How Much Deposit Will I Need to Buy a House?

Owning a home is a huge milestone, but there's a lot of things to consider, a deposit being one of them. So, how much deposit would you need to purchase a house?

The larger your deposit, the smaller your loan will be and the less interest you’ll have to pay.

A deposit of 20 per cent or more is ideal, as it’s typically the amount a lender classifies as ‘safe’. Being a safe borrower is a good position to be in as you’ll have a range of lenders to pick from.

Additionally, a deposit of over 20 per cent usually eliminates the need for Lender’s Mortgage Insurance (LMI) or a Low Deposit Premium (LDP) which could add thousands to the cost of buying your home.

While you can get a loan with a deposit that is lower than 20 per cent, but lenders tend to view borrowers with low deposits as high risk and often charge higher interest rates as a precaution. The smaller your deposit, the more you’ll also have to pay in Lender’s Mortgage Insurance (LMI) or Low Deposit Premium (LDP) as it’s calculated based on the size of your deposit.

With that said, the circumstances of your home loan will determine whether you’re charged a Low Deposit Premium (LDP) or Lender's Mortgage Insurance (LMI), but you’ll only need to pay for one of these options.

Don’t forget to budget for other upfront costs outside the deposit, including legal fees, stamp duty, moving costs and insurances. Learn more about the upfront costs to consider before buying a home.

This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.‍