Buying your first home is an exciting milestone, but saving for a deposit can feel overwhelming. One of the first hurdles for First home buyers is knowing How Much Deposit Do You Actually Need to Get Into Your First Home, and with so much information out there, it’s easy to get confused about exactly how much you need. Let’s break it down so you can plan your homeownership journey with confidence.
The Ideal Deposit: 20%
In a perfect world, a 20% deposit is what most lenders prefer. Why? Because it shows financial stability and helps you avoid Lenders Mortgage Insurance (LMI)—an extra cost lenders charge when your deposit is below 20%.
For example, if you’re purchasing a $500,000 home, a 20% deposit would be $100,000. While that’s a big amount, it’s not your only option!
Can You Buy with Less Than 20%?
Absolutely! Many first-home buyers enter the market with a deposit as low as 5% to 10%. However, there are some considerations:
- 5% Deposit: Some lenders accept as little as 5% (e.g., $25,000 on a $500,000 home), but you’ll likely pay LMI.
- 10% Deposit: A 10% deposit (e.g., $50,000 on a $500,000 home) can reduce your LMI costs and improve loan options.
First-Home Buyer Schemes That Help Reduce Your Deposit
Luckily, there are government schemes designed to help first-home buyers get in sooner:
- First Home Guarantee (FHG): Allows eligible buyers to purchase with as little as 5% deposit without paying LMI.
- First Home Owner Grant (FHOG): A one-time payment (varies by state) that can be used toward your deposit.
- Stamp Duty Concessions: Some states offer reduced or waived stamp duty, saving you thousands.
Other Costs to Consider
Your deposit isn’t the only upfront cost. Be sure to budget for:
- Stamp duty (if applicable)
- Legal and conveyancing fees
- Building & pest inspections
- Loan application fees
Final Thoughts: What’s the Right Deposit for You?
The right deposit depends on your financial situation, goals, and eligibility for government assistance. While a 20% deposit is ideal, there are options to buy with less—especially with first-home buyer support schemes.
Want to know your best deposit strategy? Book a free consultation with our mortgage experts today!
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