One of the most common questions people ask when considering a home loan is whether a 20% deposit is required.
While a 20% deposit has traditionally been considered the benchmark, many Australian borrowers — including first home buyers, next home buyers, and refinancers — are surprised to learn that other options may be available depending on their circumstances.
Understanding how deposits work is an important step when preparing for a home loan.
Why 20% Is Often Mentioned
A 20% deposit reduces the lender’s risk and may allow you to avoid Lenders Mortgage Insurance (LMI). It also reduces the total loan amount, which can lower your repayments over time.
However, saving 20% can take time, particularly while managing rent, existing mortgage repayments, or everyday living expenses.
Can You Get a Home Loan With Less Than 20%?
Depending on your financial situation and the lender’s criteria, some home loans are available with lower deposits.
Your deposit requirement may depend on factors such as:
- Your income and employment type
- Your credit history
- The property type
- The lender’s policies
Different lenders assess applications differently, which is why understanding your options early can be helpful.
How Your Deposit Affects Your Home Loan
Your deposit plays an important role in:
- Your loan structure
- Your borrowing capacity
- Your monthly repayments
- Whether additional costs such as LMI apply
Knowing how your deposit affects your loan can help you plan more confidently.
Why Speaking With a Mortgage Broker Can Help
A mortgage broker can help you understand how much deposit may be required based on your individual circumstances and explain the options available to you.
This can help you prepare for your application and understand what may be possible before applying.
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