How much do you need for a home deposit?

One of the first questions buyers often ask is how much they need for a home deposit. It’s a simple question with a slightly more complex answer – because the amount buyers need depends on their circumstances, goals and lender.

The standard benchmark for a home deposit is 20% of the property’s purchase price. So, if someone was buying a $700,000 home, that would mean a $140,000 deposit. But not everyone needs to, or is able to, reach that 20% benchmark.

Some lenders will accept a smaller deposit – even as low as 5%. However, buyers who go down that path will generally need to pay lenders mortgage insurance (LMI). This is a one-off premium that protects the lender if the borrower defaults on their loan. LMI is often a five-figure sum, depending on the size of the loan and the deposit gap.

First-home buyers may also be able to tap into government schemes. The First Home Guarantee, for example, lets eligible buyers purchase with as little as 5% deposit – without paying LMI. There are eligibility criteria, but it can be a fantastic option for those who qualify.

Keep in mind that the deposit isn’t the only cost to budget for. Buyers will also need to cover stamp duty (unless they’re exempt), legal fees, building and pest inspections, and moving costs. It’s important for buyers to have a buffer beyond just the deposit amount, so they don’t stretch themselves too thin.

Ultimately, while a 20% deposit is the standard option, it’s not the only way forward. With the right strategy and guidance, buyers can get into the market with less – and still put themselves in a strong financial position.