First Home Buyers Grant Mistakes That Cost Melbourne Buyers

Buying your first home in Melbourne should be an exciting milestone — but for many, it becomes a financial headache due to overlooked grant rules, eligibility confusion, or timing issues. Government incentives like the first home buyers grant and home guarantee scheme can be a game changer, but only if you understand how to use them effectively.

In 2025, tighter lending conditions, rising property prices, and shifting grant policies have created a more complex buying landscape. This guide covers the most common mistakes first-home buyers make when trying to access grants and incentives — and how working with an experienced Melbourne mortgage broker can help you avoid costly missteps.

Mistake 1: Assuming You Automatically Qualify

Not everyone qualifies for the First Home Owner Grant (FHOG), and eligibility can vary by state, property type, and even construction status.

• Believing existing homes qualify in Victoria (they usually don’t — new builds only)

• Thinking dual applicants can both claim the grant

• Overlooking income and property value caps for related schemes like the First Home Guarantee

How to avoid it: Always review the latest state guidelines and scheme-specific eligibility before making an offer. A qualified broker can confirm your position against current thresholds and ensure you don’t proceed under false assumptions.

Mistake 2: Relying on Outdated Grant Amounts

The FHOG in Victoria hasn’t been static — it has changed depending on government policy and whether the property is in a metro or regional area.

• Grants may vary between $10,000 and $20,000

• Additional stamp duty concessions may apply — but only under strict conditions

How to avoid it: Don’t rely on information from forums or friends who purchased years ago. Always check the current rates or speak with a broker who stays across real-time updates.

Mistake 3: Missing the First Home Guarantee Window

The First Home Guarantee allows eligible buyers to purchase with as little as 5% deposit and no LMI (Lenders Mortgage Insurance). But places are limited — and timing is everything.

• Waiting too long to apply and missing the allocation window

• Being pre-approved for a loan but not the scheme itself

• Not realising that new releases for the scheme drop on specific dates

How to avoid it: Apply early and work with a broker who has direct access to lenders participating in the scheme. They can help you secure your spot before allocations run out.

Mistake 4: Overlooking Timing and Contract Rules

To qualify for the FHOG or First Home Guarantee, timing matters. Some buyers miss out simply because they signed a contract too early, or applied too late.

• Signing a contract before official scheme approval

• Moving into the home too late and breaching occupancy requirements

• Applying for the grant after settlement

How to avoid it: Work with a broker or conveyancer who understands timing obligations. They’ll help you coordinate approvals, contracts, and occupancy deadlines so everything aligns.

Mistake 5: Failing to Budget for Upfront Costs

While grants and guarantees reduce your deposit needs, they don’t cover everything. Many first-home buyers are caught off guard by extra costs like:

• Stamp duty (on properties not fully exempt)

• Conveyancing/legal fees

• Building inspections

• Loan application or lender fees

• Moving expenses and utility connections

How to avoid it: Calculate your total costs upfront with help from your broker. They can prepare a full cost breakdown based on your property type, location, and lending product.

Mistake 6: Choosing the Wrong Lender

Not all lenders participate in the First Home Guarantee or offer the best structure for grant-supported loans. Some may have:

• Longer processing times

• Stricter credit checks

• Hidden fees

• Less flexibility on redraw or offset features

How to avoid it: Work with an experienced Melbourne mortgage broker who knows which lenders support grant-backed loans and who can structure the right product for your budget and goals.

Mistake 7: Not Using a Broker at All

Trying to navigate grant applications, lender criteria, and timing requirements on your own increases the risk of missed opportunities and unnecessary stress.

A good broker will:

• Clarify your eligibility for the first home buyers grant and home guarantee scheme

• Match you with lenders that align with your goals

• Prepare your documentation to meet approval timelines

• Ensure you maximise your benefits without triggering penalties or breaches

Final Thoughts

Accessing government support can significantly reduce the barriers to home ownership — but only if done correctly. The First Home Owner Grant and Home Guarantee Scheme can save you tens of thousands, but simple mistakes can just as easily cost you that much.

With property prices in Melbourne still pushing affordability limits, now more than ever it pays to get professional guidance. An experienced Melbourne mortgage broker like Loanscope can help you make the most of your first-home journey — from eligibility checks to lender matching and strategic grant usage.

Don’t leave thousands on the table. Learn the rules, plan ahead, and get expert support to secure your first home with confidence in 2025.