Building a realistic deposit and finance plan

Your deposit is one part of the plan

The amount you need to save depends on the property, lender and any assistance you qualify for. Alongside the deposit, allow for purchase costs and money you want to retain after settlement. A low minimum deposit does not remove those other needs.

Start with three amounts: cash available now, cash required to complete the purchase and cash you want left afterwards. Keep expected grants separate until the relevant provider confirms eligibility and payment timing. Do not assume a future payment can fund a deposit due earlier.

Compare different deposit levels

For an illustrative purchase price of $600,000:

• 5 percent deposit: $30,000
• 10 percent deposit: $60,000
• 20 percent deposit: $120,000

These are arithmetic examples only, before buying costs and any lender requirements. For government schemes, the relevant value assessment may differ from the contract price. Ask the lender how its valuation, deposit requirement and any rebate affect the cash contribution you need.

Lenders mortgage insurance, or LMI, protects the lender rather than you. It can apply to higher loan-to-value lending, but the threshold and cost depend on the lender and product. If the premium is added to the loan, interest can also accrue on it.

Check grants before setting your savings target

Government assistance may reduce the cash you need, but each benefit has a different purpose. A first home owner grant contributes towards an eligible purchase or build. A transfer duty concession reduces eligible tax. Neither is automatically available because you work in an essential role. Eligibility can depend on previous ownership, the property, its value, your residency status and the transaction date. See Understanding government home buyer assistance for official state and territory starting points.

For example, Queensland currently offers a $30,000 First Home Owner Grant for qualifying new-home contracts signed on or after 20 November 2023, with the home and land valued below $750,000. Other buyer and occupancy requirements apply; established homes do not qualify. Queensland also confirms that eligibility for a national home guarantee scheme does not itself prevent eligibility for this grant. This is a Queensland example, not an Australia-wide entitlement.

Before counting a grant towards your funds, ask when it will be paid, whether your lender accepts it towards the required contribution and how much of your own savings you must show. A grant paid later may not cover a contract deposit due now. Keep purchase costs and an emergency buffer in your plan.

Check whether you could avoid or reduce LMI

You may not need a 20% deposit to avoid paying LMI. Two routes to check are a government-backed loan guarantee and an occupation-based lender offer. They have separate eligibility rules and neither guarantees loan approval.

Government guarantee: the Australian Government 5% Deposit Scheme allows eligible buyers to purchase without LMI through a participating lender. Minimum deposits are 5% for eligible first-home buyers and 2% for eligible single parents or legal guardians. There is no income cap, but property price caps, buyer criteria, occupancy obligations and lender approval still apply. The guarantee supports the lender; it is not cash paid to you or a property discount.

Occupation-based offers: some lenders waive LMI for specified Key Workers, often at up to 90% loan-to-value ratio (LVR). A 90% LVR means a loan of 90% of the lender-assessed property value, so you generally need the remaining 10% plus buying costs. A valuation below the contract price can increase the cash required. Current examples include:

• Bank First: eligible first-home-buyer owner-occupiers in education or healthcare may borrow up to 90% LVR without LMI. Its published offer requires applicants to be ineligible for government schemes and excludes refinancing, off-the-plan and construction loans. Postcode and credit restrictions apply.
• People First Bank: its Essential Services Package waives LMI at up to 90% LVR on loans up to $1.2 million for eligible registered nurses, fully qualified paramedics and sworn state or federal police officers. Income requirements apply, alongside product and lending conditions.
• BCU Bank: its NSW and Queensland essential-services offer advertises an LMI waiver up to 90% LVR for listed roles, including eligible nurses, teachers, police, salaried firefighters and paramedics. The advertised waiver excludes broker-referred loans and cannot be combined with its cashback offer. Confirm the full role and loan conditions directly.

These are examples to investigate, not EWH offers, lender recommendations or confirmation of a commercial relationship. Ask your chosen broker or lender whether your exact occupation and proposed property qualify. Some offers are available only through particular application channels.

If an LMI discount rather than a full waiver is offered, request the standard premium, discounted premium and remaining amount payable in dollars. A partial discount still leaves a cost. Also ask whether LMI is waived, paid by the lender or added to your loan, and compare rates, fees and repayments across suitable alternatives. A lower LMI bill does not automatically mean the lowest total loan cost.

Understand your income assessment

Ask a broker familiar with your employment circumstances how the proposed lender would assess base salary, regular allowances, overtime, casual work and multiple jobs. Do not assume your highest payslip is the income the lender will use. Request a list of evidence required for your specific application.

Bring enough information to explain the pattern: recent payslips, year-to-date figures, employment terms and records covering variable earnings where requested. If you salary package or expect parental leave, discuss the actual arrangement before relying on an estimate. The evidence needed depends on the lender and your circumstances.

Use pre-approval appropriately

Pre-approval helps establish a potential borrowing range; it is not the same as an unconditional loan approval. Ask for its expiry date, outstanding conditions and any restrictions on property types. A property valuation and an updated assessment may still be needed.

If you are buying before construction is complete, ask whether settlement is likely to occur after the pre-approval expires. NSW's off-the-plan guidance highlights the need to secure finance when the purchase completes, which may be much later than contract signing. Have your legal representative explain your obligations if finance is not available then.

Test the monthly repayments

Illustrative principal-and-interest repayments for a $570,000 loan over 30 years:

• 6 percent interest rate: about $3,417 a month
• 8 percent interest rate: about $4,182 a month

These calculations assume monthly payments and an unchanged rate for the full term. They exclude fees and are not available loan offers. The higher-rate scenario adds approximately $765 a month. Actual loan calculations and repayment frequencies can differ.

Use your own budget to decide whether that sort of change would be manageable alongside living costs. Separate this personal exercise from the bank's assessment: APRA confirmed a three-percentage-point mortgage serviceability buffer for banks in its May 2026 review. That buffer is an assessment requirement, not a forecast of your future interest rate.

Compare the total loan cost

Ask about the interest rate, comparison rate, establishment and ongoing fees, offset costs, extra repayments and restrictions on changing or repaying the loan. Fixed, variable and split arrangements have different features. Choose on the overall fit, not a headline rate alone.

Ask a broker which lenders they can access, why the suggested loan suits you and how they are paid. Check their credit licence or representative status. Moneysmart recommends asking about loan alternatives and fees rather than assuming every broker compares every lender.

Keep the EWH and finance roles clear

EWH's advisor helps with general questions, housing options and purchase coordination. Your chosen broker or lender handles the finance assessment. EWH does not charge you for its service; it is remunerated by housing providers or developers. Separate finance fees may apply and should be explained by the relevant provider before you proceed.

Before considering a home, aim to have a comfortable monthly budget, a realistic cash contribution and a written understanding of any finance conditions. If one of those is missing, make that the next conversation rather than guessing.