The Hidden Costs of Buying a Home in Australia: Beyond the Deposit
You've saved your deposit and you're ready to buy your first home. But wait—the deposit is just the beginning. Most Australian home buyers are shocked to discover there are additional costs totaling 3-7% of the purchase price on top of the deposit, plus thousands more in the first year of ownership. The good news? Many of these costs can be reduced through first home buyer concessions or added to your loan. This comprehensive guide breaks down every cost you'll face beyond the deposit, with real numbers and practical strategies to minimize them.
Understanding Costs Beyond the Deposit
If you're buying a $600,000 home and you've saved your 20% deposit ($120,000), congratulations—you're well on your way. But be aware there are typically $20,000-$40,000 in additional costs that come with the purchase, depending on your state and circumstances.
Before you panic: many of these costs can be significantly reduced if you're a first home buyer (stamp duty concessions can save $10,000-$30,000), avoided through government schemes (5% Deposit Scheme saves $15,000-$35,000 in LMI), or added to your loan rather than paid upfront. Let's break down exactly what these costs are and how to minimize them.
Upfront Costs You Must Pay Before Settlement
1Stamp Duty (Transfer Duty)
What it is: A state government tax on property transfers. This is typically your single largest upfront cost beyond the deposit.
How Much It Costs (By State)
Example: $600,000 property purchase
- NSW: ~$24,000 (first home buyers may be exempt up to $800,000)
- VIC: ~$31,000 (concessions available for first home buyers up to $750,000)
- QLD: ~$15,900 (concessions for first home buyers up to $700,000)
- WA: ~$21,000 (exemptions available for first home buyers up to $500,000)
- SA: ~$21,000 (concessions for first home buyers available)
- TAS: ~$18,000 (concessions for first home buyers up to $600,000)
- ACT: ~$16,000 (concessions for first home buyers available)
- NT: ~$23,000 (various concessions available)
First Home Buyer Tip
Most states offer significant stamp duty concessions or full exemptions for first home buyers purchasing below certain price thresholds. In NSW, first home buyers can save the entire $24,000 stamp duty bill on properties up to $800,000. Always check your state's revenue office for current concessions before calculating your total costs.
2Lenders Mortgage Insurance (LMI)
What it is: Insurance that protects the lender (not you) if you can't repay your loan. Required when your deposit is less than 20% of the property value.
How Much It Costs
LMI varies based on your deposit size and loan amount, but here are typical costs for a $600,000 property:
- 5% deposit ($30,000): LMI ~$25,000-$35,000
- 10% deposit ($60,000): LMI ~$15,000-$25,000
- 15% deposit ($90,000): LMI ~$8,000-$12,000
- 20% deposit ($120,000): LMI $0
Important Notes
- LMI can often be added to your loan amount rather than paid upfront (though you'll pay interest on it)
- The Australian Government's 5% Deposit Scheme allows eligible first home buyers to avoid LMI entirely—potentially saving $25,000+
- Some lenders offer LMI waivers for specific professions (doctors, lawyers, accountants)
3Legal and Conveyancing Fees
What it is: Professional fees for the legal work involved in transferring property ownership, reviewing contracts, conducting searches, and managing settlement.
Typical Costs
- Conveyancer: $1,200-$2,000 (sufficient for straightforward purchases)
- Property Solicitor: $1,500-$3,000+ (recommended for complex transactions)
- Disbursements: $300-$500 (title searches, land registry fees, bank fees)
Total legal/conveyancing cost: $1,500-$3,500
Warning: Avoid choosing solely based on price. A good conveyancer or solicitor can identify contract issues that could save you tens of thousands. Ask for recommendations from recent buyers in your area.
4Building and Pest Inspections
What it is: Professional inspections to identify structural issues, safety hazards, and pest infestations before you commit to purchase.
Typical Costs
- Building inspection: $350-$600
- Pest inspection: $150-$300
- Combined building & pest: $450-$800 (usually better value)
- Specialized inspections (pools, asbestos, electrical): $200-$500 each
Never Skip This Cost
A $600 inspection can identify $50,000+ in structural problems, termite damage, or major defects. Some buyers try to save money by skipping inspections—this is one of the most expensive mistakes you can make. Even new builds should be inspected before final payment.
5Loan Application and Bank Fees
What it is: Fees charged by lenders to process and establish your home loan.
Common Lender Fees
- Application fee: $0-$600 (often waived in competitive markets)
- Valuation fee: $200-$400 (lender arranges independent property valuation)
- Settlement fee: $150-$400
- Loan establishment fee: $0-$1,000 (many lenders waive this)
Total lender fees: $0-$2,000 (highly negotiable)
Pro tip: Many of these fees are negotiable or can be waived, especially if you're bringing a significant deposit or have strong financials. Don't be afraid to ask your lender or broker to reduce or remove upfront fees.
6Home Insurance
What it is: Insurance to protect your property against damage or loss. Most lenders require you to have building insurance in place before settlement.
Types of Insurance You'll Need
- Building insurance (required): $800-$2,000 annually, depending on property value and location
- Contents insurance (optional but recommended): $300-$800 annually
- Landlord insurance (if renting out): $400-$1,000 annually
You'll typically need to pay the first year upfront or at least the first few months before settlement.
Note: If you're buying an apartment, building insurance is typically included in your strata fees. However, you'll still want contents insurance for your belongings.
Settlement Day and Moving Costs
| Cost Item | Typical Range |
|---|---|
| Removalist/moving truck | $500-$2,500 |
| Connection fees (electricity, gas, internet) | $200-$500 |
| Mail redirection | $30-$100 |
| Cleaning (old and new property) | $200-$600 |
| Minor repairs/painting before moving in | $500-$3,000 |
| Total Moving Costs | $1,500-$7,000 |
First Year Ownership Costs
Once you've moved in, you'll face ongoing costs that renters don't typically pay:
Ongoing Annual Costs
- Council rates: $1,000-$3,500 per year (depending on location and property value)
- Water rates: $500-$1,200 per year (varies by state and usage)
- Strata fees (apartments/townhouses): $2,000-$10,000+ per year (includes building insurance, common area maintenance, sinking fund)
- Home/building insurance: $800-$2,000 per year
- Contents insurance: $300-$800 per year
- Maintenance and repairs: Budget 1% of property value annually ($6,000 for a $600,000 home)
- Garden/lawn maintenance: $500-$2,000 per year (if you outsource)
- Utilities (typically higher than renting): $2,000-$4,000 per year
Total Annual Ongoing Costs
- House: $10,000-$18,000 per year
- Apartment/townhouse: $7,000-$15,000 per year (strata fees can be significantly higher for luxury buildings)
Initial Setup Costs
Many first-time buyers underestimate the cost of setting up a new home:
| Setup Item | Typical Cost |
|---|---|
| Furniture (if moving from furnished rental) | $5,000-$20,000 |
| Appliances (fridge, washer, dryer, etc.) | $3,000-$10,000 |
| Curtains/blinds | $1,000-$5,000 |
| Garden equipment (mower, tools, hoses) | $500-$2,000 |
| Security systems/cameras | $300-$2,000 |
| Minor renovations/improvements | $2,000-$15,000+ |
| Total Initial Setup | $12,000-$50,000+ |
Real-World Example: Total Cost Breakdown
Scenario: First Home Buyer in Sydney
Purchasing a $650,000 apartment with 10% deposit ($65,000)
Upfront Costs
- Deposit (10%)$65,000
- Stamp duty (NSW, first home buyer exemption)$0
- Lenders Mortgage Insurance$18,000
- Conveyancing fees$1,800
- Building & pest inspection$600
- Lender fees$400
- Building insurance (first year)$0(in strata)
- Contents insurance (first year)$500
- Total Upfront$86,300
Moving & Setup Costs
- Removalists$1,200
- Connection fees$300
- Initial furniture/appliances$8,000
- Curtains/blinds$2,000
- Total Moving/Setup$11,500
First Year Ongoing Costs
- Mortgage repayments (6.5%, P&I, 30yr)$44,400/yr
- Strata fees$4,500
- Council rates$1,200
- Water rates$800
- Contents insurance (already paid)$0
- Utilities$2,800
- Maintenance buffer$1,500
- Total First Year Ongoing$55,200/yr
Plus ongoing costs of $55,200/year ($1,062/week)
How to Prepare: Budget Planning Strategies
1. Understand the Total Cost Picture
Be aware that total upfront costs (deposit + additional expenses) can reach 25-30% of the purchase price. Here's what that looks like:
- $500,000 property: Total costs could be $125,000-$150,000
- $600,000 property: Total costs could be $150,000-$180,000
- $750,000 property: Total costs could be $187,500-$225,000
Important: This doesn't mean you need to have all this cash saved upfront. Many costs can be reduced through first home buyer concessions (stamp duty exemptions saving $10,000-$30,000), government schemes (5% Deposit Scheme avoiding $15,000-$35,000 in LMI), or added to your loan (LMI, some lender fees). Focus on understanding what these costs are and how to minimize them, not on having 30% saved before you can buy.
2. Create a Detailed Cost Spreadsheet
Before you start house hunting, create a comprehensive budget that includes:
- Estimated stamp duty for your state and price range
- LMI costs (if applicable) or confirm eligibility for 5% Deposit Scheme
- Professional fees (legal, inspections, lender)
- Insurance for first year
- Moving and setup costs
- Emergency buffer (minimum $5,000)
- First year ongoing costs to ensure affordability
3. Leverage First Home Buyer Concessions
Maximize government support to reduce upfront costs:
- 5% Deposit Scheme: Avoid LMI and buy with just 5% deposit (saving $15,000-$35,000)
- Stamp duty concessions: Save $10,000-$30,000 depending on your state
- First Home Owner Grant: Receive $10,000-$15,000 for new builds (state-dependent)
- First Home Super Saver Scheme: Save for your deposit with tax benefits (~15% tax savings)
Cost-Saving Tips
- ✓Negotiate lender fees: Application fees, valuation fees, and establishment fees are often negotiable or can be waived. Always ask.
- ✓Time your purchase strategically: Settlement periods give you time to save additional funds for moving and setup costs. Negotiate a longer settlement (60-90 days) if you need more time.
- ✓Buy furniture gradually: Don't feel pressured to furnish your entire home immediately. Buy essentials first and add items over 6-12 months.
- ✓DIY where possible: Painting, minor repairs, and garden work can save thousands if you have the time and skills.
- ✓Shop around for insurance: Insurance quotes can vary by 30-50% between providers. Get at least 3 quotes before committing.
- ✓Use a mortgage broker: Brokers can often negotiate better rates and fee waivers than you can get directly, and they're typically free for borrowers.
Common Mistakes to Avoid
- ✗Only saving for the deposit: The deposit is just one cost. Failing to budget for stamp duty, legal fees, inspections, and moving costs leaves you scrambling at the last minute.
- ✗Draining all savings: Don't spend every dollar on upfront costs. Keep an emergency fund of at least 3-6 months of expenses for unexpected repairs or income loss.
- ✗Skipping building inspections: A $600 inspection can identify $50,000+ in problems. Never skip this to save money.
- ✗Underestimating ongoing costs: Council rates, strata fees, maintenance, and higher utilities add up quickly. Make sure you can afford the ongoing costs, not just the mortgage.
- ✗Not checking first home buyer eligibility: You could miss out on $20,000-$50,000 in savings from stamp duty concessions and government schemes. Always check eligibility before assuming you don't qualify.
- ✗Buying at maximum borrowing capacity: Just because the bank will lend you $700k doesn't mean you should borrow that much. Interest rate rises and life changes can make maximum borrowing unaffordable.
Quick Reference: Total Costs Summary
| Cost Category | Typical Range | Notes |
|---|---|---|
| Deposit | 5-20% of property price | Minimum 5% with govt scheme |
| Stamp duty | $0-$40,000+ | Often $0 for first home buyers |
| LMI | $0-$35,000 | Avoid with 20% deposit or govt scheme |
| Legal/conveyancing | $1,500-$3,500 | Essential professional cost |
| Inspections | $450-$1,500 | Never skip this |
| Lender fees | $0-$2,000 | Often negotiable/waived |
| Insurance (first year) | $800-$2,500 | Required by lender |
| Moving costs | $1,500-$7,000 | Varies by distance |
| Initial setup | $5,000-$30,000 | Furniture, appliances, curtains |
| Total Beyond Deposit | $10,000-$80,000+ | Typically 3-7% of purchase price |
Calculate Your True Affordability
Understanding all costs is critical, but you also need to know how much you can actually borrow and afford to repay. Use our free calculators to understand your complete financial picture before you start house hunting.
The Bottom Line
The deposit is just the beginning of your home buying costs. To avoid financial stress and unexpected surprises, plan for the full picture:
- Understand total costs can be significant—upfront costs beyond the deposit typically range from 3-7% of the purchase price, but many can be reduced or managed through concessions and schemes
- Research state-specific costs like stamp duty and understand first home buyer concessions you may qualify for—these can save you $20,000-$50,000+
- Leverage government schemes first to reduce upfront costs (5% Deposit Scheme avoiding LMI, stamp duty concessions, FHSS)
- Don't drain your savings completely—keep an emergency fund for unexpected expenses
- Factor in ongoing costs beyond the mortgage: rates, insurance, maintenance, and utilities
- Get professional inspections—saving $600 on an inspection could cost you $50,000 in hidden problems
Australian homeownership is expensive, but understanding the true costs upfront allows you to plan properly, avoid financial stress, and make informed decisions. The buyers who succeed are those who budget conservatively, leverage available concessions, and maintain financial buffers for the unexpected.
Your first home is one of the biggest purchases you'll ever make. Taking the time to understand and prepare for all costs—not just the deposit—is the difference between a smooth transition to homeownership and years of financial stress.
Disclaimer: This article provides general educational information only and is not financial, legal, or professional advice. The costs and figures presented are estimates based on typical scenarios as of January 2026 and will vary significantly depending on your location, property type, lender, and individual circumstances.
Government schemes, concessions, eligibility criteria, and costs change regularly. Always verify current information with official sources including state revenue offices, the ATO, and your lender. This information should not be used as the sole basis for making property purchasing decisions.
Before making any financial decisions related to property purchase, you should seek independent professional advice from a licensed financial advisor, mortgage broker, conveyancer, or solicitor who can assess your specific circumstances and provide personalized guidance.
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