You finally have $100,000 in the bank.
And you’re pretty happy about that.
Years of saving. No holidays. Saying “maybe next time” when your mates booked something. Three-course meals made exclusively from “half-price specials” and questionable nutrition.
You’ve done the responsible stuff.
And none of the fun stuff.
Then you open the property app and start looking at homes around $600,000.
A 20% deposit is $120,000.
You’re nearly there.
And that’s when the little voice starts.
Maybe you should just keep saving.
Get to $120,000.
Then another $10,000 for buying costs.
Then maybe another $10,000 because you don’t want to be left with an empty bank account after settlement.
Suddenly, $100,000 doesn’t feel like much at all.
And that’s where the idea of the “perfect” deposit can get you into trouble.
Because while you’re waiting for your savings account to feel big enough, the rest of the world doesn’t stop.
Do you really need a 20% deposit to buy a home?
There is nothing wrong with aiming for a 20% deposit.
It means you borrow less. You start with more equity. And you may avoid LMI costs.
That’s why 20% has become such a common target for first home buyers.
But somewhere along the way, a useful target became a hard rule.
It really isn’t.
Eligible first home buyers can now access the Australian Government’s 5% Deposit Scheme with a minimum 5% deposit and no LMI, subject to the scheme’s eligibility rules and property price caps.
There is also Help to Buy for eligible buyers, where the Government can contribute towards the purchase price through a shared-equity arrangement.
And some buyers may have the option of a family guarantee, using equity in a parent’s property to help secure the loan.
None of these options means “buy a house with the smallest deposit possible”.
A smaller deposit means borrowing more.
More borrowing means larger repayments.
The point is simply that 20% is one pathway, not a compulsory entry ticket.
The finish line doesn’t have to stay where you left it
This is where waiting can get frustrating.
Let’s say you’ve got $90,000 saved.
You’ve found the sort of home you’d like for around $600,000.
You need another $30,000 to reach your 20% deposit.
You’re saving $1,000 a month.
Thirty months.
Done.
Except the property market isn’t waiting for you.
If that same type of home were worth $650,000 in two and a half years, your 20% deposit target would now be $130,000.
You’ve saved another $30,000.
But your target has moved $10,000.
That’s a hypothetical example, of course. Property prices can rise, fall or sit still.
Nobody knows what they’ll do.
That’s exactly the point.
Waiting doesn’t freeze the target.
You can do everything right and still find that the number you’re chasing has changed.
The cost of waiting isn’t just house prices
This is the part that gets missed.
If you spend another two years saving, you’ve potentially added a decent chunk to your deposit.
That’s good.
But you’ve also spent another two years renting.
That doesn’t make rent “dead money”. You need somewhere to live, and renting can be a perfectly sensible choice while you’re saving.
But it is still a cost of waiting.
So is the lifestyle sacrifice.
There is a point where “we’re saving for the house” becomes two years of saying no to almost everything.
No weekends away.
No nice dinners.
No replacing the car because the current one is held together with optimism.
Maybe that’s worth it.
Maybe it isn’t.
The question is whether the extra deposit you’re building is actually improving your position enough to justify the wait.
Can you buy a home with less than 20%?
This is where the alternatives become worth looking at.
The Australian Government’s 5% Deposit Scheme allows eligible first home buyers to purchase with a minimum 5% deposit without paying LMI, subject to the scheme’s rules and property price caps.
Help to Buy can also reduce the amount of cash you need upfront for eligible buyers, with the Government contributing up to 30% of the purchase price for an existing home or up to 40% for a new home through shared equity. A minimum 2% deposit applies.
And then there’s the family option.
If your parents have built up equity in their home and are willing to help, a guarantor arrangement may allow some of that equity to be used as security for your loan.
That can potentially mean buying with a very small deposit, or in some cases no genuine cash deposit, without paying LMI.
It’s also one of the scarier options.
Because Mum and Dad’s house is on the line.
If you can’t meet the loan obligations, the guarantor can be exposed to the debt they’ve guaranteed, and property used as security can be at risk.
So a family guarantee isn’t a free deposit.
It’s a different way of providing the security a lender needs.
For the right family, with the right structure, it can be a legitimate pathway.
But should you just buy with 5%?
Not necessarily.
If a smaller deposit means repayments that leave you stretched every month, buying sooner isn’t necessarily better.
A 20% deposit might be exactly the right target for you.
Maybe you want the smaller loan.
Maybe you want to avoid LMI.
Maybe you simply want a bigger financial buffer before you take on a mortgage.
All good reasons to wait.
But there’s a difference between choosing to wait and assuming you have to wait.
One is a decision.
The other is a habit.
So what is the right deposit?
There isn’t one number that works for everyone.
For some people, 20% makes sense.
For others, a smaller deposit may get them into a home sooner without putting them under too much financial pressure.
For some, the answer might be a government scheme.
For others, a family guarantee.
And for others, it might genuinely be another couple of years of saving.
The important thing is to know what you’re trying to achieve.
A bigger deposit gives you benefits.
But waiting for the biggest possible deposit isn’t automatically the best financial decision.
Because while you’re saving, you’re not standing still.
You’re paying rent.
You’re living your life.
The property market is doing whatever it’s going to do.
And your circumstances can change.
Before you wait another year, do the maths
Not just on the deposit.
On the whole decision.
How much more will you have saved?
What will that do to the size of your loan?
How much are you spending on rent while you wait?
What happens if the property you want costs more by then?
What alternatives are available to you now?
And, perhaps most importantly:
What would need to be true for you to feel ready?
If the answer is simply “I need to see a bigger number in my savings account”, you might be waiting for a feeling rather than a financial milestone.
There is nothing wrong with wanting a bigger deposit.
There is something worth questioning about waiting forever for one.
The goal isn’t the perfect deposit.
It’s getting into a home you can actually afford, at a time when the numbers make sense for you.
