Example 1: 20% deposit
- $500,000 ÷ 0.80 = $625,000
- $625,000 - $500,000 = $125,000
The average Aussie home buyer saves a 20% deposit. But that's a lot of money. If you're able to pay the extra cost of lenders mortgage insurance (LMI) then you could buy a property with just a 5% deposit.
For a $300,000 home, a hypothetical deposit might need to be between $15,000 (5% deposit) and $60,000 (20% deposit), depending on the loan.
A low deposit home loan can help you get your dream home faster. But the catch is the extra cost of lenders mortgage insurance.
If your deposit size is anything under 20% you may have to pay LMI. This can add thousands to the cost of a home loan.
|House price||5% deposit (95% loan)||20% deposit (80% loan)|
The first step is to figure out how big a home loan you can comfortably afford. To do that, you can put your income and expenses into the borrowing calculator below. That will give you a rough guide to how much you might be eligible to borrow.
Now let’s work backwards to figure out the price range. Let's imagine your borrowing power suggests you can afford a loan of $500,000. What would a deposit look like? It's fairly simple maths:
So a 20% deposit would be $125,000 but a 5% deposit would be $26,316.
Stamp duty can add tens of thousands of dollars in costs along with your deposit. Luckily, there are stamp duty concessions and discounts for buyers in most states if you are buying your first property and it's a house to live in.
Different states and territories have different rules around stamp duty and many offer concessions to first home buyers.
You can also use the stamp duty calculator below to figure out how much you’ll have to pay.
Let’s assume you live in New South Wales. Inputting the $625,000 purchase price into the calculator, it shows you’d be liable for $23,615.00 in stamp duty if you're not a first home buyer. If you are, you pay nothing.
Now, there are a few other things you might want to budget for. Buying a house isn't as simple as writing a cheque for your deposit and stamp duty. You'll also have to pay for building and pest inspections, solicitor's fees and removalists. This can easily run you an extra $3,000 or $4,000 (or more, depending on how far you're moving).
The extra cost of lenders mortgage insurance varies depending on your property's value and the amount you've saved. Genworth, one of the LMI providers in Australia, has a handy calculator you can check out which will provide you with an estimate of the LMI payable on different size home loans.
Here are a few example calculations (keep in mind these are only estimates and not final figures):
|House price||5% deposit||LMI estimate|
You don’t have to pay LMI in one go. It can be capitalised on your loan and you’ll pay for it with your regular home loan repayments. However, this will add a bit to your repayments. In the example we used above, you’d be looking at an additional $84 per month on top of your regular home loan repayment.
Online only cashback offer: Refinancers borrowing $250,000 or more can get a $4,000 cashback for their first application (Other terms, conditions and exclusions apply). Buyers and refinancers can get this competitive variable interest rate. Application fee waived for loans above $150,000.
Take advantage of a low-fee mortgage with a special interest rate of just 2.84% p.a. and a 2.84% p.a. comparison rate.
Get one free online redraw per month and pay no ongoing fees. Application fees are waived for loans above $150,000.
finder.com.au is one of Australia's leading comparison websites. We compare from a wide set of major banks, insurers and product issuers.
finder.com.au has access to track details from the product issuers listed on our sites. Although we provide information on the products offered by a wide range of issuers, we don't cover every available product. You should consider whether the products featured on our site are appropriate for your needs and seek independent advice if you have any questions.
Products marked as 'Promoted' or "Advertisement" are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options and find the best option for you.
The identification of a group of products, as 'Top' or 'Best' is a reflection of user preferences based on current website data. On a regular basis, analytics drive the creation of a list of popular products. Where these products are grouped, they appear in no particular order.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment.
We try to take an open and transparent approach and provide a broad based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labelling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
Providing or obtaining an estimated insurance quote through us does not guarantee you can get the insurance. Acceptance by insurance companies is based on things like occupation, health and lifestyle. By providing you with the ability to apply for a credit card or loan we are not guaranteeing that your application will be approved. Your application for credit products is subject to the Provider's terms and conditions as well as their application and lending criteria.