House Deposit: How Much Do You Need?
When you’re preparing to buy your first home or invest in property, one of the biggest questions is: how much do you need for a house deposit? Understanding the right deposit amount – and the mistakes to avoid along the way – is essential to set yourself up for long-term financial success.
Let’s explore what’s typically required, what help is available and what options you may have.
How Much Deposit Do You Need for a House?
So, how much deposit do you need for house purchases?
The first thing to remember is don’t forget the Stamp Duty and other costs. When we talk about ‘deposit’, we are talking about the amount of money you need to contribute to the purchase price only. You need to also factor the cost of Stamp Duty and other costs such as conveyancing, balance of rates, lands titles costs, etc. How much you need to cover these costs will vary depending on your circumstances (eg: if you are a first home buyer, you may qualify for discounted or even no Stamp Duty) and the particular property you are buying.
If you do not qualify for a stamp duty waiver, a broad estimate would be to add around another 5% of the purchase price. If you do qualify for zero stamp duty, you’d want to allow at least 1% to cover it. If you are somewhere in the middle and qualify for a stamp duty concession, then you’ll need expert guidance to work out how much extra you’ll need.
Because this cost can vary so much, we only talk about the purchase price deposit here. You’ll need to add the extra costs to these figures.
How Much Do You Need For A House Deposit: Your Options
The Traditional 20%
Traditionally, most lenders require a 20% house deposit to approve a home loan without Lenders Mortgage Insurance (LMI). This means that for a $700,000 property, you would need $140,000 as a deposit. While this is a solid goal, it’s not the only path to homeownership and not even a close reality for many – especially first home buyers.
Low Deposit Options: As little as 5%
Many lenders now offer home loans with as little as a 5% deposit. You’ll need to pay Lender’s Mortgage Insurance (LMI), but that is added to the loan, so is not an out of pocket expense.
Many people talk about LMI as a bad thing and something to avoid, but it’s actually a great tool to get you into your home sooner. It also keeps you from chasing the ever rising property prices. If you can buy your home now and borrow an extra 2-3% to cover the LMI, that’s often a much better outcome than delaying your purchase.
Delaying will only result in paying a higher price for the house when you’ve finally saved enough – not to mention all the rent you’re paying while trying to save enough to avoid LMI. There is also the very real danger of price increases outpacing your ability to save.
Grants and Guarantees You Can Access
If you’re a first home buyer, you may qualify for a 5% deposit with no LMI and possibly no stamp duty! Now, that’s a great outcome!!
Check what grants or guarantees you may qualify for. Some of the grants and guarantees you can look into include:
- First Home Guarantee (FHBG)
- Family Home Guarantee (FHG)
- First Home Owner Grant (FHOG)
How about ZERO deposit? That may be an option!
For those worried about how much do you need for a house deposit, be assured as many lenders allow you to use a Security Guarantee in lieu of a cash deposit. In simple terms, if you have a parent or close family member who is willing to use equity in their property to guarantee your loan, you could borrow the entire purchase price and costs. Of course, this means that you’ll have a larger loan to service, but there is no LMI and you get the good 80% LVR rates!
Of course, this involves the bank taking a First or Second Mortgage security over the guarantor’s home, so there is a lot more to it than we can briefly cover here. It is a relatively common structure though, so it is very do-able for a number of people.
Smart Strategies for Saving Money for a House Deposit
Building your deposit can feel overwhelming, but with the right habits, it’s achievable:
- Automate your savings – Set up regular transfers into a dedicated high-interest savings account.
- Reduce non-essential spending – Small lifestyle changes can add up over months or years.
- Use budgeting tools – Free online calculators and mobile apps can help track expenses and set realistic savings goals.
Start Saving for Your House Deposit the Smart Way
So, how much do you need for a house deposit? The short answer: it depends on your goals, circumstances and whether you qualify for assistance. The key is to do your research and start saving money for a house deposit as early as possible. With the right planning and the help of North Brisbane Home Loans, you can be stepping into your new home sooner than you think.
Patrick Cranshaw, a Certified Mortgage Professional for over 21 years, founded North Brisbane Home Loans in 2002. His career began with ANZ Bank in New Zealand, where he progressed over 16 years to a Business Banking role in Virginia. After moving to Brisbane in 2000, Patrick led the QLD market for a home loan agency, helped set up the REMAX Real Estate Finance division, and practiced as a broker.
