australians have bought through the 5% Deposit Scheme since it expanded in October 2025. But Cotality estimates this year’s four rate rises have cut borrowing capacity for a median-income household by almost $90,000, and lenders test repayments at a buffer above the actual rate. Prices are down around 5% from their March peak, yet for many buyers that hasn’t made up the difference.
How are first home buyers adapting?
CBA data shows apartments and units made up 44% of first home purchases in 2025–26, up from 32% five years earlier. Around 56% of aspiring owners are also buying with a partner, friend or family member, including parents buying a share alongside adult children. Each path opens a door, and each adds complexity that’s easier to manage early.
What does this mean for your clients?
- Accountants: How self-employed or variable income is presented can directly affect approval, and family co-purchases need the ownership split and tax position settled first.
- Conveyancers: Co-ownership structure should match the loan, some lenders tighten policy on smaller units, and an older pre-approval may fall short at exchange.
- Real estate agents: Buyers with a deposit but no clear borrowing limit can stall after an offer. A broker check before inspections means firmer, better-prepared buyers.
- Financial planners: When clients pool money with family, or parents help adult children buy, the purchase and loan structure should fit their wider financial plan.
When should you refer a client to a broker?
Earlier than most clients think, especially when they:
- Haven’t started inspecting yet
- Are buying with someone else
- Have self-employed income, a guarantor or a pre-approval more than a few months old
How can a mortgage broker help with first home buyer borrowing power?
Borrowing power isn’t one fixed number. Each lender assesses income, expenses and debts differently, so the same client can be offered very different limits depending on where they apply. At Loan Lounge, we help clients make the most of their borrowing power in three ways:
- Matching them to the right lender. We compare how lenders treat their income type, debts and living expenses, including self-employed and variable income, and apply where their situation is assessed most favourably.
- Preparing them before they apply. Small changes, like reducing unused credit card limits, closing buy now pay later accounts or timing an application around a new tax return, can change what a lender will approve.
- Structuring the purchase. Whether it’s the 5% Deposit Scheme, a family guarantee or buying with someone else, we set up the loan to fit the client’s goals now and later.
The result is a realistic, lender-tested budget before they start inspecting, not a guess from an online calculator.
How does Loan Lounge work with referral partners?
Referred clients start with free consultation call where we map out their borrowing power and build a strategy that fits their goals. We keep you updated along the way, and your client is supported through to settlement.
If you have a client weighing up their first purchase, let’s talk. Book your FREE consultation with Loan Lounge.
Frequently asked questions
What is the biggest hurdle for first home buyers in 2026?
Borrowing power. Smaller deposits are more accessible, but higher rates and serviceability buffers have reduced how much buyers can borrow.
Can parents and adult children buy a property together?
Yes. Many lenders allow family members to buy as co-borrowers, though each borrower is usually responsible for the full loan, so legal and tax advice on the ownership structure is recommended.
When should a first home buyer speak to a mortgage broker?
Before they start inspecting, so they set a realistic budget from the start.