Quite often, the biggest hurdle for first home buyers is coming up with a deposit. So how much deposit is required, and what support is available? Here we will consider some options that may be worth taking advantage of.
What deposit do I need?
Generally, lenders will require a deposit of at least 5-10% of the property's purchase price - provided you pay lenders mortgage insurance. If you want to avoid lenders mortgage insurance, you will need at least 20% deposit.
However, there is additional support that can significantly reduce the savings you need, and even allow you to avoid lenders mortgage insurance. Consider below.
Family Guarantor
If you have a family member who owns a home (such as a parent or sibling) they may be able to guarantee your home loan. This is when they provide their home as additional security, towards a small portion (generally 25%) towards your home loan.
With the additional security, many banks may allow you to borrow 100% (plus purchasing costs) towards your new home. This means you will require little to no deposit and you can also avoid having to pay lenders mortgage insurance.Family guarantor loans are a great way for parents to help their children to get onto the property ladder, without providing any funds.
Learn about family guarantee loans
Home Guarantee Scheme
The Home Guarantee Scheme is an Australian Government initiative to help eligible home buyers to purchase a home.
Under the Home Guarantee Scheme, the federal government acts as guarantor on 15-18% your home loan. The scheme allows you to avoid lenders mortgage insurance and significantly reduces the savings you require to buy a home.
From July 1st, 2023 the Government is expanding the criteria for the scheme so you may be eligible if you meet the following:
- Australian Citizen or Permanent Resident
- First Home Buyer, or haven't owned property in past 10 years
- Buying as an individual, or any other person who is eligible
First Home Owners Grant
The First Home Owners Grant is a national scheme funded by individual states and territories. This grant generally ranges between $10,000-$20,000 (depending on your state), and is available when buying or building a new home.Many banks and lenders will consider the First Home Owners Grant towards your home deposit, so it's worth taking advantage of if you're eligible.
With Build Assist, we're providing additional support to Aussies seeking home ownership. You can now access our $10,000 deposit boost plus+ $5,000 in rental assistance when you build a new home with us.
When combining our Deposit Boost with the First Home Owners Grant and Home Guarantee Scheme, you may only need $10,000 savings to get into your own home!
Super Saver Scheme
With the First Home Super Saver Scheme, you can make voluntary concessional (before-tax) and voluntary non-concessional (after-tax) contributions into your super fund to save for your first home.You can apply to have a maximum of $15,000 of your voluntary contributions from any one financial year included in your eligible contributions to be released under the scheme, up to a total of $50,000 contributions across all years.