Insights
This is one of the most common questions we get from first home buyers. The honest answer is that it depends on your situation and the property. The good news is you can get a reliable ballpark early, then tighten it into a clean plan as you get closer to buying.
Most first home buyers land in one of three deposit ranges. If you have a 20 percent deposit, you usually avoid Lenders Mortgage Insurance and you have the widest choice of lenders. If you have around a 10 percent deposit, you can often still buy, but Lenders Mortgage Insurance commonly applies unless you qualify for an exception. If you have around a 5 percent deposit, it can sometimes be possible, often through certain lender options or government backed first home buyer schemes. Eligibility rules and property price caps can apply, so it is important to check what applies to you before planning around it.
In real life, the right deposit is not only about the percentage. It is also about whether you can comfortably afford repayments and still have a buffer left after you pay the upfront costs.
When people say deposit, they usually mean the money you contribute toward the purchase price. But you will also have upfront costs alongside your deposit. Upfront costs often include conveyancing, inspections, lender fees, and moving costs. Stamp duty may apply depending on your state and any first home buyer concessions. A helpful way to think about it is this. The deposit helps you qualify for the loan, but the upfront costs and buffer help you stay calm after settlement.
Here are simple examples to help you visualise it. These are examples only. Your numbers depend on your income, property type, and lender policies.
$700,000 purchase price
$900,000 purchase price
$1,100,000 purchase price
Lenders Mortgage Insurance is a premium that protects the lender when your deposit is below 20 percent. It does not protect you. LMI is not automatically bad. Sometimes it is a reasonable trade off if it helps you buy sooner and you are confident the repayments and cash buffer still work. The key is knowing the cost, understanding your options, and deciding whether it is worth paying in your situation.
Some lenders like to see that part of your deposit is money you have saved yourself over time, not just a last minute transfer. This varies by lender, but a consistent savings pattern generally helps. If some of your deposit is a gift, that can still be fine. You just want it documented properly and you want to understand how each lender treats it.
Some first home buyer schemes work by reducing the deposit required, often around 5 percent, and providing a guarantee so the lender is comfortable with the lower deposit. These programs often have eligibility rules, property price caps, and limited places. The practical takeaway is this. A smaller deposit can be possible, but you still want to budget for fees and keep a buffer. Buying with a small deposit and no buffer is where people often feel stretched.
A 20 percent deposit often gives you the smoothest experience, but many first home buyers purchase with less. The important part is making sure the decision is safe, not just possible. A smaller deposit can work well when your income is stable, your savings pattern is strong, you have budgeted for upfront costs, and you still have a buffer after settlement. It can be smarter to wait a little longer when your deposit is there but your buffer would be wiped out, when your income is variable and you need a safety net, or when you are very close to a better deposit band and a few months of saving would materially improve your options.
First, decide on a realistic purchase range, not just what the bank might approve at the maximum. Second, work out your deposit plus your upfront costs plus a buffer. Third, estimate borrowing power using realistic assumptions. Fourth, apply for pre approval when you are genuinely close to buying. Fifth, keep your finances clean leading up to the application and settlement. Avoid taking on new debt and avoid big unexplained spending.
Not sure what your numbers might look like yet? Try our Borrowing Power Calculator to get a rough starting range before you speak with a broker. It’s only a guide, but it can help you understand what might be possible based on your income, expenses and current commitments.
Sometimes. It depends on your income, the property, and whether you qualify for lender or government options. The trade off is usually fewer lender choices and stricter assessment.
Some lenders want to see a savings history, but it varies. Gifts can still be fine when documented correctly.
LMI is a premium when your deposit is below 20 percent. The cost depends on your loan size and deposit band. In some situations it is worth paying, in others it can be avoided.
Common ones include conveyancing, inspections, lender fees, moving costs, and a cash buffer. Stamp duty may apply depending on your state and concessions.
Usually when you are actively looking and likely to buy within the next few months. If you are earlier than that, a borrowing estimate and a deposit plan is often the better first step.
We can help you sense check structure, borrowing power, and next steps so you can move forward confidently, without creating a compliance headache later.
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