The benefits of having a larger deposit

Saving a large deposit means smaller interest repayments, no lenders mortgage insurance costs and easier home loan approval.

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You don’t always need a large deposit to take out a home loan. A 20% deposit is a reasonable size and lets you avoid lenders mortgage insurance. But saving an even larger deposit can have some benefits. These include paying less interest and possibly getting a better home loan deal.

The benefits of saving a larger mortgage deposit

  • Borrowing less. If you can save up a 40% deposit, for example, that’s 40% of the purchase price of a property you can pay off straight away. That means that you borrow less from the bank and pay a whole lot less interest over the life of the loan, which is a big win in anyone’s language.
  • No LMI costs. You’ll most likely need to cover the cost of lenders mortgage insurance if you have less than a 20% deposit saved and need to borrow more than 80% of the purchase price. As a general rule, LMI costs around 2% of the value of the loan. This is an extra expense you’ll need to factor into your calculations when budgeting for a loan, so saving a larger deposit will allow you to avoid this additional cost.
  • Proof of savings. When you apply for a loan, a lender will usually ask for evidence of a regular savings history over three months or more. Known as genuine savings, this usually takes the form of a bank statement showing your regular contributions into a savings account. And if you have a deposit of 30% or more saved, you’ll be able to provide excellent evidence of your savings ability and make your application more attractive in the eyes of a lender.
  • Increase your borrowing power. The more money you have saved, the less risk you represent to a lender. If your bank is confident you’ll be able to comfortably service your loan, your borrowing capacity will increase and you may be able to borrow more.
  • Access special rates and deals. A larger deposit and a lower LVR mean that you may be able to qualify for special loan and interest rate deals that save you even more money. For example, the Mortgage House 50% LVR special is offered to borrowers who have a minimum 50% deposit saved, and it includes flexible features such as the ability to make unlimited extra repayments and a 100% offset account to minimise interest.
  • More choice. Saving a larger deposit also allows you to access a wider range of loans, as more borrowing power gives you access to more of a lender’s products.

Tips to save a larger deposit

  • Develop a savings plan. Developing a realistic savings plan is a great way to start saving for a deposit. Work out how much money you need to save and then work out a budget. Work out how much money you can afford to put away each week and start building your balance.
  • Make regular deposits. Set up a regular direct debit straight from your income into your savings account. This way, you’ll be saving money without realising it, but you can always add in extra lump sums if circumstances allow.
  • Consider a high interest savings account. Shop around for an online savings account that offers a great interest rate and minimal or no fees. You may also want to consider a term deposit so that your savings can earn a higher rate of interest.
  • Cut back on expenses. If you work out a weekly budget, you should be able to find a few areas where you can cut back on expenses. Do you really need that gym membership you never use? Could you eat at home rather than dine out one night extra per week? You’d be surprised how much you can save once you put your mind to it.
  • FHOG. If you’re saving for your first home, remember that states and territories around Australia offer a range of grants and concessions to first-time buyers. The First Home Owners Grant (FHOG) offers useful financial support to many first home buyers, so check to see if you’re eligible.

Check out our full guide to saving a house deposit

Determining your deposit size

The deposit amount you need to get a home loan is determined by each lender and its lending criteria. In the fine print explaining the features of mortgage products, you may have seen the words ‘maximum LVR’ followed by a percentage. LVR stands for loan-to-value ratio, which is a figure that expresses the amount of money you are allowed to borrow on the loan relative to the purchase price of the property.

Many Australian lenders offer loans with a maximum LVR of up to 90% or 95%, which means you would need to have a 10% or 5% deposit saved respectively. However, you would also need to budget for number of other fees that apply when you buy a home, including conveyancing fees, stamp duty and home loan application fees.

For more information about deposit size and what works for you, check out this page on deposit sizes.

Compare mortgages from across the market

$
years
Name Product Interest Rate (p.a.) Comp. Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
UBank UHomeLoan Fixed
1.75%
2.31% p.a.
$0
$0 p.a.
80%
$537
Limited time offer.
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees. Apply by 30 June 2021 and settle within 90 days to get this low rate.
Westpac Fixed Option Home Loan Premier Advantage Package
1.99%
3.48% p.a.
$0
$395 p.a.
95%
$554.81
Up to $3,000 refinance cashback.
Lock in a low fixed rate for 2 years and buy your home with a 5% deposit. Eligible borrowers refinancing $250,000 or more can get up to $3,000 cashback. Other conditions apply.
St.George Fixed Rate Advantage Package
1.94%
3.40% p.a.
$0
$395 p.a.
80%
$551.07
Up to $4,000 refinance cashback
Borrowers with 20% deposits or equity can get this competitive fixed rate loan. Refinancers borrowing $250,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
Athena Variable Home  Loan
1.99%
1.99% p.a.
$0
$0 p.a.
60%
$554.81
Owner occupiers with 40% deposits or equity can get this competitive variable rate loan. No upfront or ongoing fees.
HSBC Fixed Rate Home Loan Package
1.88%
2.86% p.a.
$0
$390 p.a.
80%
$546.6
$3,288 refinance cashback offer
Lock in a low fixed rate for 2 years and buy your home with a 20% deposit. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.
Australian Unity Health, Wealth and Happiness Package Fixed Home Loan
1.89%
2.77% p.a.
$0
$399 p.a.
70%
$547.35
Up to $2,000 cashback.
With a 30% deposit or equity, get access to an 0.10% rate cut and big discounts on credit cards and health insurance. You may qualify for up to $2,000 cashback (Terms, conditions and exclusions apply).
loans.com.au Smart Booster Discount Variable Home Loan
1.85%
2.21% p.a.
$0
$0 p.a.
70%
$544.38
Get a low discounted variable rate loan. Requires a 30% deposit. Get your loan processed fast and settle within 30 days.
Suncorp Home Package Plus Fixed
1.89%
2.85% p.a.
$0
$0 p.a.
80%
$547.35
Lock in a low fixed rate for 2 years. Available with a 20% deposit. Eligible new borrowers can get the annual package fee reimbursed for the life of the loan.
Greater Bank Great Rate Fixed Home Loan
1.69%
3.49% p.a.
$0
$0 p.a.
110%
$532.6
Get one of the lowest rates on the market with this fixed rate mortgage. NSW, QLD and ACT residents only.
Mortgage House Lifestyle First Refinancer Special Home Loan
1.94%
1.98% p.a.
$0
$0 p.a.
80%
$551.07
This loan offers owner-occupiers a low interest rate and minimal upfront fees. Requires a 20% deposit.
HSBC Home Value Loan
2.19%
2.20% p.a.
$0
$0 p.a.
70%
$569.91
$3,288 refinance cashback offer
This competitive variable rate loan is available for borrowers with 30% deposits. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.
Homestar Star Gold
1.79%
1.84% p.a.
$395
$0 p.a.
60%
$539.94
Refinancers and buyers with 40% deposits can get this very competitive variable rate. It even comes with a 100% offset account.
Westpac Flexi First Option Home Loan
2.29%
2.72% p.a.
$0
$8 monthly ($96 p.a.)
95%
$577.55
Up to $3,000 refinance cashback.
A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
Australian Unity Health, Wealth and Happiness Package Fixed Home Loan
1.99%
2.91% p.a.
$0
$399 p.a.
80%
$554.81
Up to $2,000 cashback.
Borrowers with min. 20% deposits or equity are eligible for this ultra-low rate loan, packed with features. You may qualify for up to $2,000 cashback (Terms, conditions and exclusions apply).
Well Home Loans Balanced Fixed Home Loan
1.89%
2.18% p.a.
$250
$0 p.a.
90%
$547.35
Owner occupiers can get a sharp fixed rate for the first year, plus an offset account. Available with a 10% deposit.
UBank UHomeLoan Fixed
1.85%
2.24% p.a.
$0
$0 p.a.
80%
$544.38
A competitive fixed rate loan with no ongoing fees. Requires a 20% deposit.
St.George Basic Home Loan
2.49%
2.51% p.a.
$0
$0 p.a.
80%
$593.01
Up to $4,000 refinance cashback
Get this low-rate variable loan with a 20% deposit and pay $0 application fee. Borrow from $150k (or $250k to be eligible for the cashback offer) (terms, conditions & exclusions apply).
Greater Bank Great Rate Fixed Home Loan
1.79%
3.35% p.a.
$0
$0 p.a.
80%
$539.94
A discounted 2 years fixed rate for home buyers. Available with just a 10% deposit. Guarantor option available. NSW, QLD and ACT residents only.
Virgin Money Reward Me Fixed Rate Home Loan
1.98%
2.66% p.a.
$300
$10 monthly ($120 p.a.)
80%
$554.06
$3,000 refinance cashback.
Buy your home and lock in a low rate for the first two years. Get a $3,000 cashback when you switch to Virgin Money with a loan amount of $300,000 or more with an LVR up to 80%. You must apply by 29 August 2021 and settle by 26 November 2021.
Macquarie Bank Basic Home Loan
2.34%
2.34% p.a.
$0
$0 p.a.
60%
$581.39
Apply for the Macquarie Bank Basic Home Loan - LVR ≤ 60% (Owner Occupier, P&I) and get a low variable interest rate, plus no application and ongoing fees. Requires a 40% deposit.
Well Home Loans Balanced Fixed Home Loan
1.95%
2.17% p.a.
$250
$0 p.a.
90%
$551.82
A low fixed mortgage with an optional 100% offset account. Not available for construction purposes.
Mortgage House Advantage Investment
2.44%
3.11% p.a.
$0
$10 monthly ($120 p.a.)
80%
$589.12
This fixed investment loan has a 100% offset account. Principal-and-interest repayments. Requires a 20% deposit.
loans.com.au Smart Booster Discount Variable Home Loan
1.99%
2.47% p.a.
$0
$0 p.a.
80%
$554.81
Home buyers can get a very low discounted variable rate for the first year. This loan has a revert rate of 2.48%. Requires a 20% deposit. Add an offset account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.
Macquarie Bank Basic Fixed Home Loan
2.09%
2.32% p.a.
$0
$0 p.a.
70%
$562.33
Get a low interest rate and a mortgage with flexible, basic features. No application or ongoing fees. Requires a 30% deposit. Refinancers can switch with a convenient digital application.
IMB Fixed Rate Home Loan
1.97%
2.81% p.a.
$449
$6 monthly ($72 p.a.)
95%
$553.31
NSW and ACT customers only. 3 years fixed interest terms and free access to redraw facility online. Available with a 10% deposit.
Mortgage House Fix and Save
1.99%
3.19% p.a.
$600
$395 p.a.
95%
$554.81
Lock in a competitive rate for 3 years. Available with a 5% deposit.
Well Home Loans Balanced Variable
2.17%
2.20% p.a.
$250
$0 p.a.
80%
$568.39
A very low interest rate for home buyers with 20% deposits saved. Add an offset account for a small fee.
Bank of Melbourne Advantage Package Fixed Home Loan
1.94%
3.40% p.a.
$0
$395 p.a.
80%
$551.07
Up to $4,000 refinance cashback
Get a competitive home loan rate for two years. Requires at least a 20% deposit. Refinancers borrowing $250,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
loans.com.au Fixed
1.99%
2.70% p.a.
$0
$0 p.a.
80%
$554.81
Home buyers can lock in this low fixed rate for three years. This loan also allows extra repayments. Requires a 20% deposit.
Athena Variable Home  Loan
2.09%
2.02% p.a.
$0
$0 p.a.
70%
$562.33
A low variable rate for owner occupiers with 30% deposits. No upfront or ongoing fees.
Great Southern Bank Fixed Rate Home Loan
2.09%
4.07% p.a.
$600
$0 p.a.
95%
$562.33
Pay no ongoing fees on a fixed rate home loan with flexible repayment options.
UBank UHomeLoan Variable Rate
2.34%
2.34% p.a.
$0
$0 p.a.
80%
$581.39
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
Newcastle Permanent Building Society  Premium Plus Package Fixed Rate
2.09%
3.58% p.a.
$0
$395 p.a.
80%
$562.33
$2,000 cashback for eligible refinancers borrowing $250,000 or more.
Suncorp Home Package Plus Fixed
2.28%
3.15% p.a.
$0
$0 p.a.
80%
$576.78
Borrowers with 20% deposits can lock in a low fixed rate loan for three years. Eligible new borrowers can get the annual package fee reimbursed for the life of the loan.
homeloans.com.au Low Rate Home Loan with Offset
2.14%
2.16% p.a.
$0
$0 p.a.
60%
$566.11
A competitive rate with no application or ongoing fees. This loan is not available for construction.
IMB Fixed Rate Home Loan
2.19%
2.98% p.a.
$449
$6 monthly ($72 p.a.)
95%
$569.91
Lock in a rate for one year and get the ability to make additional repayments for 12 months without penalty. Face-to-face consultations available for NSW and ACT customers. Available with a 5% deposit.
Great Southern Bank Basic Variable
2.49%
2.54% p.a.
$600
$0 p.a.
80%
$593.01
Suncorp Back to Basics Home Loan
2.44%
2.45% p.a.
$0
$0 p.a.
80%
$589.12
A competitive variable interest rate loan with low fees. The establishment fee is waived if you borrow $150,000 or more.
Bank of Melbourne Basic Home Loan
2.49%
2.51% p.a.
$0
$0 p.a.
80%
$593.01
Up to $4,000 refinance cashback
A competitive variable rate loan. Refinancers borrowing $250,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
ME Flexible Home Loan Fixed with Members Package
1.99%
3.33% p.a.
$0
$395 p.a.
80%
$554.81
Lock in a competitive rate for owner occupiers for two years. Comes with a 100% offset account.
homeloans.com.au Low Rate Home Loan with Offset
2.24%
2.26% p.a.
$0
$0 p.a.
90%
$573.72
This loan offers a competitive variable rate and a 100% offset account to help save you on interest repayments. This loan is not available for construction.
BankSA Basic Home Loan
2.49%
2.51% p.a.
$0
$0 p.a.
80%
$593.01
Up to $4,000 refinance cashback
A competitive variable rate loan from BankSA. Refinancers borrowing $200,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
Heritage Bank Fixed Rate Home Loan
2.19%
4.23% p.a.
$600
$8 monthly ($96 p.a.)
95%
$569.91
Get a fixed rate for two years and borrow up to 95%.
Newcastle Permanent Building Society  Premium Plus Package Fixed Rate
2.19%
3.83% p.a.
$0
$395 p.a.
95%
$569.91
$2,000 refinance cashback
Enjoy a competitive rate with no application fee for this package loan. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
ME Flexible Home Loan Fixed with Members Package
2.09%
3.27% p.a.
$0
$395 p.a.
80%
$562.33
Get a low 3 year fixed rate with a 100% offset account and package discounts.
IMB Budget Home Loan
2.58%
2.64% p.a.
$449
$0 p.a.
80%
$600.05
A competitive variable rate for borrowers with 20% deposits saved. Available for NSW and ACT borrowers only.
BankSA Advantage Package Fixed Home Loan
1.99%
3.44% p.a.
$0
$395 p.a.
80%
$554.81
Up to $4,000 refinance cashback.
Fix to a low rate for two years and forget about rate rises. Refinancers borrowing $200,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
Well Home Loans Balanced Fixed Home Loan
2.29%
2.29% p.a.
$250
$0 p.a.
90%
$577.55
A competitive 3 year investor rate with principal and interest repayments. Optional offset account with a $10 monthly fee. Not available for construction purposes.
homeloans.com.au Low Rate Home Loan with Offset
2.69%
2.52% p.a.
$0
$0 p.a.
80%
$608.71
A competitive rate with no application or ongoing fee. This loan is not available for construction.
ME Basic Home Loan
2.58%
2.60% p.a.
$0
$0 p.a.
80%
$600.05
This variable rate loan keeps the features simple and fees low. This loan is offered by a 100% online lender.
UBank UHomeLoan Fixed
2.14%
2.35% p.a.
$0
$0 p.a.
80%
$566.11
A one year fixed rate offer with no ongoing bank fees.
Heritage Bank Discount Variable Home Loan
2.59%
2.64% p.a.
$600
$0 p.a.
80%
$600.83
Family guarantee option available. Enjoy flexible repayments and a low minimum loan amount.
ME Flexible Home Loan Fixed
2.64%
4.65% p.a.
$0
$0 p.a.
80%
$604.76
Lock in a competitive rate for 2 years, unlock package discounts and use a 100% offset account to minimise interest payments.
Macquarie Bank Offset Home Loan Package
2.34%
2.62% p.a.
$0
$0 p.a.
60%
$581.39
A sharp variable rate with low fees for borrowers with 40% deposits or refinancers with equity in their properties. Refinancers can switch with a convenient digital application.
Heritage Bank Advantage Package Fixed
2.39%
3.15% p.a.
$0
$350 p.a.
95%
$585.25
Get a partial offset account and flexible repayments with this package loan.
loans.com.au Smart Booster Discount Investor Variable Home Loan
1.99%
2.71% p.a.
$0
$0 p.a.
80%
$554.81
If you have an owner occupier loan with loans.com.au you can also get this very low rate variable mortgage for your investment property. Principal and interest repayments. Add an offset account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.
UBank UHomeLoan Fixed
1.99%
2.70% p.a.
$0
$0 p.a.
80%
$554.81
Limited time offer.
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender. Apply by 30 June 2021 and settle within 90 days to get this low rate.
Newcastle Permanent Building Society Real Deal Home Loan
2.59%
2.63% p.a.
$595
$0 p.a.
80%
$600.83
$2,000 refinance cashback
$2,000 cashback for eligible refinancers borrowing $250,000 or more.
St.George Basic Home Loan
2.54%
2.56% p.a.
$0
$0 p.a.
90%
$596.91
$2,000 cashback.
With this competitive variable rate loan from St.George, refinancers borrowing $250,000+ can get a $2,000 cashback (terms, conditions & exclusions apply)
Macquarie Bank Basic Fixed Home Loan
2.19%
2.42% p.a.
$0
$0 p.a.
80%
$569.91
Borrow up to $750,000 with this basic 3 years fixed rate home loan. Refinancers can switch with a convenient digital application.
Well Home Loans Balanced Fixed Home Loan
2.04%
2.17% p.a.
$250
$0 p.a.
90%
$558.56
A low 3 year fixed rate for home buyers. Add a 100% offset account with a $10 monthly fee. Not available for construction purposes.
IMB Budget Home Loan
2.68%
2.74% p.a.
$449
$0 p.a.
95%
$607.92
NSW and ACT customers only. You can get an interest rate discount for a limited time with this competitive variable mortgage.
homeloans.com.au Low Rate Home Loan with Offset
2.59%
2.61% p.a.
$0
$0 p.a.
90%
$600.83
Save on interest with a free 100% offset account and buy your property with just a 10% deposit. This loan is not available for construction.
Bank of Melbourne Basic Home Loan
2.54%
2.56% p.a.
$0
$0 p.a.
90%
$596.91
$2,000 cashback
A competitive variable rate loan. Refinancers borrowing $250,000 or more can get a $2,000 cashback (Other terms, conditions and exclusions apply).
Well Home Loans Balanced Variable
2.52%
2.55% p.a.
$250
$0 p.a.
90%
$595.35
A very low variable interest rate for borrowers with a 10% deposit. Add a 100% offset account for $10 a month. Not available for construction purposes.
Virgin Money Reward Me Variable Home Loan
2.59%
2.76% p.a.
$300
$10 monthly ($120 p.a.)
60%
$600.83
$3,000 refinance cashback.
A variable rate loan for owner occupiers with a 40% deposit (or equity) borrowing under $500,000. Get a $3,000 cashback when you switch to Virgin Money with a loan amount of $300,000 or more with an LVR up to 80%. You must apply by 29 August 2021 and settle by 26 November 2021.
Athena Variable Home  Loan
2.39%
2.39% p.a.
$0
$0 p.a.
60%
$585.25
Investors with large 40% deposits or equity can get this low variable rate. A competitive option for investors looking to refinance.