By Chaice Paterson, CEO & Founder, Low Deposit Homes | Updated June 2026
The single most expensive first home buyer mistake in Australia in 2026 is buying an established home when a brand-new home would have saved $67,500 on a $1 million property — that’s the average deposit gap between the two paths in Queensland. After 1000+ families helped, Low Deposit Homes has seen the same handful of mistakes drain tens of thousands of dollars from first home buyers who didn’t know the rules. This guide covers the 10 most costly mistakes and how to avoid each one.
Mistake 1: Buying established when a new build saves $67,500
On a $1,000,000 property in metropolitan Queensland, an established home requires approximately $122,000 cash on hand (stamp duty $30,850 + LMI $34,594 + costs + standard deposit). A brand-new home under the 5% Deposit Scheme requires approximately $54,500. The saving for buying new is $67,500.
For Victoria at $750,000, the gap is $79,000 ($109,000 established vs $30,000 new build with the 5% Scheme and FHOG).
This isn’t because new builds are magically cheaper — it’s because first home buyers buying new builds qualify for the full stamp duty exemption (QLD has no upper cap; VIC up to $750K land value), avoid LMI under the 5% Deposit Scheme, and access the FHOG ($30K QLD until 30 June 2026, $10K VIC).
Mistake 2: Not using the 5% Deposit Scheme and paying $15K-$35K in LMI
Without the 5% Deposit Scheme, a first home buyer purchasing with a 5% deposit pays approximately $35,000 in Lenders Mortgage Insurance on a $1 million property. With the 5% Deposit Scheme, that LMI is zero — the government guarantees the gap.
The Scheme has no income cap (since October 2025) and no place caps. The only reasons not to use it: you’re buying above the property cap ($1M Brisbane/GC/SC/Beaudesert, $700K other QLD regional, $950K Melbourne/Geelong, $650K other VIC regional), or you’ve owned property in the past 10 years.
Mistake 3: Choosing a lender that doesn’t participate in government schemes
Not all 35+ Australian lenders participate in the 5% Deposit Scheme or Help to Buy. If you’ve already pre-qualified with a non-participating lender, you’re locked out of the scheme benefits with that lender. Solution: use a broker who knows which lenders participate, or check Housing Australia’s participating lender list before applying.
Mistake 4: Not checking soil classification ($50K-$60K extra in reactive soil)
Some lots — particularly in reactive clay zones of Victoria and certain low-lying parts of Queensland — require special foundation engineering. Class M, H, or P soil classifications can add $30,000-$60,000 to your build cost compared to a Class A or S site.
This isn’t disclosed until you receive the soil test report, which happens after you sign the land contract in most cases. Solution: Low Deposit Homes pre-assesses soil and drainage for every block we present, so you don’t sign a contract on a hidden cost trap.
Mistake 5: Not getting pre-approved before house hunting
Looking at properties before knowing your borrowing capacity wastes time and creates emotional attachment to homes you can’t actually afford. Pre-approval costs nothing, takes 1-2 weeks with the right broker, and lasts 90 days. Get pre-approved first, then shop.
Mistake 6: Rushing into a contract without using the cooling-off period
Queensland and Victoria both offer a cooling-off period (typically 5 business days in QLD, 3 business days in VIC, with exceptions). This window exists for a reason — use it for building and pest inspections, contract review, financial verification. Waiving cooling-off without due diligence has cost buyers tens of thousands when issues surfaced post-signing.
Mistake 7: Using a conveyancer who’s never done a house and land package
H&L contracts are different from established home contracts. Sunset clauses, registration dates, building contract integration, progress payment schedules — these all require H&L-specific experience. A general conveyancer at $800 can cost you $50,000 in missed protections. Always use a conveyancer with proven H&L-specific experience — we work with conveyancers who have handled hundreds of LDH client settlements.
Mistake 8: Ignoring the FHSSS ($15K-$25K in tax savings missed)
The First Home Super Saver Scheme lets you contribute up to $15,000 per year (up to $50,000 lifetime) into super pre-tax, then withdraw it for your deposit. For someone earning $90,000 (32.5% marginal tax rate), this delivers approximately $5,000-$15,000 in tax savings depending on how aggressively you use it.
The mistake: not knowing about FHSSS until after you’ve signed a contract. The determination itself is provided instantly via myGov, but for determinations made on or after 15 September 2024, you have 90 days after signing the contract to make the release request (extended from the old 14-day rule). The release itself then takes 15–25 business days to process. Many buyers miss this entirely — they don’t apply for the determination early enough, and they don’t realise the funds need lead time to land in their account before settlement.
Mistake 9: Believing you need 20% deposit
The single most common false belief in Australian first home buying. With the 5% Deposit Scheme, Help to Buy (2% deposit), or the Family Home Guarantee (2% deposit for single parents), 20% deposit is no longer required for first home buyers. The persistence of this myth costs buyers years of saving time they didn’t need to spend
“I see people who’ve been saving for five years to hit a 20% deposit because their parents told them that’s what’s required. Meanwhile they’ve paid $200,000 in rent and the property prices have climbed past their target. The rules changed years ago. Most first home buyers don’t need anywhere near that much.” — Chaice Paterson, founder of Low Deposit Homes
Frequently Asked Questions
Q: What’s the single most expensive mistake? Buying established when new build was an option. The $67,500 average saving (QLD) or $79,000 saving (VIC) is real money — it’s the difference between buying now and saving for another 2-3 years.
Q: How much does soil classification typically cost? Standard sites (Class A or S) require no additional foundation work. Class M, H, or P sites can add $30,000-$60,000 depending on severity and house design. Check before signing.
Q: Can I avoid all these mistakes by using Low Deposit Homes? We pre-assess soil and drainage on every block, match you to participating lenders, refer you to H&L-experienced conveyancers, and walk you through FHSSS timing. The structure of our process is designed to avoid each of the mistakes in this article.
Q: What’s the cheapest mistake on this list? Not getting pre-approved before house hunting. The cost is mostly emotional — time wasted, expectations set wrong. Easy to fix: get pre-approved first.
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Low Deposit Homes operates under Winning Homes Australia Pty Ltd (ACN 633 321 758). All calculations are indicative. Individual circumstances may vary. This is not financial advice.