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How Much Deposit Do You Need for a House in Australia?

Saving for a home deposit is a major milestone for any first-time home buyer. In Australia, deposit requirements vary depending on the property value, loan type, and lender preferences. This guide explains what you need to know about deposit amounts, factors that influence these requirements, and tips for saving efficiently.

Standard Deposit Requirements

The deposit amount typically required in Australia ranges from 5% to 20% of the propertyโ€™s value. However, these figures can vary based on the type of loan and specific lender conditions.

 

    • 5% Deposit:Some lenders offer loans with just a 5% deposit, though this often requires Lenders Mortgage Insurance (LMI).
    • 10% Deposit:Common for buyers who want a lower LMI cost while keeping initial costs manageable.
    • 20% Deposit: Ideal to avoid LMI altogether and get a better interest rate, but it requires a larger savings commitment.
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What Affects Your Deposit Amount?

Several factors influence the deposit required, including the type of loan, lender policies, and individual circumstances.

 

    • Loan Type: Some loans, such as government-backed loans, may require a lower deposit.
    • Credit Score: A higher credit score can sometimes allow for a lower deposit, as it demonstrates financial stability.
    • Lenders Mortgage Insurance (LMI): If your deposit is below 20%, lenders typically require LMI, which protects them if you default on the loan.

๐Ÿ’ก Tip: Aim for a deposit of at least 10% to reduce LMI costs, or 20% to eliminate them altogether.

Special Deposit Programs for First-Time Buyers

Australian first-time buyers may qualify for specific government schemes and incentives, helping them save on deposit costs.

 

    • First Home Owner Grant (FHOG): Varies by state, providing a one-time payment to assist with deposit savings.
    • First Home Loan Deposit Scheme (FHLDS): Allows eligible buyers to purchase with just a 5% deposit without paying LMI.
    • Learn More: Check with your local state government for eligibility requirements and application details.

Tips for Saving Your Deposit

Saving for a deposit can be challenging, but with strategic planning, you can reach your goal sooner.

 

    • Set a Budget: Outline monthly expenses and savings targets to stay on track.
    • Automate Savings: Set up an automatic transfer to a high-interest savings account.
    • Reduce Expenses: Cut back on non-essential spending to boost your deposit savings.
    • Consider Investment Options: Low-risk investment accounts can help grow your savings more quickly.

Calculate Your Deposit Goals

Use our Purchasing Power Calculator to estimate how much home you can afford and determine the ideal deposit amount based on your budget. This tool helps you plan effectively by matching your financial goals to the right property price range.

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