Buying a home in Australia for $600,000 might mean saving a $60,000 deposit, but the upfront costs before you even get the keys can add another $30,000 to $50,000 on top of that. Most first-time buyers focus on the deposit and forget about stamp duty, lenders mortgage insurance, and legal fees until they get the shock quote. Here’s what you actually need to know.
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These figures come from a single $600,000 property example, but the real numbers shift depending on which state you buy in, how much deposit you have, and whether you qualify for any first-home buyer concessions. A buyer in Victoria might pay $31,000 in stamp duty while someone in Queensland pays roughly half that on the same-priced property. The gap between a 5% deposit and a 20% deposit can mean the difference between paying $30,000 in LMI and paying nothing at all. Here’s what you actually need to know.
One term you will hear constantly during this process is lenders mortgage insurance. It is not insurance that protects you — it protects the lender if you stop paying the loan. The smaller your deposit, the higher the risk the lender takes, and the more you pay for that protection.
What I tend to notice is that buyers fixate on the deposit number and treat everything else as a surprise. The four takeaways above are the ones that matter most for your budget planning.
What the full cost picture actually looks like for Australian buyers
The purchase price is never the only number that matters. On a $600,000 property, the total upfront cash needed — deposit plus all fees — can easily reach $150,000 or more depending on your deposit size and location. Here is how the costs break down across the major categories.
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| Cost Category | Typical Range ($600k property) | When It’s Paid |
|---|---|---|
| Stamp duty (NSW example) | ~$24,000 | Before settlement |
| LMI (5% deposit) | $25,000–$35,000 | At loan settlement (can be capitalised) |
| Legal & conveyancing | $1,500–$3,500 | During the purchase process |
| Building & pest inspection | $450–$800 | Before exchange of contracts |
| Lender fees (application, valuation, settlement) | $0–$2,000 | At loan application and settlement |
| Building insurance (first year) | $800–$2,000 | Must be in place at settlement |
| Moving costs | $500–$2,500 | On or after settlement day |
The table shows the range, but the real sting comes from the combination. A buyer in Victoria with a 5% deposit could be looking at $31,000 in stamp duty plus $30,000 in LMI before they have paid a single dollar toward the property itself. That is $61,000 in costs that do not build equity. First-home buyers in NSW can avoid stamp duty entirely on properties under $800,000, which changes the calculation completely. The risks in house and land contracts can add further costs if the contract terms are not carefully reviewed before signing.
LMI can often be capitalised into the loan rather than paid upfront, which means you borrow more and pay interest on it for the life of the loan. A $30,000 LMI premium added to a 30-year loan at 6% costs roughly $58,000 in total by the time it is paid off. That is the hidden cost that keeps costing.
Where buyers get tripped up — and how to avoid it
Underestimating stamp duty by state
Most buyers know stamp duty exists, but they do not realise how much it varies. On that same $600,000 property, a buyer in Victoria pays roughly $31,000 while a buyer in Queensland pays about $15,900. That is a $15,100 difference for the same house price. The mistake is assuming your state’s rate is the national rate. Check your state’s revenue office website before you set your budget. First-home buyer concessions exist in every state but with different thresholds — NSW exempts properties up to $800,000, while WA only exempts up to $500,000.
Skipping the building and pest inspection
A $600 inspection can identify $50,000 or more in structural problems, termite damage, or safety hazards. The mistake is thinking a new build does not need one. New homes can have slab issues, waterproofing failures, or framing defects that are not visible to an untrained eye. The inspection happens before exchange of contracts, and the report gives you grounds to renegotiate the price or walk away. If you skip it, you accept the property as-is with no comeback. If you need to verify property ownership before committing, that is a separate step that should happen alongside the inspection process.
Ignoring LMI until it is too late
Buyers with a 5% deposit often do the maths on the deposit and stop there. LMI on a $600,000 property with a 5% deposit runs $25,000 to $35,000. That is more than the deposit itself in some cases. The mistake is not checking whether you qualify for the government’s 5% Deposit Scheme, which can save the full LMI amount for eligible first-home buyers. Some lenders also waive LMI for certain professions — doctors, lawyers, and accountants often qualify. The fix is to ask your lender or broker about LMI waivers and government schemes before you commit to a loan.
Choosing a conveyancer on price alone
A cheap conveyancer charging $1,200 might miss a restrictive covenant, an easement issue, or an error in the title search that a more experienced solicitor would catch. The mistake is treating legal fees as a commodity. A good conveyancer or property solicitor charges $1,500 to $3,500, but they can identify contract issues that save you tens of thousands. The process involves reviewing the contract, conducting title searches, liaising with the lender, managing settlement, and checking for outstanding debts on the property. If you are unsure about a contract term, you can get real estate law advice online to clarify your position before signing.
How to budget for the full purchase — step by step
Work out your state’s stamp duty before you look at properties
Stamp duty is the largest single upfront cost after the deposit, and it changes the price range you can afford. Use your state revenue office’s online calculator before you start viewing homes. In NSW, a $700,000 property attracts roughly $26,000 in stamp duty for a non-first-home buyer. In Victoria, the same price triggers about $35,000. That $9,000 difference means a Victorian buyer needs either a bigger cash reserve or a lower purchase price. First-home buyers should check the concession thresholds in their state — buying $1 over the limit can cost you the entire exemption.
Calculate your LMI exposure at different deposit levels
LMI is not a fixed fee — it scales with your loan-to-value ratio. On a $600,000 loan, a 5% deposit triggers $25,000–$35,000 in LMI. A 10% deposit drops that to $15,000–$25,000. A 15% deposit brings it down to $8,000–$12,000. The sweet spot is 20%, where LMI disappears entirely. If you can wait an extra year to save the difference between a 10% and 20% deposit, you save $15,000–$25,000 in LMI plus the interest on that amount over the loan term. The Australian Government’s 5% Deposit Scheme is worth checking if you cannot reach 20% — it covers the LMI for eligible buyers on properties up to certain price caps that vary by region.
Get the inspections done before you exchange contracts
The building and pest inspection happens after your offer is accepted but before you sign the contract. You pay the inspector directly — $350–$600 for building, $150–$300 for pest, or $450–$800 combined. The report takes one to three days. If it finds major issues, you can renegotiate the price, ask the seller to fix the problems, or walk away. The contract should include a subject-to-inspection clause that lets you withdraw without penalty. Even if you are buying at auction, get the inspection done beforehand — once the hammer falls, there is no cooling-off period. For specialised checks like pool compliance, asbestos testing, or electrical safety, budget an extra $200–$500 each.
Factor in lender fees and insurance at settlement
Lender fees include application fees ($0–$600, often waived), valuation fees ($200–$400), and settlement fees ($150–$400). Many lenders waive these in competitive markets or for borrowers with strong credit and a decent deposit. Ask upfront what fees apply and whether they can be waived. Building insurance must be in place on settlement day — the lender will not release funds without proof of cover. The first year’s premium runs $800–$2,000 depending on the property value and location. Contents insurance is optional but recommended at $300–$800 annually. If you plan to rent the property out, landlord insurance adds $400–$1,000 per year.
Understand the emerging changes to property costs
Several states are reviewing their stamp duty systems, with some moving toward annual land tax models as an alternative. New South Wales introduced an optional annual property tax for first-home buyers in 2022, though the take-up has been lower than expected. Victoria has announced changes to land tax thresholds that will affect investors and second-property buyers from 2024. These shifts mean the cost structure you face today might look different in two or three years. If you are planning to buy in the next 12 months, the current rules apply — but keep an eye on state budget announcements for changes that could affect your long-term holding costs. For those considering a strata title versus freehold decision, the ongoing costs like strata levies and sinking fund contributions are just as important as the purchase price.
Frequently asked questions about hidden home buying costs in Australia
Can I add LMI to my home loan instead of paying it upfront? ▾
Do first-home buyers in Australia pay stamp duty? ▾
Is a building inspection necessary for a new home? ▾
What happens if I buy a property at auction without an inspection? ▾
Can I negotiate lender fees with my bank? ▾
Does the 5% Deposit Scheme cover LMI for all properties? ▾
What the cost structure means for your buying timeline
The single biggest financial decision in the buying process is not which property you choose — it is how much deposit you save before you start. Waiting six extra months to move from a 5% deposit to a 10% deposit saves $10,000–$15,000 in LMI alone. Waiting to reach 20% saves the full $25,000–$35,000 and removes the monthly interest cost on that capitalised amount. The trade-off is that property prices might rise faster than you can save, which is a real risk in markets like Sydney and Melbourne. Run the numbers both ways — the cost of waiting versus the cost of buying early with a small deposit — before you decide.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Top Tips for Mortgage Loan Refinancing in Australia.
Sources and Further Reading
Smart Ways to Avoid Real Estate Fraud in Australia — A practical guide to verifying property titles and avoiding settlement scams that can add unexpected legal costs.
Understanding Bridging Loan Requirements for Home Buyers in Australia — Explains the costs and timing of bridging finance if you need to buy before selling your current property.
Money Tools Australia (2024). Hidden Costs of Buying a Home in Australia. 🔗
