How much do you need for a home deposit?
One of the first questions buyers often ask is how much they need for a home deposit. It’s a simple question with a slightly more complex answer – because the amount buyers need depends on their circumstances, goals and lender.
Do I need a 20% deposit?
The standard benchmark for a home deposit is 20% of the property’s purchase price. So, if someone was buying a $700,000 home, that would mean a $140,000 deposit. But not everyone needs to, or is able to, reach that 20% benchmark.
Some lenders will accept a smaller deposit – even as low as 5%. However, buyers who go down that path will generally need to pay lenders mortgage insurance (LMI). This is a one-off premium that protects the lender if the borrower defaults on their loan. LMI is often a five-figure sum, depending on the size of the loan and the deposit gap.
First-home buyers may also be able to tap into government schemes. The First Home Guarantee, for example, lets eligible buyers purchase with as little as 5% deposit – without paying LMI. There are eligibility criteria, but it can be a fantastic option for those who qualify.
People in some professions, such as within healthcare, may also be eligible to have LMI waived with certain lenders.
Which professions could be eligible for low-deposit loans?
Some lenders will waive LMI for professionals in some fields including finance, law and medicine. This is dependent on a number of eligibility criteria, depending on the lender. Some eligible professions include:
Accountant
Actuary
Anaesthetist
Barrister
Dental practitioner
Dermatologist
Financial analyst
GP
Lawyer/solicitor
Obstetrician/gynaecologist
Opthalmologist
Optometrist
Paediatrician
Pathologist
Pharmacist
Physiotherapist
Psychiatrist
Radiation oncologist
Surgeon
Veterinary practitioner
Keep in mind that the deposit isn’t the only cost to budget for. Buyers will also need to cover stamp duty (unless they’re exempt), legal fees, building and pest inspections, and moving costs. It’s important for buyers to have a buffer beyond just the deposit amount, so they don’t stretch themselves too thin.
Ultimately, while a 20% deposit is the standard option, it’s not the only way forward. With the right strategy and guidance, buyers can get into the market with less – and still put themselves in a strong financial position.
At Skybridge Capital, we have tailored finance solutions to fit your unique needs.
Thinking about buying a home but unsure about your deposit requirements? While a 20% deposit is often recommended, it's not the only option. Let's talk today about finding the right financing solution to help you confidently step into your new home.