Do you know what deposit you need for a home loan?

How much deposit do you actually need?

Most lenders will require a minimum of 5% of the purchase price as a genuine deposit, though the amount you put down affects both your borrowing costs and loan features. A 20% deposit means you avoid Lenders Mortgage Insurance and typically access lower interest rates and more flexible loan products.

Consider a buyer looking at a unit in Southport who has saved $40,000. With the current median for units in that area, a 10% deposit is achievable but triggers LMI. That insurance premium might add $8,000 to $12,000 to the loan amount, depending on the lender and specific property value. The buyer needs to decide whether paying LMI now makes sense, or whether waiting another year to reach 20% is worth delaying the purchase while rent continues and property values potentially shift.

Your loan to value ratio determines which lenders will consider your application and what rate discount you can negotiate. At 95% LVR, you are limited to certain products and pay a higher variable interest rate than someone borrowing at 80% LVR for the same property.

What counts as genuine savings?

Lenders want to see that your deposit came from your own income or assets, not from a loan or recent cash gift. Typically, this means funds held in your account for at least three months, shown through bank statements that track regular contributions from your salary.

Savings in an offset account linked to a parent's loan, term deposits, shares sold and transferred to your account, or proceeds from selling another asset all count. A tax refund counts. Inheritance counts, though you may need to provide documentation. What does not count in most cases is money borrowed on a credit card, a personal loan used to boost your balance just before applying, or funds that appeared suddenly without a clear explanation.

Some lenders allow up to 5% of your deposit to come from a genuine gift from an immediate family member, provided you still demonstrate at least 5% in your own genuine savings. The lender will ask the person providing the gift to sign a statutory declaration confirming the money does not need to be repaid.

Can you borrow with less than 5%?

A small number of lenders will consider applications with a deposit as low as 2% to 3%, but these loans come with strict conditions. You will pay a higher rate, a larger LMI premium, and the lender will often require proof of strong income stability, low existing debts, and a guarantor or additional security.

A family guarantee is one way to reduce the deposit required. A parent or close family member uses equity in their own property as additional security, which can reduce or eliminate your LMI and allow you to borrow with a smaller cash deposit. This does not mean the guarantor hands over cash. It means their property is used to support your home loan until you build enough equity to release them from the guarantee, usually within a few years.

This option works well for buyers with solid income but limited savings, though it does place the guarantor's property at risk if repayments are not maintained. Both parties should understand the arrangement fully before proceeding.

How deposit size affects your loan features

A larger deposit unlocks access to better loan products. At 90% LVR or higher, many lenders will not offer you an offset account, and your ability to split between variable and fixed rates may be restricted. At 80% LVR, you can typically choose from the full range of features, including a linked offset, the option to fix part of your loan, and portability if you move property.

The interest rate discount you receive is also tied to your LVR. A buyer borrowing $500,000 at 90% LVR might be offered a variable rate 0.30% to 0.50% higher than someone borrowing the same amount at 70% LVR. Over the life of a loan, that difference compounds significantly, even if you refinance later.

If you are close to the 80% threshold, it is worth asking whether a smaller loan amount, a lower purchase price, or a slightly larger deposit gets you over the line. The upfront effort to reach that threshold can mean lower repayments and more control over your loan structure from day one.

Deposit requirements for first home buyers on the Gold Coast

The First Home Guarantee allows eligible buyers to purchase with a 5% deposit without paying LMI, provided the property price falls within the regional cap and you meet income and residency conditions. On the Gold Coast, this has opened up suburbs like Coomera, Ormeau, and parts of the northern corridor to buyers who otherwise would have needed another 12 to 18 months of saving.

You still need to demonstrate genuine savings for that 5%, and you will still need to cover stamp duty and settlement costs separately unless you are eligible for a Queensland first home concession. That concession can reduce or eliminate stamp duty on properties under a certain threshold, which changes how much cash you need at settlement.

If you are considering this pathway, it is worth comparing the long-term cost of entering the market sooner at 95% LVR against waiting to save 10% or 15% and avoiding the scheme altogether. For some buyers, especially those currently paying high rent in areas like Surfers Paradise or Broadbeach, entering sooner makes financial sense. For others with stable low-cost housing, waiting might be the better option. There is no universal answer, and your circumstances will determine which approach suits you.

How settlement costs affect your total deposit requirement

Your deposit is not the only upfront cost. Settlement costs including conveyancing, building and pest inspections, loan application fees, and government charges typically add another $5,000 to $10,000 depending on the property price and location. These costs must be paid from your own funds and cannot be added to the loan in most cases.

If you are using all your savings for the deposit, you will need to factor in these additional costs or risk delaying settlement. Some buyers allocate their savings into two buckets from the start: deposit funds and settlement funds. This avoids the situation where you have just enough for a 10% deposit but cannot cover the conveyancer or pest inspector when the time comes.

Another consideration is whether you want to keep a buffer after settlement. Moving costs, immediate repairs, council rates, and strata fees all arrive quickly. Having $3,000 to $5,000 available after settlement can make the first few months far less stressful, especially if you are transitioning from renting and managing bond refunds and overlapping payments.

Should you use all your savings as a deposit?

Putting down a larger deposit reduces your loan amount and your ongoing repayments, but it also reduces your liquidity. If you have $100,000 saved and put it all toward a deposit, you are left with no emergency buffer, no funds for repairs, and no capacity to manage an unexpected expense without relying on credit.

For most buyers, keeping at least three to six months of living expenses in an accessible account after settlement is a sensible approach. This might mean choosing a 15% deposit instead of 20%, accepting a small LMI premium, but maintaining financial flexibility. You can always make extra repayments once you are settled and your income is stable.

If your loan includes an offset account, any spare cash you hold can sit in that account and reduce the interest you pay without locking the funds away. This gives you the benefit of a lower effective loan balance while keeping the money available if you need it. Not all loans at higher LVRs include offset accounts, so this is another reason to weigh up deposit size carefully when comparing home loan options.

Call one of our team or book an appointment at a time that works for you. We will review your savings, your goals, and the property you are considering, then show you what deposit size makes sense for your situation and what loan structure fits your plans beyond settlement.

Frequently Asked Questions