How Much Deposit Do You Really Need? A First Home Buyer’s Guide

Buying your first home is an exciting milestone, but one of the biggest hurdles for many first-time buyers is saving for a deposit. With all the different advice out there, it’s easy to feel overwhelmed. Do you need 20%? Can you buy a home with 5%? What about government assistance?

If you're looking to buy in Mackay, understanding your deposit options can help you get into the market sooner rather than later. In this guide, we’ll break down exactly how much deposit you need, the government grants available, and ways to fast-track your savings.

How Much Deposit Do You Need to Buy a Home?

The deposit required depends on the lender and the type of loan you choose. Here’s a general guide:

1. The Traditional 20% Deposit

The gold standard for home deposits is 20% of the property price. This means:

• If you’re buying a $500,000 home, a 20% deposit would be $100,000.
• A $400,000 home would require an $80,000 deposit.

✅ Pros of a 20% Deposit:
✔ Avoid Lenders Mortgage Insurance (LMI) – If you borrow more than 80% of the property value, you’ll likely have to pay LMI, which can cost thousands.
✔ Lower Loan Amount – A higher deposit means a smaller loan, reducing monthly repayments and interest over time.
✔ Better Interest Rates – Banks often reward borrowers with larger deposits by offering better loan terms.

❌ Cons of a 20% Deposit:

• Saving a large deposit can take years, especially if property prices are rising faster than your savings.
• It may delay homeownership, meaning you continue paying rent instead of building equity in your own home.

2. The 5-10% Deposit – Getting Into the Market Sooner

Many first home buyers enter the market with just 5%–10% of the property price.

• A 5% deposit on a $400,000 home = $20,000
• A 10% deposit on a $500,000 home = $50,000

✅ Pros of a Lower Deposit:
✔ Buy a Home Sooner – Getting into the market early means you benefit from price growth while still paying off your home.
✔ Government Assistance – With the right grants, you might not need a full 20% deposit to avoid LMI.
✔ Flexible Loan Options – Some lenders offer low-deposit home loans tailored for first home buyers.

❌ Cons of a Lower Deposit:

• Lenders Mortgage Insurance (LMI) applies if you borrow more than 80% of the property value.
• Higher Monthly Repayments due to a larger loan amount.
• Some banks might have stricter lending criteria, meaning you’ll need to prove financial stability.

Government Assistance for First Home Buyers in Mackay

If saving for a deposit feels like a daunting task, the good news is that government grants and schemes can help you buy your first home faster.

1. First Home Owner Grant (FHOG) – $30,000 Boost

In Queensland, eligible first home buyers can access a $30,000 First Home Owner Grant when purchasing or building a new home (valued under $750,000).

✅ Who Can Apply?
✔ You must be buying a brand-new home (including house & land packages).
✔ You must live in the home as your principal place of residence.
✔ You must be a permanent resident or Australian citizen.

📌 Tip: If you're considering a house and land package in Mackay, this grant can significantly reduce the deposit you need.

2. First Home Loan Deposit Scheme (FHLDS)

The First Home Loan Deposit Scheme (now part of the Home Guarantee Scheme) allows eligible buyers to purchase a home with just a 5% deposit while avoiding Lenders Mortgage Insurance (LMI).

✅ Key Benefits:
✔ The government guarantees up to 15% of your loan, reducing LMI costs.
✔ Available for new and existing homes in Mackay.
✔ Income thresholds apply ($125,000 for singles, $200,000 for couples).

3. Stamp Duty Concessions

First home buyers in Queensland may not have to pay stamp duty on homes under $500,000, saving thousands in upfront costs.

📌 Example Savings:

• Buying a $400,000 home? Stamp duty = $0 (a saving of approx. $10,000).
• Buying a home over $500,000? You may still get reduced stamp duty rates.

How to Fast-Track Your Home Deposit Savings

If you’re working towards a deposit, here are some smart strategies to save faster:

🏦 1. Open a High-Interest Savings Account – Separate your home deposit savings from everyday spending.
📉 2. Reduce Unnecessary Expenses – Cut down on subscriptions, dining out, and impulse purchases.
💰 3. Use a Budgeting Tool – Track income and expenses to set realistic saving goals.
📈 4. Invest in a First Home Super Saver Scheme (FHSSS) – This allows you to use your superannuation to save for a home deposit, with potential tax benefits.
🏡 5. Consider Rentvesting – If saving in Mackay is tough, consider buying an investment property in a more affordable area while renting where you want to live.

Final Thoughts – What’s the Right Deposit for You?

There’s no one-size-fits-all answer to how much deposit you need—it depends on your financial situation, goals, and eligibility for government support.

✅ If you can save 20% – You’ll avoid LMI, have lower repayments, and more negotiating power.
✅ If you can only save 5-10% – With government assistance, you can still buy a home without waiting years.

At Mackay First Home Buyer, we specialise in helping first-time buyers navigate the home-buying process, from understanding deposits to finding the best house & land packages.

📞 Want expert advice? Contact us today!

Ready to start your journey? Let’s get you into your first home sooner rather than later! 🚀