Saving a deposit is often one of the biggest challenges for first home buyers. In fact, many people delay their home ownership goals because they believe they need a 20% deposit before they can even start looking.
The good news is that this isn’t always the case.
Depending on your financial situation, the type of property you’re purchasing and the loan products available to you, it may be possible to buy your first home with a much smaller deposit than you think.
So, how much deposit do you actually need to buy your first home in Perth?
Do you need a 20% first home deposit?
A 20% deposit has traditionally been considered the ideal target for home buyers.
For example:
- A $500,000 home would require a $100,000 deposit
- A $600,000 home would require a $120,000 deposit
- A $700,000 home would require a $140,000 deposit
One of the biggest benefits of a 20% deposit is that it can help you avoid lenders mortgage insurance (LMI), which is an additional cost charged by lenders when borrowing more than 80% of a property’s value.
A larger deposit may also reduce your loan repayments and increase your borrowing flexibility.
However, many first home buyers don’t wait until they have saved 20%.
Can you buy your first home with a 5% deposit?
In many cases, yes.
Some lenders offer home loans that allow eligible buyers to purchase with a deposit as low as 5%.
Using the same examples:
- A $500,000 home may require a $25,000 deposit
- A $600,000 home may require a $30,000 deposit
- A $700,000 home may require a $35,000 deposit
This can make home ownership much more achievable, particularly for buyers who are ready paying rent while trying to save.
Every lender has different requirements, so it’s important to understand what options may be available based on your individual circumstances.
What does a deposit look like for Perth first home buyers?
The amount you’ll need to save will often depend on where and what you’re buying.
For example, a buyer considering a house and land package in suburbs such as Byford, Alkimos, Eglinton or Ellenbrook may require a different deposit amount to someone purchasing an established home closer to the Perth CBD.
Because property prices vary across Perth, there is no one-size-fits-all answer. Understanding your borrowing power is often the best place to start.
Don’t forget the additional costs
While the deposit is often the largest upfront expense, it isn’t the only cost you’ll need to budget for.
Other costs may include:
- Settlement fees
- Loan establishment fees
- Building inspections
- Moving expenses
- Utility connections
- Home and contents insurance
The good news is that eligible first home buyers in Western Australia may be able to access grants and stamp duty concessions that can help reduce some of these costs.
What grants and incentives are available for first home owners?
There are a range of government incentives designed to help first home buyers enter the property market sooner.
Depending on your circumstances, you may be eligible for:
- The First Home Owner Grant
- Stamp duty concessions
- Low deposit lending options
- Government-backed home ownership schemes
These initiatives can make a significant difference to the amount of savings required before purchasing your first home.
What if you’re building your first home?
Many first home buyers choose to build because it can provide access to modern designs, energy-efficient homes and potential government incentives.
If you’re purchasing a house and land package, the finance process may be slightly different to buying an established home. Construction loans are typically used to fund the build, with payments made in stages as construction progresses.
For many buyers, building can be an affordable pathway into home ownership while allowing them to create a home that suits their lifestyle and budget.
So how much deposit do you really need for a first home?
While a 20% deposit is often considered the ideal goal, it’s not always necessary to wait until you’ve saved that amount before exploring your options.
Many Perth first home buyers are entering the market with smaller deposits, particularly when grants, incentives and suitable loan products are considered.
The best way to find out how much you’ll need is to speak with a finance specialist who can assess your individual circumstances and explain the options available to you.
You may be closer to owning your first home than you think.