Shoestring savings to home ownership - First Home Buyers!

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If you go to a lender informed, with a purposeful deposit technique in mind, and an understanding of how much you can borrow — home ownership can transform from dream to reality.

Rule of thumb : you’ll need at least a 10% of the purchase price of your future home as a deposit to qualify for a 95% Loan to Value Ratio loan.

This allows for the often overlooked upfront costs of Lenders Mortgage Insurance (a once-off payment which allows you to borrow more than 80%, and stamp duty, a state government tax on property purchases, to be capitalised on to the principal of your loan) 


NOTE: QLD, NT and WA don’t have stamp duty (reduces upfront costs). Everywhere but QLD and NSW have first home buyer grants for established properties.

• Get over the 10% deposit threshold by adding your local first home buyer grant to your savings then you should have enough deposit to get into home ownership

• Rural home lenders are often unwilling to lend anywhere close to 95% of the purchase price. Lenders seem to be more comfortable with a loan amount somewhere in the 60-80% region.

How can I get a home loan without the minimum deposit?

1. There are a small selection of guarantor loans on the market that enable first home buyers to borrow from 97 to 120% of the purchase price.
2. Some loans also allow upfront costs to be tacked on as well - relying on a family member financially guaranteeing the loan.

Can I just get my parents to stump up the entire deposit?

1. "From a lenders perspective, we want to see that you really understand what's involved in getting a loan. You're going to have to pay off this loan for a long time. So what we want to see is that you've made a commitment to the process yourself, and that commitment's come from you creating your own pot of genuine savings."

How much do I need to prove 'genuine savings'?

1. Genuine savings means that you've put away a minimum of 5% of the deposit amount over no less than three months. That money should come from regular deposits like salary. So we don't want to see that your 5% savings are from lump sums like tax refunds or gifts. Or face higher interest rates!!
2. As a first home buyer, you need to show a lender you're diligent in terms of putting away the pennies yourself for a period of time."