save for a deposit

Purchasing a new home is exciting. At the same time, it can also be overwhelming, especially with all the numbers involved. Most prospective homeowners take advantage of available loan options to make this major purchase, while others save for a deposit first before they make their purchase. In this situation, making a deposit on a home loan is a must-do step.

With this being a requirement, how much do you really need to save for a deposit?

General Rule of Thumb to Save for a Deposit

As a general rule of thumb, you should be saving about 10% of the total purchase price as a deposit. This will generally cover all your costs.  Things like lenders mortgage insurance, land transfer registration and any other settlement costs.

rule of thumb to save for a deposit

First Home Loan Deposit Scheme (FHLDS)

Scratching a deposit together can feel impossible, especially if you’re already paying rent. Commencing in 2020 is the new First Home Loan Deposit Scheme (FHLDS).  This is limited in time and spots so you need to talk this over with your Mortgage Broker so you can plan ahead and give yourself the best chance to talk with someone.

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If you don’t qualify you still maybe able to get into your first home with a low deposit.  There are caveats to these types of loans, though. Remember that banks and financial institutions are also business entities. They need profit. So, financial institutions allowing less than 20% deposit may set guidelines such as:

1. Higher interest rates
2. Paying for lenders mortgage insurance (LMI)
3. Having a guarantor

Various factors can affect your ability to access such loans. Due to the guidelines, the lenders will need a definite proof of consistent savings. Your credit history and employment history must be exceptional, too. Lenders may also need to look at other factors.

Using a Guarantor for Your Purchase

A guarantor is one that can put their title or property, acting as a co-security against your home loan. The guarantor is generally a closer relative.  It is exceptionally handy because you will most likely pay a lower rate and it will waive any mortgage insurance costs you would have paid too.

how to save for a deposit and get a home loan

The Answer Lies in Your Situation

How much to save for a deposit is more of what your situation is like. Keep in mind that getting a home loan is a life-long financial commitment. Even if you can pay for a full 20% deposit, are you sure you can tackle future repayments with ease? Can you afford to pay more monthly just so you can put up a deposit of less than 20%? Ultimately, your choice depends on what works best considering your financial situation.

how much to save for a deposit

Check out my podcast to know more about how much deposit is really enough for your home purchase.

Expert advice on deposits and home loans is always available. In my 13 years of assisting prospective buyers, I have the experience to help you get through the home-buying process. It starts with helping you reach an informed decision when making a deposit.

Don’t hesitate to contact me for your queries and concerns!


Will Bell Mortgage Broker is a mortgage and finance broker based in Melbourne specializing in residential home loans.  Will is all about the average Australian understanding just enough of the broader economy to take action on your own personal economy.  He is the host of the My Personal Economy Podcast which you can check out here.

Additionally, you can follow him on Facebook


Services we offer:

  • First Home Buyer Loans
  • Property Investment Loans
  • Mortgage Consultation
  • Loan Prequalification
  • Debt Consolidation
  • Refinancing
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