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Deposit, grants, guarantees and LMI. There is more help available than most first home buyers realise, and the rules differ depending on where you buy.
The hardest part of a first purchase is rarely the loan itself. It's working out what you can actually access – which schemes apply, what a guarantee does, whether LMI is worth paying, and how much deposit you genuinely need.
Most people are told a version of this by a friend or a relative that was true three years ago in a different state. Let's start from what applies to you now.
The standard answer is 20% of the purchase price. The real answer is that plenty of first home buyers purchase with far less, using a combination of government schemes, family security, or by paying Lenders Mortgage Insurance.
Which of those makes sense depends on how long saving a larger deposit would take, what the market is doing in the meantime, and your appetite for the trade-offs involved.
LMI is commonly misunderstood as a penalty. It isn't – it's an insurance premium that protects the lender, not you, and it's what allows lenders to say yes at a higher loan-to-value ratio.
The useful question is not "how do I avoid LMI" but "what does LMI cost me, and is that less than the cost of waiting?" Sometimes paying it is clearly right. Sometimes it clearly isn't. It depends on the numbers, and we can run them.
There are also ways to avoid it entirely – government guarantee schemes, a family guarantor, or certain professional exemptions. See government schemes and low deposit and guarantor loans.
Depending on your circumstances and your state, you may be eligible for a low-deposit guarantee scheme, a shared-equity arrangement, a first home owner grant, a stamp duty exemption or concession, or some combination.
These have different eligibility rules, different price caps, and they change regularly. I keep across them so you don't have to. See the current schemes.
Pre-approval tells you your number and tells an agent you're a real buyer rather than a hopeful one. It's worth having before you start seriously looking.
It also has limits that plenty of buyers misunderstand – it isn't unconditional, it's usually subject to valuation and to your circumstances not changing, and it expires. Worth understanding exactly what yours covers before you bid.
It depends on the lender, your income, and whether a government scheme or family guarantee is available to you. Some eligible first home buyers purchase with as little as 5%, or 2% under certain schemes. Others are better served saving longer. It's worth a conversation rather than a rule of thumb.
Usually not. The grant is generally aimed at new homes, house-and-land packages or owner-builder situations, and it's administered by each state and territory separately, so the rules depend on where you buy.
Often yes, through a guarantor arrangement where they offer equity in their own property as additional security. It can let you buy sooner and avoid LMI, but it carries real risk for them. See our page on guarantor loans.
Yes. Just mention it when you book and we'll run the conversation in whichever language is easiest for you and your family.
