So you want to buy your first home? Before you start looking for property, you must first take care of your own finances and get a strategy in place. You don’t want to find your dream home only to have your loan application refused and potentially lose the deposit you worked so hard to save.

Here are 8 basic steps to follow to make sure you are ready to buy that first home.

• What’s your work situation?

Your employment history is very important when looking to borrow money. You should have a full time job that you have been working in for at least 6 to 12 months; or if you work for yourself, you should be able to show a couple of years of good, consistent income. Without solid employment in place, banks generally will not lend you money.

• Location, location

Figure out where you want to live, then look at the prices in that area and which parts are the most affordable. If you see a $500-$600,000 price range, you’re in the right ball park for a first home buyer.

Ask yourself: Can I work in a more affordable area and move there for a better property? Instead of buying a postbox in Sydney for $500,000, you might consider a smaller city or regional centre, where that money will get you a good house and lifestyle.

• Maximise your savings

The more money you save for a deposit, the better. If you save 20 per cent of the property’s value, you won’t need lenders mortgage insurance (LMI) and banks will be more comfortable approving your application.

Saving is currently tough as interest rates are so low, so start as early as possible. You can maximise your interest by putting money in a term deposit with the best rate. Ask family members for cash instead of gifts on special occasions and put aside whatever you can. Banks will want to see your saving history to prove you can afford loan repayments.

Consider: A second job or side hustle to earn some more dollars. Also look at what government grants you may be eligible for.

• Engage a mortgage broker

This is a no-brainer. A good mortgage broker has access to a wide range of lenders, not just the big four banks. A broker can assess your financial situation and match you with the loan product that suits you best, saving you time and taking away the risk of applying for loan products that will cost you more money, or that you might be rejected for, which can cause damage to your credit score.

The added bonus is that you don’t pay mortgage brokers, they earn their commission from the banks.

Important: Do a background check on the broker, find out who they are associated with and ask to see comparisons and multiple options. You don’t want as broker that only uses one or two lenders.

• Set your budget

Your broker will give you an idea of how much you will be able to borrow with different lenders, so use that to set a purchase price budget. Aim below the maximum amount you can borrow to avoid causing yourself stress.

• Hit the pavement

It’s time to start looking for properties. Consider the area, density, access to public transport and other amenities, plus any major roads or government works planned that may affect local property value. Ideally, more than one bank is willing to lend to you, which will put you in a stronger position to negotiate price.

• Get legal help

Once you’ve found a property, engage a solicitor to read over the contract and make sure everything is OK. Ask your solicitor whether you are eligible for government grants and, if so, how to apply.

• Signed and settled

When your solicitor is happy with the contract, pay your deposit on the property, sign the contract and submit your loan application. Generally, you will have 6 weeks or similar between signing the contract and settlement to tie up any loose ends with the bank and move on in.