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How much of a deposit do you need for a home?

Saving takes real steel and tenacity. How much of a
deposit do you need to gain finance for your first home
does it need to be an alp or just a hill?

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The first hurdle to buying your first home is possibly one
of the hardest. Putting your money aside to accumulate
for a deposit takes real steel and tenacity, and can seem
a bit like climbing Mt Everest. However, every mountain
has its peak, and once you’ve reached it then it’s all
There are plenty who have gone before you, as according
to the Australian Bureau of Statistics (ABS), first home
buyers make up for about 15 per cent of the lending to
owner-occupiers every month – this amounts to almost $3
In light of this, how much of a deposit do you need to gain
finance for your first home, does it need to be an alp or
just a hill?
20 is the magic number
Just about every authoritative source will tell you the
same thing when it comes to saving for home loans – “The
bigger the deposit the better”.
The ABS asserts that the average loan size among those
fresh to the market is around $340,000, which gradually
rises year after year in tune with prices and inflation.
Despite this, the proportion of deposit that it is
recommended you have remains the same. In order to
take advantage of lower rates, you should have at least
20 per cent of the purchase price.
According to the Australian Securities and Investments
Commission (ASIC), if your deposit is less than 20 per
cent of the purchase price, you will likely be charged a
one-off payment to cover lender’s mortgage insurance.
This is simply because they will see you as a bigger risk
to default on your payments, and therefore want some
What’s the smallest deposit you can have?
Generally, the major lenders are willing to provide finance
to home buyers with deposits as little as 5 per cent.
However, the ASIC affirms that in this case there are a
number of other factors that will influence your appeal as
a borrower, including:
• A strong employment history and income
• A history of saving
• Minimal debts
• Clear credit history
Typically, the size of the loan you can access will be
much less than the average mortgage.

Written by

Stephen Bonfield, the Managing Director, previously worked for one of Australia’s major home loan companies as an independent mortgage broker. Steve used this experience to set up his own mortgage broking company - a company that places customer needs at the forefront.

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