
Purchasing a home is a significant milestone, but one of the biggest hurdles many face is saving for the deposit. Understanding how much you need and what factors influence this amount can help you plan better and make informed decisions. Whether you’re a first-time buyer or a seasoned investor, knowing the basics of house deposits is crucial. Let’s break it down step by step.
What Is a House Deposit?
A house deposit is the upfront payment made when purchasing a property. It’s typically expressed as a percentage of the property’s purchase price and serves as an assurance to lenders that you’re financially invested in the purchase. The remaining balance is usually covered by a mortgage loan, which you’ll repay over time.
Factors Influencing How Much You Need
The amount you need for a deposit varies depending on several factors:
- Property Value
- The more expensive the property, the larger the deposit required.
- For instance, a 20% deposit on a $500,000 home would be $100,000, whereas the same percentage for a $750,000 home would be $150,000.
- Loan-to-Value Ratio (LVR)
- LVR represents the percentage of the property value financed through a loan.
- A higher deposit lowers your LVR, making you a less risky borrower in the eyes of lenders.
- Lender Requirements
- Some lenders may allow lower deposits, especially for first-time buyers or under special schemes.
- However, smaller deposits often come with higher interest rates or additional costs like Lenders Mortgage Insurance (LMI).
- Location
- Metropolitan areas often require higher deposits due to higher property prices.
- In contrast, regional properties may have lower price points, reducing deposit requirements.
- Your Financial Profile
- Factors like your credit score, income stability, and existing debts play a role in determining the deposit amount.

Typical Deposit Amounts
- 20% Deposit:
- This is the traditional benchmark and is often recommended because:
- It reduces the loan amount and interest paid over time.
- It helps you avoid Lenders Mortgage Insurance (LMI).
- This is the traditional benchmark and is often recommended because:
- Low Deposit Options (5-10%):
- Many lenders now offer loans with as little as 5% deposit.
- For a $400,000 property, a 5% deposit would be $20,000.
- These options often come with conditions such as higher interest rates or mandatory LMI.
- Government Assistance Programs:
- Programs like the First Home Loan Deposit Scheme (FHLDS) allow eligible buyers to secure a home with as little as 5% deposit without LMI.
- Other schemes may offer grants or shared equity options to reduce the upfront financial burden.
Benefits of a Larger Deposit
While saving for a larger deposit might take longer, the benefits often outweigh the effort:
- Lower Loan Amount:
- A larger deposit reduces the amount you need to borrow, translating to lower monthly repayments.
- Avoiding LMI:
- Deposits of 20% or more eliminate the need for LMI, which can save thousands of dollars.
- Better Interest Rates:
- Lenders may offer more competitive rates to borrowers with larger deposits.
- Increased Equity:
- Starting with more equity in your home provides financial security and flexibility in the future.

Challenges in Saving for a Deposit
Saving for a deposit can be daunting, especially with rising property prices. Here are some common challenges and tips to overcome them:
- High Living Costs:
- Create a budget to identify areas where you can cut back.
- Consider high-interest savings accounts or term deposits to grow your savings faster.
- Unexpected Expenses:
- Build an emergency fund separate from your deposit savings.
- Discipline in Saving:
- Set automatic transfers to a dedicated savings account.
- Break your goal into smaller, achievable milestones to stay motivated.
How Original Wealth Can Assist
At Original Wealth, we specialize in helping clients navigate the complexities of home financing. Here’s how we support your journey:
- Tailored Loan Options:
- With access to over 60 banks and lenders, we find the most suitable options based on your financial profile.
- Guidance on Low-Deposit Loans:
- We help identify lenders offering competitive terms for low-deposit loans.
- Expert Advice on Deposit Savings:
- Our financial consultants provide strategies to help you save efficiently and achieve your goals faster.
- Support with Government Schemes:
- Assistance in understanding and applying for grants and schemes to reduce your deposit requirements.

Steps to Start Saving for Your Deposit
- Assess Your Financial Position:
- Calculate your current savings and set a realistic target.
- Create a Savings Plan:
- Allocate a fixed portion of your income towards your deposit.
- Reduce Unnecessary Expenses:
- Limit discretionary spending and prioritize savings.
- Seek Professional Advice:
- Consult experts, like the team at Original Wealth, to explore your options and develop a clear plan.
Conclusion
Saving for a house deposit is a critical step in the home-buying process. By understanding the factors involved and planning strategically, you can set yourself up for success. Whether you’re aiming for a traditional 20% deposit or exploring low-deposit options, the key is to stay informed and proactive.
Ready to take the next step? Contact Original Wealth today to explore tailored financial solutions that help make your homeownership dream a reality.
Frequently Asked Questions
Q. 1 What is the minimum deposit required?
A. It depends on the lender and property value, but many loans start with a minimum deposit of 5%.
Q. 2 Can I use my superannuation for a deposit?
A. Yes, under the First Home Super Saver Scheme (FHSS), eligible buyers can withdraw voluntary super contributions to use for a deposit.
Q. 3 What additional costs should I consider?
A. Besides the deposit, budget for stamp duty, legal fees, inspection costs, and insurance.
Q. 4 How do government grants work?
A. Grants vary by location and eligibility. They’re designed to assist first-time buyers or those purchasing new homes.