Buyers often calculate “20% deposit” and assume that is the amount needed to complete the purchase. In reality, the cash requirement is the deposit plus purchase costs, less any eligible concessions or approved funding sources. At higher LVRs, lenders mortgage insurance or other risk fees can also affect the numbers.
- Deposit and purchase costs are separate
- 20% is not always required
- LMI can apply at higher LVRs
- State concessions change over time
- Keep an emergency buffer where possible
Separate deposit from costs
A 20% deposit on an $800,000 purchase is $160,000, but that does not include transfer duty, conveyancing, searches, inspections, lender fees or moving costs. The exact costs vary by state, buyer type and transaction.
First-home buyer concessions can change the result materially, so use the current official state calculator rather than an old rule-of-thumb.
Buying above 80% LVR
Many borrowers can buy with less than 20% deposit, subject to lender policy and mortgage-insurance requirements. The rate, LMI premium and maximum loan size can vary.
A smaller deposit can get you into the market sooner, but it also means less equity at settlement and a larger loan repayment.
Keep a buffer after settlement
Using every available dollar for settlement can leave the household exposed to immediate repairs, strata adjustments, moving costs or a delayed first rental payment.
Where possible, include a post-settlement cash reserve in the plan rather than treating the bank balance as something that must reach zero on settlement day.
Frequently asked questions
Can I buy with a 10% deposit?
Potentially, subject to servicing, lender policy and LMI or guarantee-scheme eligibility where applicable.
Can stamp duty be added to the loan?
Usually the loan is limited by the property value and LVR, so purchase costs generally need to be covered from your available funds or equity.
Should I use all my savings as the deposit?
Not necessarily. Keeping a reasonable emergency buffer can be more prudent.