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The real cost of buying a home in Australia
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The two levers that move your costs most

Which costs move the most when you buy — and can you control them?

Reviewed by a licensed conveyancer

Reviewed by

Cordell Smith

Last updated

July 24, 2026

The two big cost levers are the factors that most influence what you pay upfront: whether you qualify for a first-home duty concession (and stay under its threshold), and your deposit size — under 20% triggers lender's mortgage insurance. Both are partly within your control.

In detail

The two big levers

Lever 1: FHB concession — and the cliffs

FHB stamp duty isn't a sliding scale all the way up. VIC $750K and QLD $800K are sharp cliffs — $1 over and the concession is gone. NSW is different: it tapers from $800K to $1M, but by $999K you're already paying ~$39K (close to full duty). The valuable NSW range is $800K–$900K, not $800K–$1M.

If you're negotiating near a VIC or QLD cliff, the cliff matters more than the price. A $751K VIC purchase costs more out of pocket than $749K. Get under the threshold if you can.

Lever 2: LMI — and how to skip it

LMI (Lenders Mortgage Insurance) applies when your deposit is under 20%. It's typically 1–5% of the loan — often $15K–$35K+ on a 5–10% deposit.

The First Home Guarantee (expanded 1 October 2025) wipes LMI entirely: no income caps, unlimited places, 5% deposit, no LMI. Price caps apply by state and region — check before you sign.
LMI is often capitalised into the loan — you don't see it at settlement, but you pay it with 30 years of interest.

The deposit lever in action (illustrative, $800,000 purchase)

Factor20% deposit ($160,000)10% deposit ($80,000)
Loan-to-value ratio80%90%
Lender's mortgage insuranceNone — at the 20% thresholdApplies — often $15K–$35K+ (unless you use the First Home Guarantee)
Transfer (stamp) dutySet by price and state — unchanged by your depositSet by price and state — unchanged by your deposit

The deposit doesn't move the duty, but crossing the 20% line is what switches LMI on or off — so of the two levers, your deposit size is the one you most directly control.

Lender pays vs you pay

Lender pays (built into the rate): property valuation; its own title checks at settlement.

You pay (cash on the day): deposit (5–20%); transfer duty; title + mortgage registration; conveyancing + disbursements; building & pest inspection; LMI (unless using the First Home Guarantee); home & contents insurance; council rates adjustment; moving + connections. (The seller covers their own mortgage discharge.)

In practice

The two big cost levers in practice

In our experience, the two costs buyers can most influence are the ones they think about least early on.

A common one is the stamp-duty cliff. Near a first-home threshold, a small change in price can flip a buyer from a concession to none — in VIC and QLD it's a sharp cut-off, so a dollar over the line costs far more than the dollar. We see people negotiating hard on features when getting under the threshold would have saved more.

The other is LMI. Buyers with a deposit under 20% are often surprised it can run into the tens of thousands, and that it's usually capitalised into the loan — invisible at settlement, but paid off with years of interest.

What we do is flag both before you commit, so price and deposit are set with the levers in mind.

The takeaway: watch the threshold you're buying near and the size of your deposit — those two move your upfront costs more than anything else.

Related explainers

Buying costs by state (QLD, NSW, VIC)

Buying costs by state are the upfront expenses that change depending on where in Australia you buy. The biggest driver of the difference is transfer (stamp) duty and the concessions available, plus government registration fees, which is why the typical cost stack varies across Queensland, New South Wales and Victoria.

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The costs buyers most often forget

The most forgotten buying costs are the smaller line items buyers overlook when they focus on price and stamp duty. They include settlement adjustments for council rates and water, mortgage registration fees, building insurance from the day risk passes to you, and moving costs — small individually, meaningful together.

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What every buyer pays

The costs everyone pays when buying are the unavoidable expenses that apply on top of the purchase price, whatever you buy. They include government transfer (stamp) duty, a transfer registration fee, conveyancing, and building and pest inspections — plus lender's mortgage insurance if your deposit is under 20%.

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