How much deposit do I need to buy a house? This may be a question you’re asking as you plan your homeownership journey. Knowing the right deposit amount can help you prepare, budget, and move forward with confidence.
What Is a House Deposit and Why Is It Important?
A deposit is the upfront payment you make when buying a house. It forms part of the total purchase price and shows lenders you’re financially committed. Typically, a deposit is paid before finalising the home loan.
Importantly, the deposit affects how much you’ll need to borrow from a lender. The bigger your deposit, the less you owe on your home loan. This can also improve your chances of loan approval, reduce home loan repayments, and lessen the need for lenders mortgage insurance.
How Much Deposit Do You Need to Buy a Home in Australia?
In most cases, you’ll generally need a deposit of at least 5% to 20% of the purchase price of the home. However, the exact deposit amount varies depending on the lender, loan type, and your financial situation.
For example, if the purchase price of the home is $600,000, you may need a deposit between $30,000 and $120,000. The larger your deposit, the better the loan terms and the lower the interest rate you may receive.
If you’re planning to buy a property, it’s important to work out how much you need early in the process. You’ll need to save for a deposit, and that starts with a clear idea of your budget. The more you can put aside, the less you’ll need to borrow. Knowing how much you need to save helps you stay focused and financially prepared.
What Is the Minimum Deposit for a Home Loan?
To apply for a home loan, most lenders require a minimum deposit of 5% of the property’s value. This is the minimum deposit required to get started.
However, if your deposit is less than 20%, you’ll need to pay for lenders mortgage insurance. That means you’ll need to factor in extra upfront costs such as this premium, along with legal and administrative fees.
How Much Deposit Do I Need as a First Home Buyer?
Whether it’s a first home or your next step, the minimum deposit for first-home buyers is often 5%. Thankfully, various federal schemes provide additional support to help you enter the market.
The First Home Guarantee and the government’s First Home Owner Grant are designed to help first home buyers secure a property sooner. These programs can reduce the deposit required and help lower the need for LMI.
Can I Buy a Home With a Smaller Deposit?
Yes, you can buy a home with a deposit as low as 5%. Some lenders even allow smaller deposits under certain conditions, including support from family.
However, a smaller deposit means you’ll need to pay mortgage insurance. This low deposit premium adds to the cost of your loan and increases your overall repayments, so consider all factors carefully.
What’s a Larger Deposit and Why Might It Help?
A larger deposit means you’ll need to borrow less, which improves your chances of loan approval and lowers your home loan repayments. You’ll also pay less interest over time.
Additionally, a larger deposit gives you more equity in your home from the start. This can eliminate the need for LMI and provide greater financial stability and flexibility in the long term.
If you’re wondering about the need for a house deposit, it’s worth remembering that a strong home deposit supports long-term affordability. When you secure a property with a deposit of 20% or more, you avoid extra costs like mortgage insurance. Starting with a solid deposit also builds financial confidence and reduces future repayment stress.
Other Upfront Costs You Need to Pay When Buying a Home
Besides your deposit, there are other upfront costs you’ll need to pay. These include stamp duty, legal fees, loan application charges, and building inspections.
Use our stamp duty calculator to estimate the amount you’ll need to pay based on your state or territory. These costs of buying a home are essential to factor into your budget.
What Are the Benefits of Saving for a House Deposit?
Saving for a house deposit allows you to avoid unnecessary costs and reduce your loan amount. The more you save, the less you’ll need to borrow.
It also shows lenders that you manage money responsibly. That makes it easier to get a home loan and may qualify you for better interest rates and loan terms.
How Can You Save a Deposit Faster?
To save your deposit faster, set a clear savings goal and track your spending. Cut unnecessary expenses and consider a high-interest savings account.
Also, take advantage of the First Home Super Saver Scheme. It allows you to save as much as $50,000 through superannuation and is designed to help first home buyers enter the market sooner.
How to Calculate How Much You’ll Need to Buy a Home
You can use a calculator to estimate how much deposit you’ll need. This depends on the purchase price of the home and your preferred deposit percentage.
Also consider the additional costs like stamp duty, LMI, and conveyancing. Figuring out how much you can afford will help you plan better and avoid unexpected financial pressure.
How Much Can You Borrow Based on Your Deposit?
Generally, the larger your deposit, the more a lender is willing to lend for a home loan. A strong deposit improves your borrowing power.
Still, lenders look at your income, expenses, and credit score before approving the loan. You’ll need to meet all lender criteria to get a home loan that suits your needs.
What Deposit Do You Need to Buy a Larger Home?
Buying a larger home typically requires a bigger deposit due to the higher purchase price of the home. This means a larger loan and higher repayments.
For example, a $900,000 family home may require a deposit of $90,000 to $180,000. A larger deposit means you’ll need to borrow less and reduce the need for mortgage insurance.
What Does the Home Buying Process Look Like Once You Have a Deposit?
Once you’ve saved your deposit, you’re ready to begin the home buying process. This includes getting pre-approval, researching builders, and choosing your land and design.
For those building a home or an investment, AVIA Homes guides you from concept to completion. We simplify every step so you can move forward with confidence.
Do You Need a Deposit to Build a Custom Home With AVIA Homes?
Yes, you’ll generally need a cash deposit before construction begins. The deposit amount depends on your lender’s requirements and the cost of your project.
AVIA Homes works closely with lenders and clients to streamline the process. We’ll help you understand what deposit is required and guide you toward building your dream home.
Ready to Build Your First or Forever Home in Queensland?
Whether you’re a first home buyer or building your forever family home, AVIA Homes is ready to help you every step of the way. Explore our thoughtfully designed house plans to find one that suits your lifestyle and preferences. Each layout is crafted to balance functionality, comfort, and visual appeal, just perfect for your new house in Queensland.
We specialise in custom-built homes tailored to your lifestyle. Contact AVIA Homes today to learn how we can help you buy a home with a deposit that suits your goals.
