While putting a 20% deposit can improve your chances of getting approved, help you avoid Lenders Mortgage Insurance and possibly secure you a lower interest rate – you can buy a home with as little as 8-10% deposit – or none if you have the help of a guarantor!
Do you want to buy a home? One of the first and most important steps in the homebuying process is calculating how much you need for a deposit. It is important to understand what a home loan deposit is, how it works, and how to calculate the amount you need.
Today we will show you exactly how to calculate your home loan deposit.
In fact, this is the same process that we’ve used to help over 1,500 home buyers buy their homes.
We should point out that this is a really simple calculator.
So if you’re not super technical, you’ll love the calculator and simple steps in this guide.
Let’s get started.
Table of Contents
What is my house deposit amount?
A house deposit is upfront money that a prospective home buyer must pay to secure a home loan. This deposit is usually a percentage of the total home purchase price and is intended to lower the risk the bank takes on when granting you a loan.
In other words, your home deposit is your contribution towards buying your first house. This includes the bank deposit, which is usually between 5-8% of the purchase price PLUS savings to cover other costs like stamp duty, solicitor costs and other fees.
In total, you will need 8-10% of the purchase price in savings to afford a home.
So, for example, if you were buying a place for $400,000, you would need around 10% or $40,000 in savings.
This includes the bank deposit (sometimes called the home loan deposit) and other costs like stamp duty.
You can calculate this manually by getting the purchase price and multiplying it by the deposit amount divided by 100 : $400,000 x 10/100 = $40,000.
The easiest way is by using our awesome deposit calculator above.
Is Stamp Duty part of my house deposit?
Yes, stamp duty costs will form part of the deposit you need to contribute—it cannot be borrowed from the bank. In other words, stamp duty cannot be included in your loan and needs to come from your savings.
But the good news is in some states, Stamp Duty is waived for first home buyers.
You can use our stamp duty calculator to determine the exact amount you would pay in your situation, but we have included a table below that confirms which states will waive or discount stamp duty for first home buyers.
First Home Buyer Concession
Stamp Duty Waived Up To
Stamp Duty Discounted Up to
The discount you can receive is capped at $34,790
So, for example, if you are a first home buyer buying a home in Queensland for $300,000, your stamp duty is waived. Let’s go through an example below.
How Much Deposit do I need for a $300,000 house?
If you wanted to buy your first home for $300,000 in Queensland, stamp duty would be waived for first home buyers. But the government still charges a transfer fee of $641 and registration fees of $197. You will also want to provision $1,500 for conveyancing fees, $500 for building and pest, plus your bank deposit.
The total deposit, including all costs, is around 8% of the purchase price or $25,038. This is calculated as:
- Bank deposit – $22,200
- Transfer Fee – $641
- Registration Fee – $197
- Conveyancer Fee – $1,500 (estimate)
- Building/Pest Fee – $500 (estimate)
You need at least $25,038 in deposit for a $300,000 house as a first home buyer, or if you aren’t a first home buyer, you’d need to pay $3,000 extra in stamp duty, meaning you’d need at least $28,432 in deposit on a $300,000 home in Queensland.
You can use our stamp duty calculator to determine the exact amount you would pay in your situation and your state.
Why is knowing my house deposit important?
Knowing how much you need for a house deposit is very important because it will help you plan your budget and make sure you have enough money to cover other costs associated with buying a home. It is also important to know how much you need for a house deposit because it will determine how much you need to save and how much you need to borrow from the bank.
In fact, the amount you have in savings usually sets how much you can afford to buy.
And without knowing this, it’s impossible to start looking for a home.
How do I use the deposit calculator?
We’ve tried to keep the deposit calculator as simple as possible, so follow these steps to work out your house price:
- Step #1: Enter how much you have in savings that can go towards your deposit. In this example, we used $30,000.
- Step #2: Change the interest rate and loan term if you would like. In the example above, we didn’t change either of these.
- Step #3: If you want to put down a bigger deposit, leave the deposit amount at 20%. But if you want to stretch a little bit, reduce the deposit amount to between 8% and 10%. In this example, we went with 10% as the deposit amount.
- Step #4: See how much you can afford and what the approximate monthly loan repayments would be. As you can see here, based on your deposit, you can roughly afford a purchase price of $300,000, and your monthly repayments would be around $1,290.
The calculator is just for illustrative purposes only, and the final house price would be determined by your income (aka your borrowing capacity), so if you need any further info on this, get in touch with our team or give us a call on 1300 088 065 to chat through your situation.
Jump back to our awesome deposit calculator above.
How much deposit do I need to buy a house?
A good place to start is by having a rough budget of how much you want to spend on your new home, along with an idea of your borrowing capacity. Without knowing this, you’ll be stabbing around in the dark with no idea about how much you can actually afford.
Many first home buyers enter into the property game with champagne taste and a beer budget, so it’s good to speak with a mortgage broker initially and understand your borrowing capacity.
For now, let’s look at how much deposit you need to buy a house, and we’ll speak about your borrowing capacity further on.
Aim to have 8-10 % of the property purchase price in savings, as this will cover all costs involved with buying. Out of that, at least 5% should be held under your name (in an account) for the previous three months so that lenders can see this as evidence of genuine savings.
What you need to know about home deposit:
- Get in touch with a mortgage broker to find out what your borrowing capacity is
- Aim for 8-10% of the purchase price
- At least 5% of the purchase price should be held for 3 months or longer in your name
- Even those who are renting will need a deposit to buy a house
House deposit amount examples
You might have started looking for a place and are asking yourself. “, how much deposit do I need to buy something for $350,000 or $450,000?”
If you have a deposit of under 20%—let’s say between 8% to 20% you will need to pay Lenders Mortgage Insurance. Banks that lend 95% loans will lend this amount, including LMI, so it usually works out to be a 92% + LMI loan – which means you need a minimum of 8% deposit to cover stamp duty and other costs.
Our Deposit Calculator will give you a more accurate estimate. Still, if you want to know roughly what you need (without taking into account other deposit costs like stamp duty, conveyancing and legal costs, etc.), you can use this table as a guide:
How much deposit do I need?
No Lenders Mortgage Insurance needed
Lenders Mortgage Insurance needed for a deposit of less than 20%
Read More: How can I avoid paying LMI?
Can I buy a home with no deposit?
The short answer is yes!
There are several alternative options when it comes to buying your first home with no deposit, including the First Home Owners Grant, different government concessions and a few different 100% home loan options. So if you’re lucky enough to qualify, buying your first home can be surprisingly easy.
Here are a few ways to buy a home with no deposit:
- Funds gifted from parents or relative
- Parental or family guarantee using another property
- Using the first home owners grant as a deposit
- Partnering with someone
- Being employed in the medical field.
Read More: Can I get a home loan with no deposit?
What is the minimum deposit for a home loan?
Generally speaking, the minimum deposit for a home loan should not be lower than 8-10%, as this will cover the extra expenses involved.
While 20% is desirable, lenders will generally accept deposits from around 8-10%. From that figure, they will want to see at least 5% of the purchase price held for 3 months or longer in an account with your name as genuine savings
However, funds for stamp duty and other costs do not need to be held for 3 months or greater.
8-10% is the minimum deposit we recommend— any lower, and you’ll start to feel like you’re stretching it.
Don’t forget there are so many extra expenses when buying a home, including the small things like new furniture and moving costs
For a full breakdown of what is considered genuine savings, read more here.
If you are renting, you will still need to set aside a deposit to move ahead, even if you can prove consistent payment history.
A few ways that you can speed up the process and help kickstart your savings include:
- Create a detailed breakdown of how you’re going to save.
- Speak to your parents about becoming your guarantor.
- Have a stable income to get into a better routine.
Read More: How to Save for a House Deposit
What is my borrowing capacity?
Knowing your borrowing capacity is important because it can help you create a budget, set realistic financial goals, and make informed decisions. Having this information can help ensure that you don’t over-borrow and can help you find the best loan options for your specific situation.
It’s important to have a clear idea of your borrowing capacity so that you can begin to research and understand what sort of properties you can afford. Knowing this will help you to make sure you don’t overstretch yourself.
When searching for my first property, I had made up a budget of around $450,000 to $500,000 to buy a house.
So there I was, searching endlessly on Realestate.com for my dream home: a 3-bedroom, 1-bathroom house with a yard in Gold Coast.
Months later, I began researching finance and called a mortgage broker about my borrowing capacity, only to realise that due to my income and the deposit I had saved, I could only borrow up to $297,000…
I was shattered. Completely priced out of the market I was aiming for.
I realised that all I could afford was a 1 or 2-bedroom apartment in the outer suburbs.
Yet looking back, this was a blessing in disguise because it meant that I focused more on saving a larger deposit and looked around for the right kind of property I could afford.
So don’t go in blind; find out your borrowing capacity first to save time and keep your expectations in line with what you can afford.
Thankfully, there are a few easy tricks (that I implemented) that will help you increase your borrowing capacity.
- Reduce your amount of available credit – get rid of those credit cards. Even if you’re not using them, they still reduce your borrowing capacity.
- Claim all of your income – don’t try and get out of tax – claim it all so you can have a higher borrowing capacity.
- Split debt and expenses with your spouse – because sharing is caring.
- Choose the right bank for you [Speak to our team]
- Remove defaults from your credit – pay them and contact the company to remove them.
- Ask for a pay rise – because there’s no time like the present!
Read more: Understanding your home financing options.
How much is lenders mortgage insurance?
Lenders mortgage insurance is required when the buyer is unable to pay a 20% deposit.
So if you’re sticking with your 10% deposit, then count yourself in for LMI.
It’s hard to give an exact figure regarding LMI due to all of the variables and differences between each buyer. However, as an idea, for a $400,000 property with a 90% loan-to-value ratio (10% deposit), LMI can cost anywhere between $7,000 and $10,000, depending on the lender.
- The LMI premium varies between lenders and is also determined by your loan to value ratio. Take a look at our LMI calculator here and compare the LMI premiums between various banks.
- Some professions like accountants, doctors and pharmacists are actually eligible to borrow 100% of the property price without paying LMI. Take a look at the full list here.
- Shop around for LMI between lenders, as not all LMI is created equally, and the price difference between lenders varies greatly.
What other costs are there for buying a home?
Aside from the money for the deposit and lenders mortgage insurance, unfortunately, there are several other hidden costs when buying a home.
But if you can figure them out early, you’ll be able to factor these costs into your savings plan.
So let’s go over the main ones you need to be ready for:
- Borrowing costs. Beware that even with fee-free loans, you’ll likely still need to pay settlement and documentation fees. The application fees are generally around $500-600, though they can be more than $1000, depending on the loan and lender.
- Government fees. The government still manages to find a way to weasel their way in with some extra fees – like the Registration Fee. These fees vary between states, but in Queensland, they are typically around $187 depending on the registration type. On top of that, you’ve got the Transfer Fee. For a home valued at $400,000, you’ll typically need to pay about $957 in transfer duty. Figure out your transfer duty fees here.
- Stamp duty. Good news if you’re a first home buyer in Brisbane when buying a house under $500,000, you’ll be exempt from stamp duty. Bad news if it’s your second or third property, stamp duty fees become a real thing! On a $500,000 house, you can expect to pay around $8750 in stamp duty fees.
- Council and Water rates. Each council has their own set of rates. Estimate between $1,000 to $2,000 per year, depending on the suburb.
- Strata/Body corporate fees. If you are buying a unit, apartment or townhouse in a complex, you will need to pay strata fees. These fees are usually paid quarterly to maintain the complex. IMPORTANT TIP: Before buying your apartment, get a copy of your Strata report to ensure that the current report isn’t requesting huge fees from owners. If there are issues like water damage or structural problems, these could add up and might be a deal breaker for you before you buy.
- Home and contents insurance. Don’t even try and skimp out on this, as it will cover your back if something goes wrong. This is an extremely significant cost that you should sort out right away. You need to make sure you have insurance from 5pm on the day of signing the contract of sale. It’s incredibly important. At Hunter Galloway, we work with Allianz and can help arrange Home & Contents Insurance for you – Allianz gives our clients 90 days of free cover until settlement!
- Legal costs. You’ll need to pay a legal professional or conveyancer to conduct title searches, make a strata report (if you are buying a townhouse or unit), review a contract of sale (not always required in Queensland) and arrange settlement details. In general, conveyancers charge a flat fee, while solicitors commonly charge by the hour – with the amount being paid depending on how complex your purchase is. The approximate cost is $1,000 to $2,000, depending on the searches conducted. Read more about legal costs here.
- Building and pest reports. This one is so important and has saved me from buying complete dumps of properties. Get a building and pest report before you buy the property. A typical building inspection for a 4 bedroom home can cost $400-500 and pest inspection $200-300. The good news is you can save a few hundred dollars by getting a combined building and pest report for around $500-600. Read more about our tips for building and pest reports
- Moving costs. Let’s not forget removalist fees and costs around buying all of those extra little bits and pieces for a local move (i.e. within the same city). Home Improvement Pages recommends you set aside anywhere from $300 to $3,500. For an interstate move, removalist costs can be several thousand dollars more than this.
Read More: 11 Hidden Costs of Buying a Home
What are some ways I can increase my savings?
Alright, so you are now probably starting to realise that all the extra costs involved in buying add up pretty quickly… But if you begin to implement just one of our saving strategies, you will be able to supercharge your savings and save a lot easier.
Cut the small costs. When I was saving for a house, in some ways, I became the world’s biggest stinge. Now I don’t want you to start getting that reputation in your social circles, which is why I figured out some subtle ways to do this. For example: swap lunch catch-ups for coffee catch-ups (save $30), stop ordering a drink with your meal (save $8), eat at home before a night out (save $40), stop buying coffee every day and make it at home (save $25 per week), bring your lunch to work (save $50 to $60 per week), find free parking whenever possible – walk the extra 10 minutes ($5 per day – save $25 per week). These small things all add up, and they could easily save you almost another $200 per week.
- Spread your savings. Having a sole focus on your savings for a house is great, but you’ll also need to afford other things life brings. For example, you can save for different goals, whether it’s buying a car or planning a holiday with your family. Even if you save $200 per month, you’ll still end up with $2,400 towards your other goals at the end of the year. Set up separate accounts so you can easily see the sum of your savings.
- Reduce debt and try not to accumulate more. Pay special attention to your credit cards and focus on reducing debts. Also, keep in mind payment services like AfterPay and Zippay, which can easily add up. Try to go a few months without using these services and focus on paying them down. Read more about reducing debt here.
- Swap new for second hand. Help the environment and save money by shopping at op shops. For a long time, this has been my go-to for everything. From furnishing my entire home to even buying electrical appliances and toilet paper, you can save SO much money shopping at op shops, and it’s no different to anywhere else. My tip: Take a look at Recycle Centres near you, which often have larger furniture items. I also always get my glassware from op shops because it’s always good quality and about 50c a piece!
Read More: How to Save for a House Deposit
Do I need to get pre approved?
If you are going to auction, then yes, you need to get pre approved. If not, you might be best speaking with a mortgage broker to confirm your home buying potential.
Without speaking with a mortgage broker, it’s hard to know exactly how much the bank will lend you, what the actual amount of deposit you are going to need is , and what your cash flow will look like after you’ve purchased your new home.
In a competitive property market, not knowing your home buying potential also means that you can risk losing the property of your dreams because your finance isn’t sorted on time.
Or even worse: imagine if you were successful at an auction and put down a 5% deposit, applying for the loan but only to have the bank knock it back because of your job status… What a disaster!
In this situation, there’s no way you’d get your deposit back because auctions have no cooling-off periods. Therefore, you could risk losing your $20,000 deposit!
Bonus: First Home Super Saver Scheme(FHSSS)
First Home Super Saver Scheme (also known as FHSS) is a government scheme designed to help you speed up the time it takes to save a deposit towards buying your first home.
FHSSS uses voluntary before-tax contributions made to your superannuation fund. You can then withdraw these funds to use later as a deposit towards buying your first home. There are limitations on the amount you can save using the First Home Buyer Super Saver Scheme. There is a maximum voluntary contribution of $15,000 per financial year or up to a maximum of $30,000 in total.
To be eligible for this scheme, you need to meet the following requirements
- You have to be purchasing your first home. This means you cannot have owned property in Australia in the past.
- You need to be over 18 years old.
- You must be planning to live in the property for at least 6 months within the first 12 months of owning it.
- You must not have used the FHSSS before.
With the First Home Super Saver Scheme, you can release up to 100% of the funds if you made a non-concessional contribution. If you made a concessional contribution, you could release up to 85%.
It is important to note that the maximum amount you can release is not what you will actually get. The ATO will withhold the appropriate amount of tax and offset your balance against any outstanding Commonwealth debts.
For more details on the First Home Super Saver Scheme, click here.
Next steps and getting your home loan.
If you want to get a pre-approval or buy a home, speak with one of our experienced mortgage brokers to walk you through the next steps of home loans in Australia.
At Hunter Galloway, we help home buyers get ahead in this competitive market; we give you the actual strategies that have helped other home buyers like you secure a property when there have been 5 other offers on the table! Enquire online or give us a call on 1300 088 065.
Unlike other mortgage brokers who are just one-person operations, we have an entire team of experts dedicated to helping make your home loan journey as simple as possible.
If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.
- Home Loan Extra Repayment Calculator
- Pay off your loan 6 years faster
- How much home can I afford?
- Negotiate the house price with a real estate agent
- Home loan features explained
Note: The information provided in this article is intended to provide illustrative examples based on stated assumptions and your inputs. Calculations are meant as estimates only, and it is advised that you consult with a mortgage broker about your specific circumstances.