What First Home Buyers in Ferntree Gully Need to Know

Getting your application sorted comes down to three things: knowing what you can borrow, understanding your deposit options, and having the right documents ready when a lender needs them.

Ferntree Gully sits in the outer eastern suburbs of Melbourne, with a mix of established homes near the train station and newer builds further up towards the Dandenongs. Buyers here typically have access to Victoria's full stamp duty exemption on properties up to $600,000 and the Australian Government 5% Deposit Scheme, which doesn't have an income cap and covers properties up to $950,000 in regional centres and capital city areas.

What Deposit Do You Actually Need?

You can purchase with as little as 5% of the property value if you're eligible for the Australian Government 5% Deposit Scheme. That scheme removes the need for Lenders Mortgage Insurance and is available through participating lenders. If you're using a standard loan without a government guarantee, most lenders will accept a 10% deposit, though you'll pay LMI unless you have 20% or more. A 20% deposit removes the need for LMI entirely.

Genuine savings usually need to show at least three months in your account. Lenders want to see you've saved the funds yourself, not borrowed them. If part of your deposit is a gift from family, most lenders will accept it as long as you have a signed gift letter and can show where the funds came from. The Australian Government 5% Deposit Scheme works with both saved deposits and gifted funds, provided the total meets the minimum percentage required.

Consider a buyer putting down 5% on a property in Ferntree Gully. If they're using the government scheme, they avoid LMI and can move forward with a lower upfront cost. If they're using a standard loan with a 5% deposit, LMI could add several thousand dollars to the amount they need to borrow or pay upfront, depending on the lender and loan amount.

Your Income and Employment Documentation

Lenders assess your income to work out how much you can afford to repay each month. If you're a full-time or part-time employee, you'll need recent payslips covering at least the last month, a letter from your employer confirming your role and salary, and your last two years of tax returns or notices of assessment from the ATO. If you've been in your current role for less than six months, some lenders will want additional detail about your employment history.

Self-employed applicants need two years of financial statements and tax returns. Lenders assess your income based on what you've declared to the ATO, so if your taxable income is lower due to deductions, that's what they'll use. If you've recently started a new business, most lenders won't assess your income until you've been trading for at least 12 months.

Understanding Your Loan Structure Options

You'll need to choose between a variable rate, a fixed rate, or a split loan that combines both. A variable rate moves with the market, which means your repayments can go up or down. Most variable loans include an offset account, which reduces the amount of loan balance that accrues daily, and unlimited extra repayments without penalty.

A fixed rate locks in your repayment amount for a set period, usually between one and five years. You'll know exactly what you're paying each month, but most fixed loans don't include an offset account and limit how much extra you can repay each year. If you need to break the loan before the fixed term ends, you may face break costs.

A split loan divides your borrowing between fixed and variable portions. You get some certainty on part of your repayment and some flexibility on the rest. Consider whether you're likely to make extra repayments or need access to an offset account before deciding how much to fix. If you're planning to put regular extra income toward the loan or use an offset to manage your cash flow, keep the majority variable or split it evenly.

Stamp Duty and Grant Eligibility in Victoria

Victoria offers a full stamp duty exemption on properties valued up to $600,000 for eligible buyers. If the property is valued between $600,001 and $750,000, a sliding scale concession applies. Above $750,000, standard stamp duty rates apply. The exemption applies to both new and established homes, provided you move in within 12 months of settlement and live there for at least 12 continuous months.

The $10,000 FHOG is available only for new homes valued up to $750,000. It doesn't apply to established properties. If you're buying an established home in Ferntree Gully, you can still access the stamp duty exemption or concession, but you won't receive the grant. If you're building or buying new, you can claim both the grant and the duty exemption or concession, provided you meet the eligibility criteria for each.

You can use these state concessions alongside the Australian Government 5% Deposit Scheme. They're separate programs and don't cancel each other out. If you're also contributing to the First Home Super Saver Scheme, you can combine all three, though you'll need to obtain a determination from the ATO before signing a contract if you're planning to release super contributions.

What Lenders Will Ask For Before Settlement

Once your loan is formally approved, the lender will ask for final documents before settlement. You'll need to provide evidence of building insurance from the settlement date, confirmation that you've paid your deposit to the solicitor or conveyancer, and a copy of the signed contract of sale. If you're purchasing a unit or townhouse, the lender may require a copy of the owners corporation certificate or strata report.

If you've changed jobs or your financial situation has shifted between approval and settlement, tell your broker immediately. Lenders will sometimes re-verify your employment and income in the days leading up to settlement. If something has changed and you don't disclose it, the lender can delay or withdraw the loan.

Most lenders will also want to see evidence that you've organised your own independent building and pest inspection if the contract wasn't subject to one. While this isn't always a formal lending condition, it's part of doing your own due diligence, and some lenders will ask to see the report if the property is older or if there are concerns about the condition.

Pre-Approval and How Long It Lasts

Pre-approval gives you a clear borrowing limit before you start looking at properties. It's not a guarantee that the lender will approve the final loan, but it confirms they're willing to lend to you in principle, based on the information you've provided. Most pre-approvals last between three and six months, depending on the lender.

Once you find a property and sign a contract, you'll submit the contract and any additional documents the lender requests. They'll complete a full valuation and credit assessment before issuing formal approval. Pre-approval shortens this process because the lender has already reviewed your income, expenses, and deposit. If you're buying in a competitive area near the Ferntree Gully village or close to the train line, having pre-approval in place means you can move quickly when the right property comes up.

In our experience, buyers who wait until after they've signed a contract to start the application process often face tighter settlement timelines and less room to compare loan options. Getting pre-approved early gives you time to understand what's available and make an informed decision about your loan structure.

Your Expenses and Living Costs

Lenders assess your expenses to work out how much you can comfortably repay each month. They'll ask for at least three months of bank statements and review your spending on rent, groceries, transport, insurance, childcare, and any other regular commitments. If you have existing debts such as car loans, personal loans, or credit cards, those repayments will reduce the amount you can borrow.

Even if you don't carry a balance on your credit card, the lender will assess the full limit as if you're using it. If you have a card with a $10,000 limit, they'll assume you could draw that amount at any time and factor the potential repayment into their assessment. If you're not using the card, consider closing it or reducing the limit before applying.

Lenders also add a buffer to your expenses to account for rate rises and changes in your circumstances. They'll test your ability to repay the loan at a rate higher than the one you're actually being offered. That buffer varies between lenders, but it's typically between 2% and 3% above the current rate. If your budget is tight, that buffer can reduce your borrowing capacity, even if you're confident you can afford the repayments at the current rate.

Call one of our team or book an appointment at a time that works for you. We'll go through your full position, explain what's available, and put together an application that gives you the strongest chance of approval with a loan structure that suits your circumstances.

Frequently Asked Questions