The answer to how much deposit a first home buyer needs is rarely one neat number. You may be able to buy with as little as 5% of the property price, but that does not automatically mean it is the right amount for your circumstances. Your deposit affects your loan size, repayments, lenders mortgage insurance and the cash you need available before settlement.
For Gold Coast buyers especially, where property prices can make even a modest percentage feel substantial, the aim is to find a deposit target that gets you into a suitable home without leaving your finances stretched from day one.
A 20% deposit is the traditional benchmark. On a $750,000 home, that is $150,000, plus buying costs. Reaching 20% generally means you can avoid lenders mortgage insurance, often called LMI, and borrow at a lower loan-to-value ratio.
But a 20% deposit is not a requirement for many first home buyers. Some lenders will consider a loan with a 5% deposit, and a number of government-backed options may help eligible buyers purchase with a smaller contribution without paying LMI. Between those points, 10% and 15% deposits are also common.
The right figure depends on the property you are buying, your income and employment, living expenses, existing debts, savings history, credit profile and whether you qualify for any assistance. A larger deposit can improve your options, but waiting indefinitely to save one can also mean paying rent for longer while property prices move.
It helps to turn percentages into a real target. If you are considering a $650,000 property, a 5% deposit is $32,500, a 10% deposit is $65,000 and a 20% deposit is $130,000. Those figures are for the deposit only, not the full amount you will need to complete the purchase.
For a $900,000 property, the difference is sharper: 5% is $45,000, while 20% is $180,000. This is why starting with a realistic purchase price is more useful than chasing a generic savings goal.
One of the most common first-home-buyer mistakes is saving every available dollar for the deposit and overlooking the costs that sit around it. Depending on the purchase, you may need funds for stamp duty, transfer and registration fees, conveyancing or legal costs, building and pest inspections, lender fees and moving expenses.
In Queensland, eligible first home buyers may receive stamp duty concessions, and buyers of eligible new homes may be able to access the First Home Owner Grant. The rules, property-value limits and eligibility requirements can change, so it is worth checking the current position before relying on either benefit in your budget.
You also need to consider the deposit due when contracts are exchanged. The contract deposit is often negotiable and is not always the same as your total home-loan deposit. Your conveyancer, agent and lender should be clear on the timing, but having a broker involved early can help ensure your loan structure matches the contract terms.
Keeping a modest cash buffer after settlement is sensible too. A new home can bring immediate costs, whether that is a repair identified in an inspection, furniture, rates or simply a higher-than-expected electricity bill. Being approved for a loan is one thing; feeling comfortable with the commitment is another.
A smaller deposit can bring forward your purchase date, but it usually comes with additional cost or tighter lender criteria. If you borrow more than 80% of the property value, LMI may apply. Despite the name, LMI protects the lender if the loan is not repaid. It does not protect you.
LMI can sometimes be added to the loan rather than paid upfront, which reduces the cash required at settlement. The trade-off is that you are borrowing more and may pay interest on that amount over time. The cost varies based on your deposit size, loan amount, lender and borrower profile, so it should be assessed as part of the overall loan comparison, not in isolation.
A lower deposit also means higher repayments than if you had contributed more upfront. In a changing interest-rate environment, it is wise to test your budget at a repayment level above today’s figure. That gives you more room to manage rate movements, reduced hours or the ordinary surprises life brings.
On the other hand, waiting to save 20% is not always the best financial decision. If you have stable income, manageable expenses and a property that suits your longer-term plans, a 5% or 10% deposit may be workable. The key is understanding the total cost and choosing a loan that remains manageable, rather than focusing only on getting approved.
Eligible first home buyers may be able to use the First Home Guarantee under the Australian Government’s Home Guarantee Scheme. This allows participating lenders to offer qualifying buyers a loan with a deposit as low as 5% without the usual LMI, because the government guarantees part of the loan.
There are eligibility criteria around income, owner-occupier status, property price caps and other factors. Places are limited, and not every lender participates. A Family Home Guarantee and Regional First Home Buyer Guarantee may also be relevant in particular situations, although they are designed for different borrower circumstances.
These schemes can be valuable, but they do not make the loan free of risk or remove the need for a clear budget. You still need to meet the lender’s serviceability requirements and cover the other costs of buying. They are best viewed as a way to reduce one barrier to entry, not as a reason to overextend.
Lenders look beyond the balance in your savings account. They generally want to understand where the funds came from and whether you have demonstrated a reliable savings pattern. This is often referred to as genuine savings.
Regular savings from your income can strengthen an application. Gifts from family may be accepted by some lenders, but the requirements differ and the lender may need evidence that the money is genuinely a gift, not an undisclosed loan. Proceeds from selling an asset, such as a car or shares, may also be acceptable with the right documentation.
Your deposit is only one part of the assessment. Credit cards, personal loans, buy now pay later accounts, car finance and dependants can all affect borrowing capacity. Before making an offer, it is useful to review these commitments and avoid taking on new debt or changing jobs without first considering the effect on your application.
Start with a comfortable monthly repayment, not the maximum amount a calculator suggests. From there, estimate a realistic purchase price and work backwards through the deposit and purchasing costs. This gives you a target that relates to your actual circumstances.
If you are not yet ready, set up a dedicated savings account and automate transfers just after payday. Paying rent consistently and saving regularly can also demonstrate that a future mortgage repayment is within reach. If you are buying with a partner, have an open conversation about your combined debts, savings and financial priorities before house hunting begins.
Pre-approval can be helpful before you attend inspections or make an offer, but it is not a guarantee of final approval. The lender will still assess the property and confirm your situation before formal approval. A clear pre-approval process should leave you knowing your likely borrowing range, expected deposit contribution and the conditions to keep in mind.
A mortgage broker can compare lenders that suit a smaller or larger deposit, explain the likely costs and help identify whether a government guarantee may apply. At DMC Finance, the focus is on making those figures clear before you commit to a property, with practical updates throughout the process.
Your first home deposit does not need to be perfect. It needs to be enough for a property and loan that fit your life, while leaving room to handle what comes next.
If you’d like to have a chat about your options, call Dane from DMC Finance today.
