A first home buyer was keen to get into the property market but was struggling with one of the biggest hurdles many first home buyers face: the belief that they needed to save a 20% deposit before they could even start looking.
With property prices where they are, reaching that figure can take years, particularly when you’re also trying to cover the other costs involved in buying a home.
They wanted to know whether there was another way forward.
The client had been working towards buying their first home, but the 20% deposit target felt like a significant barrier.
The challenge wasn’t simply saving the deposit. Waiting until they had 20%, plus the costs associated with purchasing a property, could have meant putting their plans on hold for several more years.
Like many first home buyers, they were starting from the assumption that 20% was the minimum they needed before buying was even an option.
Rather than accepting that as the starting point, we looked at what options were actually available to them.
We reviewed the first home buyer schemes available and looked at how the different options could work with the client’s circumstances.
We identified a scheme that allowed the client to purchase with a significantly smaller deposit than the traditional 20% requirement.
Importantly, the structure also meant they could avoid LMI and access a competitive interest rate.
This changed the numbers considerably. Instead of continuing to save towards a 20% deposit for years, the client had an opportunity to use the deposit they had already built up and move forward with their purchase sooner.
The client was able to purchase their first home without waiting until they had accumulated a traditional 20% deposit.
The right scheme reduced the amount they needed to save upfront, while also allowing them to avoid LMI.
For the client, the biggest outcome was time. They could stop waiting for the 20% milestone and get into the market sooner.
One of the biggest hurdles for first home buyers can be assuming there is only one path into the property market.
A 20% deposit is not necessarily the starting point for every buyer. Depending on your circumstances and the schemes available, there may be ways to purchase with a smaller deposit and avoid LMI.
Understanding what’s available can make a significant difference to how soon you can turn the goal of buying your first home into a reality.
For many first home buyers, the biggest hurdle isn’t finding a property. It’s believing they need to save 20% plus costs before they can even start looking.
At Ironbark Group, we take the time to understand where you are now, what you’re hoping to achieve and what options may be available. With access to a wide network of lenders and more than 200 years of combined experience across our team, we can help you navigate the different lending and first home buyer options available.
Ready to find out whether you could buy sooner? Talk to Ironbark Group about your options today.
Not necessarily. While a 20% deposit is often used as a benchmark, there are circumstances where first home buyers may be able to purchase with a smaller deposit. Government schemes and lender policies can provide options for eligible buyers, potentially allowing them to enter the market sooner without waiting years to save a full 20% deposit. The amount you need will depend on your circumstances, the property you’re purchasing and the lending options available to you.
There are options that may allow eligible first home buyers to purchase with a smaller deposit. The important thing is to understand what schemes and lending options are available and whether you meet the relevant eligibility requirements. A smaller deposit doesn’t automatically mean you have to pay LMI either, as some first home buyer schemes can provide an exemption or other arrangement. It’s worth looking at your options before assuming you need to save a full 20%.
Lenders Mortgage Insurance, or LMI, is generally an additional cost that can apply when a borrower has a smaller deposit and is borrowing a higher percentage of the property’s value. Certain first home buyer schemes can allow eligible buyers to purchase with a smaller deposit without paying LMI. Whether you qualify will depend on the scheme, your circumstances and the property you’re purchasing. Understanding this before you start looking at properties can help you work out what you may actually need to save.
There isn’t one deposit amount that applies to every first home buyer. In addition to the deposit, you may need to allow for costs such as stamp duty, conveyancing, inspections and other purchase costs, although some first home buyers may be eligible for concessions or exemptions. Rather than assuming you need 20% plus all costs, it’s worth understanding your borrowing capacity and the options available to you first. This can give you a clearer picture of what is realistically achievable.
Yes. There are government schemes designed to help eligible first home buyers purchase a property with a smaller deposit and, in some cases, avoid LMI. Eligibility, property price caps and other requirements apply and these can change over time. The important thing is to look at the scheme that applies to your circumstances rather than assuming you have to follow the traditional 20% deposit model.
Not necessarily. Buying a home is a significant financial decision and the right approach depends on your individual circumstances, income, savings, existing commitments and the property you’re considering. However, it can be worth exploring your options rather than automatically assuming you need to wait until you’ve saved 20%. For some eligible first home buyers, a smaller deposit may make it possible to purchase sooner while still having a manageable lending structure.
