What size deposit do you need to buy a home?

Are you looking to buy your first home? Calculate the upfront deposit you’ll need to meet the purchase price, along with other expenses you have to factor in to get through the door. Plus, explore strategies to help speed up your journey to home ownership.

Calculate your price range

To get started saving up for a house deposit to buy your new home, first work out the price range you should be targeting. Understanding your price range means that you can explore potential homes without worrying if they fit your budget.

Check our mortgage calculator. It’ll estimate how much you might borrow depending on your financial situation. You can also use our repayment calculator to see how interest rate, repayment type and loan term could affect your repayments.

Borrow less with a bigger deposit

Once you've found a house that fits your budget, it's time to figure out how much deposit you can manage. Putting down a bigger deposit means borrowing less, which can translate to paying less interest and possibly lower monthly payments.

Usually, aiming for around 20% of the house's total value is a good goal for a deposit. If you can't manage that, you might still get a loan, but you could end up paying extra for Lenders Mortgage Insurance (LMI). Plus, it might take longer to pay off.

Most lenders use something called a loan-to-value ratio (LVR) calculation to decide how much they're willing to lend you. It's basically a comparison between your loan amount and the bank's valuation of your property, shown as a percentage.

For example, a loan of $800,000 to buy a property worth $1,000,000 results in a loan to value ratio of 80%. Banks place a limit on the loan to value ratio depending on things such as the type of property, the location and your financial position.

If the bank is lending you anything more than 80% LVR, you’ll likely need Lenders Mortgage Insurance.

Upfront costs

Buying a home involves more than just the price tag of the property. There are additional expenses you need to pay for that you should be aware of:

• Stamp Duty: This is a tax imposed by state and territory governments, which can vary based on factors like location, whether it's your first home, investment property, and the property's price. It's important to consider this cost when purchasing a property, and you can use our stamp duty calculator to estimate it.
• Legal Costs: Buying a property requires legal process and documents. You’ll need to pay for conveyancing, which involves the sale and transfer of real estate, and includes tasks such as property and title searches, contract reviews, title transfers, and more.
• Mortgage Establishment and Registration Fees: These fees can vary depending on your location and lender. It's essential to find out whether these fees apply to your situation. Talk to your broker or lender to get the information.

Your loan and interest rate – factors that can impact them

Now that you've got your price range, deposit amount, and other upfront costs sorted, there are a few more things to consider that could affect the loan amount and interest rate you'll get from a lender.

Your credit report and score are important because they will impact the amount you can borrow. Before you take out a loan, you need to be sure that you can service it

Having a savings plan for your deposit can show that you can handle loan repayments. Also, making regular payments on your credit cards or other credit accounts can help boost your credit score.

First time buyer support

The government gives first-time home buyers a one-time payment to help buy their first home. The details of this First Home Owner Grant, like the amount and criteria, vary by state and territory. You can check with your lender or visit the Federal Government's First Home Owner Grant site for more info.

Saving for a deposit can be a big challenge since most lenders ask for at least a 20% deposit. But with the Australian Government's Home Guarantee Scheme, first-time home buyers have options to help them achieve their dream of homeownership sooner.

At St.George, this is known as a Family Pledge loan. It allows a family member to use equity in their home to guarantee a portion of your home loan without having to pay any money for your deposit up front.

Know your max borrowing power

Your borrowing power depends on your personal situation, lifestyle, income, expenses, credit score, and other factors. If you want to estimate your borrowing power quickly and easily, try using our borrowing power calculator.

Top points:

• Get a handle on your price range and figure out how much you can put down for a deposit.
• Keep in mind there are other expenses involved in buying a home.
• Your personal situation and financial setup can impact how lenders see your loan application.
• If you're a first timer, check out what government help you might qualify for.