How Much Deposit Do I Need For A Home Loan?

One of the frequently asked questions in the loan process is how much deposit do I need for a home loan. As a first home buyer it’s helpful to know how much deposit you need to save for a home loan so you can get started with a savings plan. Minimum deposits vary between lenders and depend on the loan product you choose.

As a general rule, if you are an owner occupier you will require a minimum 5% of the purchase price as a deposit. If you are an investor, you will ideally require 5-10% of the purchase price.

Low deposit home loans can be great for first home buyers who haven’t been able to save a large deposit due to high rental payments.

If you are looking at a minimum deposit then you will also need to provide a proportion of the deposit as genuine savings. There are also some lenders now who will recognise 12 months continuous rental repayments as part of the genuine savings requirement.

Each bank will have their own credit policy on how they assess your deposit, so it comes down to knowing which bank or secure lender provides a home loan solution that can cater to your particular situation.

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How Much Deposit Do I Need for a Home Loan?

Your home loan deposit will usually need to be at least partly made up from genuine savings. You can also use a combination of other sources, including:

  • First Home Owners Grant (FHOG) and state-based first home buyer incentives
  • Monetary gifts, inheritances and tax refunds and sales of an asset such as shares
  • First Home Saver Account

Don’t forget to leave some money aside to cover the other fees and charges associated with buying your property. Your Loan Market mortgage broker will go through a list of fees and charges you should consider.

Be aware that some of the conditions you have to meet for a low deposit home loan may be more stringent if you had a larger deposit.

The larger you can make your home loan deposit the better, as it reduces your home loan size and can also reduce or even eliminate the need to pay Lenders Mortgage Insurance (LMI).

In NSW we regularly hold free First Home Buyer seminars to help prepare your for your home buying journey.