Buying your first home is exciting, but saving for a deposit can feel like the biggest hurdle. You've probably heard that you need a 20% deposit to buy a house. While that's a useful target, it's not always necessary.
In Queensland, some first-home buyers may qualify for a home loan with as little as a 5% deposit, or even 2% under certain government schemes.
So, how much do you actually need to save? Here's what to know before you start house hunting.
How Much Deposit Do You Need to Buy a House in Queensland?
Most lenders prefer a deposit of 20% of the property's value. This reduces the amount you borrow and generally helps you avoid Lenders Mortgage Insurance (LMI), which protects the lender if you cannot repay your loan.
However, some lenders accept smaller deposits, often around 5% to 10%, depending on your financial situation and loan eligibility. Understanding your home loan options can help you work out what deposit may be suitable for your circumstances.
Here's what different deposit amounts could look like:
These figures cover the deposit only. You'll also need to budget for additional buying costs.
Can First Home Buyers Purchase With a 5% Deposit?
Yes. The Australian Government 5% Deposit Scheme allows eligible buyers to purchase their first home with a minimum 5% deposit without paying LMI.
To qualify, you generally need to be at least 18, an Australian citizen or permanent resident, and meet the scheme's property ownership and lender requirements. There are no income caps or fixed limits on available places, although property price limits apply.
For Rockhampton and other eligible regional Queensland areas, the scheme's property price cap is $700,000.
For example, if you're buying a $500,000 home in Rockhampton, a 5% deposit would be $25,000 instead of $100,000 for a 20% deposit.
You'll still need to demonstrate that you can afford the repayments and meet the participating lender's approval criteria.
Finance First can guide you through the first-home buying process, including understanding your finance options and preparing your loan application.
Can You Buy Your First Home With a 2% Deposit?
Some Queensland buyers may qualify for a 2% deposit through government-backed programs.
Under the federal 5% Deposit Scheme, eligible single parents and legal guardians can purchase with a minimum 2% deposit.
Queensland's Boost to Buy scheme also offers eligible first-home buyers a 2% deposit pathway. It works through shared equity, where the Queensland Government contributes towards the property purchase in exchange for an ownership share.
Both options have specific conditions. Check eligibility, participating lenders and scheme availability before making plans.
What Government Grants Can Help First Home Buyers in Queensland?
The Queensland First Home Owner Grant provides $30,000 to eligible buyers purchasing or building a new home valued below $750,000, including land.
The grant does not apply to established homes.
If you're considering a new build, understanding the different financing requirements for building a new home can help you plan your budget and construction loan.
Eligible first-home buyers may also receive transfer duty (stamp duty) concessions. For established homes valued at $700,000 or less, qualifying buyers may pay no transfer duty.
These benefits can reduce upfront expenses, but lenders have their own rules about how grants can contribute towards a deposit.
What Other Costs Should First Home Buyers Budget For?
Your deposit isn't the only expense when purchasing a property.
Other costs may include:
Conveyancing and legal fees
Building and pest inspections
Lender application and settlement fees
Transfer duty, if applicable
Moving costs and initial home expenses
Keeping some savings aside for unexpected expenses can also help you feel more financially prepared after settlement.
Should You Save 20% or Buy With a Smaller Deposit?
A 20% deposit generally means borrowing less, paying less interest over time and avoiding LMI.
A smaller deposit could help you buy sooner, particularly if you're eligible for government assistance. However, it may also mean larger repayments and a higher overall loan cost.
The right choice depends on your savings, income, ongoing expenses and how comfortably you can manage mortgage repayments.
If you're unsure where to start, learning more about the different home loan features available can help you make a more informed decision.
Ready to Buy Your First Home in Rockhampton?
You don't necessarily need a 20% deposit to get started. Understanding your borrowing options and available government assistance can help you plan your next move with confidence.
At Finance First, we help first-home buyers in Rockhampton explore suitable home loan options, compare lenders and understand the steps involved in buying their first property.
Ready to explore your options? Contact Finance First today to discuss your first home loan and find out what deposit may work for your circumstances.
Frequently Asked Questions
Can I buy a house in Queensland with a $20,000 deposit?
Potentially. A $20,000 deposit represents 5% of a $400,000 property. You may be eligible for a low-deposit home loan, subject to lender requirements and any applicable government scheme conditions.
Do first home buyers have to pay Lenders Mortgage Insurance?
Not always. LMI is commonly required for deposits below 20%, but eligible buyers using the Australian Government 5% Deposit Scheme can avoid it.
Can I use the First Home Owner Grant towards my deposit?
Some lenders may allow the grant to contribute towards the funds needed to purchase a property. However, this depends on lender requirements, the scheme and when the grant becomes available. It's important to confirm this before relying on the grant as part of your deposit.
