What’s the right home loan deposit to have?

Many first-home buyers struggle with knowing how much money they should have as a deposit.

Fortunately, there are no hard and fast rules when it comes to home deposits.

Usually, 20% of the full value of the house is a good amount to aim for as a deposit. You can still get a loan if you have a smaller deposit, but you may need to take out Lenders Mortgage Insurance (LMI) which adds an additional cost to your loan. It’ll also take longer to pay off.

A summary of the list of First Home Buyer Grants that are available currently can be viewed here.

What is the ideal house deposit?

Ideally, lenders would like you to have a 20% deposit.  In other words, if you are looking to purchase a home worth $500,000, you should come to the table with savings in excess of $100,000.

The money you have saved will not only fund your initial contribution to the purchase price of a property but it will also be used to pay for stamp duty (where required), as well as any other fees and charges associated with buying a home.

What if you don't have a 20% house deposit?

Many lenders will take a significantly lower deposit of 5% or 10% of the value of your desired property – provided you meet their specific lending criteria.

Of course, if your deposit is less than 20% of the value of your home, you will be required to pay Lenders’ Mortgage Insurance or LMI.

Another option is to seek assistance from your parents by way of them being a Guarantor on your loan

Other Upfront Costs in Purchasing Property

There’s more to buying a home than just the cost of the house itself. There are some other upfront costs you’ll need to know about.

Stamp Duty is a state and territory government tax that can fluctuate depending on things such as location, whether it’s a first home or an investment, and the price of the property. It’s important you take this into consideration when looking to buy a property – our Stamp Duty calculator can help give you an idea of how much this may be.

Several legal steps are involved when buying property. Conveyancing (the sale and transfer of real estate) can include a property and title search, the review and exchange of the contract of sale, the transfer of the title, and other aspects too.

Mortgage establishment and registration fees – these can depend on the state in which you live and who your lender is. Knowing whether these apply to you is also important. Find out more about the upfront costs of buying a home