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!
Today I’m going to show you exactly how to calculate your home loan deposit.
In fact, this is the same process that we’ve used to help over 900 home buyers with buying their home.
And I should point something out:
This is a really simple calculator.
So if you’re not super technical (like me), you’ll love the calculator and simple steps in this guide.
Let’s get started.
- Deposit Calculator 101
- How much deposit do I need to buy a house?
- House deposit amount examples
- Can I buy a home with no deposit?
- What is the minimum deposit for a home loan?
- What is my borrowing capacity?
- How much is lenders mortgage insurance?
- What other costs are there for buying a home?
- What are some ways I can increase my savings?
- Do I need to get pre approved?
- Help this is all confusing
Deposit Calculator 101
In this section, I’ll help you get the basics down.
So if you’re not sure if you have enough deposit to buy a home, this chapter will get you on the right track.
Then, in later sections, I’ll show you a bunch of advanced strategies and techniques.
What is my house deposit amount?
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 (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.
Or 400,000 x 10/100 = $40,000.
(Or 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 it 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 which 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
| || |
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 $300000 house?
If you were wanting to buy a house 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 $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.
Why is knowing my house deposit important?
Setting your budget is the very first step …
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 like 20%. But if you want to try to stretch a little bit, reduce the deposit amount to between 8 to 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. Woo, as you can see here and based off 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.
A lot of first home buyers enter into the property game with champagne taste and a beer budget (like me), so it’s good to speak with a mortgage broker initially and get an understanding of what your borrowing capacity actually is. 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 about 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.
On some occasions you may be eligible for a smaller deposit if you have a guarantor, or able to buy with no deposit at all. Read through these specific circumstances here or move on to my next point below.
What you need to know:
- ✅ START HERE: 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
- ✅ 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 just want to know, how much deposit do I need to buy something for $350,000… Or what about $450,000?
If you have a deposit of under 20%, so between 8% to 20% you will need to pay Lenders Mortgage Insurance. Remember the 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 plus stamp duty and other costs.
Our Deposit Calculator will give you a more accurate estimate, but 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:
|Purchase Price||How much deposit do I need?|
|No Lenders Mortgage Insurance needed||Lenders Mortgage Insurance needed for a deposit of less than 20%|
|20% Deposit||10% Deposit||8% Deposit|
Read More: How can I avoid paying LMI?
Can I buy a home with no deposit?
The short answer is, yes!
There are a number of alternative options when it comes to buying your first home with no deposit.
There are different options 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, it can be surprisingly easy to buy your first home.
Practically these are:
- ✅ Funds gifted from parents or relative
- ✅ Parental or family guarantee using another property
- ✅ Using the first home owners grant as a deposit
What is the minimum deposit for a home loan?
Generally speaking, the minimum deposit for a home loan is no lower than 8-10%, as this will cover 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 and 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, as 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 even down to the small things like new furniture and moving costs.
For a full break down of what is considered genuine savings, read more here.
The same goes for those who are renting, even though you can prove payment history, you will still need to have a deposit set aside to move ahead.
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?
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 I was searching for my first property, I had made up in my head 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 – 3 bedroom, one bathroom house with a yard in Gold Coast.
Months later, I began to research finance and made some calls to a mortgage broker about my borrowing capacity, only to realise that due to my income at the time and 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 one or two 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 that I could afford.
So don’t go in blind, find out your borrowing capacity first to save you 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’re still counted
- ✅ Claim all of your income – don’t try and get out of tax – claim it all
- ✅ Split debt and expenses with your spouse – because sharing is caring
- ✅ Choose the right bank for you [Speak to our team]
- ✅ Removing 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 you 10% deposit, then count yourself in.
It’s hard to give an exact figure when it comes to 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 to $10,000 depending on the lender.
- ✅ The LMI premium varies between lenders and it’s 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 are actually eligible to borrow 100% of the property price and can qualify for waived LMI including accountants, doctors and pharmacists. 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 a number of 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 it’s likely you’ll 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 manage 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 typically are 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: $1,000 to $2,000 per year depending on 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 in order 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 – as if there are issues like water damage or structural problems these really could add up and actually 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 in the end if something goes wrong. This is an extremely important cost that you should sort out right away. You need to make sure you have insurance from 5pm 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 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. 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. Do this 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 my tips for building and pest reports
- ⛔ Moving costs – Not forgetting about 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 financially now you’re probably starting to realise all of the extra costs involved in buying, it adds up pretty quickly. But if you start to implement even just one of my saving strategies, you’re going to 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 just from the above 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 see the sum of your savings easily.
- ✅ 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 any of these services and just 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 Centre’s near you as well, which often have larger items of furniture. 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 yes, 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 is going to lend you, what the actual amount of deposit you are going to need is and also what your cash flow is going to 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.
Or even worse, imagine if you were successful at an auction and put down a 5% deposit but then after applied for the loan 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 due to no cooling off periods for auctions, therefore, you could risk losing your $20,000 deposit.
Help this is all confusing
If you are a wanting to get a pre-approval or buy a home speak with one of our experienced mortgage brokers to walk through the next steps of home loans in Brisbane with you.
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.
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