How Much Deposit Do First Home Buyers Really Need?
No, you almost certainly do not need as much deposit as you might have heard. The amount a first home buyer needs to get into the property market is often far less than word-of-mouth figures suggest, and speaking with a mortgage broker can make that very clear, very quickly.
Where Does the Confusion Come From?
A family recently reached out to me after hearing some unsettling news. A tradesman doing work on the rental property they were living in had told them, in passing, that they would need a $450,000 deposit before they could buy their first home in Brisbane. That figure stopped them in their tracks. It felt insurmountable, and for a moment, it probably made home ownership feel completely out of reach.
After sitting down and working through their actual situation, the picture looked very different. That conversation is one I have regularly, and it matters. Misinformation shared in good faith by people who simply do not work in mortgage lending can cost families years of unnecessary waiting.
The truth is, deposit requirements depend on several factors, including the purchase price of the property, the lender's policies, and whether you are accessing any assistance schemes. There is no single universal figure, and there is certainly no reason to accept a number quoted by someone who is not a licensed finance professional.
What Does a Deposit Actually Cover?
When lenders talk about a deposit, they are referring to the portion of the purchase price you contribute from your own funds or eligible sources. The lender covers the rest through your home loan.
Most lenders require a minimum deposit of around five per cent of the property's purchase price. On a $600,000 property, that is $30,000, not $450,000. However, the size of your deposit does affect other parts of the loan, particularly whether you will be required to pay LMI (Lenders Mortgage Insurance).
LMI is a one-off insurance premium that protects the lender if you default on the loan. It applies when your deposit is less than 20 per cent of the purchase price. It does not protect you as the borrower. The cost can be significant, and it is worth understanding before you commit to a purchase price or a deposit amount.
A deposit of 20 per cent or more generally avoids LMI altogether, which is why that threshold gets talked about so often. But it is not the only path into the property market, particularly for first home buyers.
What Are the Options for Buyers With a Smaller Deposit?
If saving a full 20 per cent deposit feels like it will take many years, there are a few paths worth exploring with a broker.
Low deposit loans: Some lenders will approve a home loan with a deposit as low as five per cent, though you will typically pay LMI on top of this unless another arrangement is in place.
Guarantor support: A guarantor, often a parent or close family member, can use equity in their own property to support your loan. This can allow you to borrow without a large deposit and in some cases avoid LMI.
Family Security Guarantee: A Family Security Guarantee is a formal structure where a family member's property is used as additional security for part of the loan.
Government assistance: There are government schemes designed to help first home buyers enter the market with a smaller deposit, sometimes with as little as five per cent and without the requirement to pay LMI. Your eligibility for these will depend on factors including income, property price, and whether you have owned property before.
Each of these options comes with its own conditions and risks, and not every lender or product will suit every situation. That is why it is worth getting a proper assessment of your circumstances rather than relying on general rules or, as that Brisbane family discovered, advice from someone outside the industry.
What Else Do You Need to Budget For Beyond the Deposit?
The deposit is the headline figure, but it is not the only upfront cost. First home buyers often underestimate what else needs to be covered before settlement.
Stamp duty: A significant upfront cost in most states, though some first home buyers may be eligible for concessions or exemptions depending on the purchase price and state of purchase.
Conveyancing and legal fees: You will need a solicitor or conveyancer to handle the legal transfer of the property.
Building and pest inspections: Essential before you commit to a purchase, particularly for older properties.
Loan fees: Some lenders charge establishment fees or other loan fees at the start of the loan.
Moving costs and initial repairs: Easy to overlook, but they add up quickly once you have the keys.
As a general guide, budgeting an additional two to five per cent of the purchase price for these costs is a reasonable starting point. The exact figures will depend on your state, your property, and the lender you go with.
Why Talking to a Broker Early Makes a Real Difference
That Brisbane family came to me feeling defeated. What they actually needed was accurate, specific information about their situation. Once we worked through their finances properly, their options looked a lot more realistic than a $450,000 deposit figure had suggested.
I understand the challenges that come with trying to piece together a picture of what home ownership requires when you are not inside the industry every day. There is a lot of noise out there, and not all of it is reliable. What I aim to do, every step of the way, is give you clarity about where you actually stand.
A broker can look at your income, your savings, your existing debts, and your goals, then work out which lenders and products are genuinely within reach. That kind of assessment costs you nothing to arrange, and it gives you a real foundation to work from rather than a figure someone heard somewhere.
Whether you are a first home buyer trying to understand what is possible, or you are further down the track and ready to start making formal applications, the starting point is the same: a conversation about your actual situation, not a generalised number that may have nothing to do with your life.
If you are in regional or rural NSW, or anywhere across Australia, and you want to understand what deposit you genuinely need to buy your first home, reach out. The answer is almost certainly not what you have been told.