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First home buyers · 4 min read

How much deposit do you really need?

The twenty percent rule is the one number everyone has heard, and the one that stops a lot of people before they start. The truth is more flexible, and often more hopeful.

Where twenty percent comes from

At twenty percent, you usually avoid Lenders Mortgage Insurance (LMI), a one off cost that protects the lender when your deposit is smaller. So twenty percent is a useful target, not a hard rule. Plenty of people buy with less.

Buying with a smaller deposit

With under twenty percent you can often still buy, you just factor in Lenders Mortgage Insurance. Sometimes that cost is worth paying to stop renting sooner. Sometimes a government scheme removes it entirely. The right answer depends on your situation, not a rule of thumb.

Schemes can change the maths

Some eligible first home buyers get in with a five percent deposit and no Lenders Mortgage Insurance. Eligible single parents may do it with as little as two percent. These schemes and their limits change, so I check what currently applies to you rather than quoting an old figure.

With under twenty percent you can often still buy, you just factor in Lenders Mortgage Insurance.

If any of this is sitting on your mind, the fastest way through is a short chat. No cost, no pressure.