First home buyer guide: deposit to settlement

A deposit of 20% is ideal but is not mandatory. With Lenders Mortgage Insurance it is possible to buy with 10% or less, and eligible buyers under the federal Home Guarantee Scheme can purchase with 5% and pay no LMI. On a $600,000 home, that is the difference between saving $120,000 and saving $30,000.

LMI is a one-off premium that protects the lender, not the borrower, when the deposit is under 20%. It typically ranges from a few thousand dollars to tens of thousands of dollars, depending on the loan size and deposit. For that reason, the guarantee schemes that waive it are of considerable value.

Buyers are generally eligible if they are buying or building a new home under their state's price cap, are over 18, are Australian citizens or permanent residents, and will live in the property. Amounts and caps differ by state, as set out in the state-by-state government grants guide.

Under the First Home Super Saver Scheme, voluntary contributions (up to $15,000 per year, $50,000 in total) and associated earnings can be withdrawn and put toward a first home. The scheme covers voluntary contributions only, not compulsory employer contributions.

There is no universal answer. The outcome depends on how quickly a buyer can save relative to movements in prices and rents. A smaller deposit means a larger loan and higher repayments, but waiting also carries costs. Consider modelling both options with the BorrowWise calculators, or ask a broker to do so at no cost.

There is no cost to the buyer. Brokers are paid a commission by the chosen lender and are legally required to act in the best interests of the borrower. A bank, by contrast, offers only its own products.