Home loan myths for first home buyers | Home loan guidance - NAB

Myth#1: You need a 20% deposit to buy a home

Reality

Many people think they must save a huge deposit before they can buy. While 20% can help you avoid Lenders Mortgage Insurance (LMI), it’s not a hard rule. Lenders may offer options with deposits as low as 5 to 10%, and government schemes can make it easier to buy sooner.

Tip: Start by checking what you can afford and exploring government programs and schemes designed to help eligible home buyers and single parents.

Explore government schemes

Myth #2: Lenders mortgage insurance protects you

Reality

Many buyers think LMI works like insurance for them, but it protects the lender. If you cannot repay your loan and the lender sells the property for less than what you owe, LMI helps the lender recover the shortfall. You’re still responsible for any remaining debt.

Tip: If you’re a first home buyer with a 5% deposit or a single parent with a minimum of 2%, you may be able to buy your home using the Australian Government 5% Deposit Scheme and avoid LMI.*

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*Eligibility and lending criteria apply.

Myth#3: Pre-approval guarantees a home loan

Reality

Pre-approval is only an initial check based on your current financial snapshot. Final approval depends on a full review of your finances and the property’s valuation. Changes in your circumstances or the property can derail approval.

Tip: Keep your finances stable between pre-approval and settlement. Avoid new debts, credit cards, or job changes if possible.

Learn how pre-approval works

Myth #4: You must have the perfect credit score

Reality

A strong credit score helps, but it’s not the only factor lenders consider. Even if your score isn’t flawless, you may still be able to qualify for a home loan with the right preparation.

Tip: Show consistent savings, on-time bill payments. Reducing credit card debt and checking your credit report early will also help.

Improve your creditworthiness

Myth #5: Refinancing is too complicated

Reality

For many borrowers, refinancing is simply a way to shift to a loan that better matches their needs. It can involve adjusting how your loan is set up, such as changing between fixed and variable portions, restructuring payments or bring debts together. Our experts help you switch quickly with support every step of the way.

Tip: It can be useful to check your home loan from time to time. A different structure may suit you as your situation changes.

Get refinancing support

Myth #6 Home loans are only for couples or families

Reality

Some first home buyers think they cannot get a home loan unless they are part of a couple or a family, but this is not true. Singles can absolutely qualify for a home loan. It’s all about your financial position and ability to meet repayments.

Tip: If you’re buying solo, check your borrowing power early and focus on budgeting and saving for your deposit.

Check your borrowing capacity

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Explore other home and property guides

Government home loan grants and schemes

Government schemes and grants for homebuyers.

How to get a home loan

See a full list of the information we'll request here.

How much do you need for a house deposit

Tips to help you save a deposit for a home loan.

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Terms and Conditions

The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.

Target Market Determinations for these products are available at nab.com.au/TMD.