A RECENT loan for a car or an engagement ring could set people back from securing home ownership that same year.
While personal loans and credit cards may provide the means to fund certain items, they can come back to haunt borrowers when they apply for a mortgage.
Wagga experts advise that an applicant's level of debt will affect the size of their home loan mortgage that is offered to them and can even hinder their chances of being offered one entirely.
Mortgage broker Brad Bland, at Wagga's Mainland Finance, said banks are prepared to lend to people with a good credit history, a deposit and a minimum of six months savings history.
"Most lenders are looking for employed people, with 12 months of secure employment and income to show that the first home buyers can afford to repay the loans," Mr Bland said.
"People intending to buy their first house in the next five to 10 years need to ensure they keep all their utility bills paid and up-to-date and that they meet at least the minimum requirement on any commitments they have.
"This could be credit cards, Afterpay, or similar styles of lenders because that will affect their credit scores and their credit rating."
ME Bank's latest Household Financial Comfort Report, 2019, found one in four households have less than $1000 in cash savings, while two in three Aussies could not easily raise $3000 within a week of an emergency.
About 50 per cent of Australians have no money left in the bank after they've paid for the essentials in life, according to ME Bank consulting economist Jeff Oughton.
Commonwealth Bank South Wagga branch manager Lisa Smith said banks want to ensure that people can still maintain their lifestyle before they are given a loan.
"We want to be able to ensure you don't have to sacrifice everything in order to own a home; we talk about this in a lot of detail," Ms Smith said.
The branch manager said banks are looking for people who have done a bit of homework about their spending habits and those who are open to discussions around their finances.
"High credit card limits, even if not being used, or any other debt can affect the outcome of a loan application," she said.
The First Home Loan Deposit Scheme, which NAB and CBA began offering on January 1, enables first home buyers to purchase a home with a deposit of as little as five per cent.
The federal government scheme - which also involves 25 non-major lenders whose guaranteed loans will be rolled out from February 1 - will support up to 10,000 guarantees each financial year.
Applicants will be subject to eligibility criteria, including having taxable incomes up to $125,000 a year for singles and up to $200,000 a year for couples, and dwelling price thresholds.
Mr Bland said borrowers in Wagga have the potential to borrow up to about $660,000 for their first home, depending on the property's value.
"All indications from within our network is that these 10,000 loan guarantees per annum will probably be exhausted within the first eight to nine months of the year," he said.