A typical first home buyer's deposit is between 5% and 20% of the property's purchase price. If you bought an $800,000 house with a 20% deposit you would need to save $160,000 for the deposit and borrow the rest.
Saving this deposit is often the biggest challenge for first home buyers today.
The statistics on this page break down how much homebuyers need to save for deposits using ABS lending figures to work out average deposits. We have broken this down by state and territory.
We analysed how much homebuyers need to save for a deposit in each state and territory by looking at the latest average loan sizes for Australian owner-occupiers (ABS figures).
Using these loan averages we were able to assume property prices and deposit sizes. This is based on the assumption of a 20% deposit.
Borrowers can get home loans with deposits as low as 5%. But this comes with additional costs such as lenders mortgage insurance (LMI).
"My advice would is start the search in 'the sold' section rather than the 'for sale' section. If you do your research up front on what is actually achievable, you can conduct your search with much more focus and not waste any time chasing properties that will never be in [your] budget anyway. By using the map function, you can actually explore alternative areas to your ideal suburbs and find that ' sister' suburbs may give you a similar lifestyle at a more affordable price point."
With the loan amounts and deposit figures above, we calculated the average borrower's monthly home loan repayments. To do this we used:
The data clearly shows that homebuyers in NSW have the most expensive mortgage burdens. This is the inevitable result of higher property prices in that state (especially in Sydney), which in turn forces buyers to save bigger deposits and borrow more.
Interest rates started rising in May 2022. This has massively increased loan repayments:
Another way to understand rising property prices and deposit sizes is to look at how much first home buyers borrow today.
Loans for first home buyers have increased dramatically across every state and territory in the last 2 decades.
Using loan averages and 20% deposits we can also determine average property prices. All figures in the chart below assume a 20% deposit.
"Homebuyers have been chasing a goal which is becoming more and more difficult to attain. As property prices have risen the deposits needed for a first home loan have grown with them. Not only that, rising interest rates have meant that buyer borrowing power has dropped. The good news is that there are still solutions, like first home buyer support and low deposit loans, but it might require a little research and comparison to find the right one for you."
If you're looking to enter the property market, you'll need to save a deposit and get a home loan. And luckily, you don't need to save a 20% deposit.
You can enter the market with a low deposit home loan if you're willing to borrow more and pay LMI.
And if you have parents who own a property and are willing to act as your guarantor, you can get a loan with a low deposit and skip the LMI premium.
There are also government schemes that let first home buyers purchase homes with deposits below 20% and no LMI.
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