How Much Deposit Do First Home Buyers Really Need?
One of the biggest questions first home buyers ask is how much deposit they actually need to buy a home. While many people believe a 20% deposit is mandatory, the reality is more flexible — but comes with important trade-offs. Understanding how much deposit first home buyers really need can help you plan realistically and avoid delays when applying for a home loan.
Is a 20% Deposit Always Required?
A 20% deposit allows you to avoid lenders mortgage insurance (LMI), but it isn’t a strict requirement. Many lenders allow smaller deposits, depending on your overall financial position.
Lower deposits often involve higher costs or stricter assessment.
Low Deposit Options for First Home Buyers
Some first home buyers can purchase with as little as 5% deposit through specific lender programs or government-backed schemes.
Eligibility criteria apply, and lender choice is important.
How Lenders Assess Your Deposit
Lenders don’t just look at the amount of your deposit — they assess how it was built.
They consider:
- Genuine savings history
- Source of funds (savings, gifts, grants)
- Consistency of saving behaviour
A strong savings pattern improves lender confidence.
The Trade-Offs of a Smaller Deposit
Smaller deposits can mean higher interest rates, LMI costs, or stricter loan conditions. These factors affect both short-term affordability and long-term cost.
Understanding the full picture is critical before deciding.
Why This Matters for Australian First Home Buyers
Australian lenders apply different rules to low-deposit borrowers, and government schemes have specific eligibility requirements. Applying with the wrong lender can limit options unnecessarily.
How The Finance Brokers Can Help
The Finance Brokers help first home buyers understand realistic deposit options and compare lenders to find the best path forward. They also help assess eligibility for grants and low-deposit programs.
Not Sure If You Have Enough Saved?
If you’re unsure whether your deposit is sufficient, speaking with a broker can help you understand what’s possible now and what steps to take next.
Book a free consultation with The Finance Brokers
Final Thoughts
There’s no one-size-fits-all deposit requirement for first home buyers. Understanding lender expectations and available options can help you move forward with confidence and avoid unnecessary roadblocks.
