Saving for a home deposit is one of the biggest challenges for many Australians entering the property market. Whether you are a first home buyer or an experienced investor, understanding how deposits work can help you better prepare for your property journey.
In this guide, we explain how much deposit you may need, what costs to consider, and how you can improve your chances of home loan approval.
A home loan deposit is the upfront amount you contribute toward the purchase price of a property.
For example, if you purchase a property worth $700,000 and contribute a $70,000 deposit, you would borrow the remaining amount from the lender.
The size of your deposit can affect:
In Australia, most lenders prefer a deposit of at least 20% of the property’s value.
| Deposit Size | What It Means |
|---|
| 5% Deposit | Minimum required by some lenders |
| 10% Deposit | More loan options available |
| 20% Deposit | Avoid Lenders Mortgage Insurance (LMI) |
While it is possible to buy a home with a smaller deposit, additional costs and lender requirements may apply.
Lenders Mortgage Insurance is a fee charged when your deposit is less than 20%.
LMI protects the lender, not the borrower, if the loan cannot be repaid.
The cost of LMI depends on factors such as:
In some cases, eligible first home buyers may qualify for government schemes that help avoid LMI.
Your deposit is not the only upfront expense involved when buying a property.
Other potential costs include:
Planning for these costs early can help reduce financial stress during the purchasing process.
Australian first home buyers may be eligible for various grants and schemes designed to reduce upfront costs.
These may include:
Eligibility requirements vary depending on your state, income, and property type.
A mortgage broker can help you understand your borrowing options and guide you through the home buying process.
They can assist with:
Professional guidance can make the process much easier and less overwhelming.
Saving for a home deposit is one of the first major steps toward property ownership in Australia. While a 20% deposit is ideal for many buyers, there are still opportunities available for those with smaller deposits.
Understanding your financial position, planning ahead, and seeking expert advice can help you move closer to owning your dream home.