What is the Minimum Deposit Required for a First Home Buyer?

By Matthew Kenworthy | First Home Buyers

One of the most common questions we get asked is ‘What is the minimum deposit required for a first home buyer?’. For most first home buyers it is the first step towards getting a clear plan in place towards home ownership.

Unfortunately there’s no easy one size fits all answer to this question.

Bank & Government Fees

There are a number of costs that need to be factored in when calculating minimum deposit requirements. These potentially include bank fees, mortgage insurance, settlement charges and government fees.

Consider Stamp Duty Costs

When purchasing above $430,000 stamp duty costs need to be considered requiring more precise calculations. However if you’re purchasing an established property for under $430,000 as a rule of thumb you can use 5% of the purchase price as a savings target.

Please keep in mind this is specific to West Australian properties as stamp duty and first home buyer concessions vary from state to state.

##Factors affecting Deposit Requirements

Some factors that may involve you requiring less of a deposit include:

  • If you qualify for government schemes available to specific applicants.
  • Your parents are willing and in a position to go guarantor for you.
  • If you’re planning to buy established, or build a new home where you may be eligible for the currently boosted $15k First Home Owners Grant.
  • If you have a very high level of income and are able to borrow some of the deposit as a personal loan. I strongly recommend speaking to experienced broker before you do this as the circumstances when this is acceptable to the bank are very rare and can hurt your credit score if it is not done correctly.

Some factors that may involve you requiring a larger deposit include:

  • If you’ve only been in your job for a short amount of time.
  • If you are self-employed and your business has been running for less than two years.
  • If you deposit has not actually been saved by you but gifted to you by your parents or is deposited in a lump sum (including tax refunds).
  • If you’ve had credit file issues in the past.
  • If the property you’re purchasing is considered less desirable by the bank such as if it is a small inner-city apartment or a large rural or country property.
  • If you’re buying vacant land without a building contract.

If you have an upper price range in mind as far as property price goes you can set yourself a clear savings target which gives you a long-term goal to focus on.

If you’re interested in finding out the minimum deposit required for a home loan in your situation please get in contact with us about our obligation free mortgage broker service.

About the Author

Matthew Kenworthy is a specialist in all aspects of Residential & Commercial Finance. He can assist all borrowers from First Home Buyers to Property Investors with Large Portfolios.