How much deposit do I need to buy a house in QLD?
Use this article as a starting point, however it is designed to give you a good idea of how much deposit you'll need to buy a house in Queensland in most cases. Most people will usually need an 8% deposit plus Government charges plus costs (usually about $3,000), please refer to the costs of buying a house in QLD.
5% deposit is possible - but generally requires a spot with the FHLDS (Google FHLDS to see) or a very strong applicant(s). Most of the time, you need an 8% - 9% deposit - usually 8% for loans under $500k, and 9% for applications over $500k, but this is a very rough guide. The 8% - 9% deposit is standard because most major and second tier banks will lend up to 95% of the property value (95% LVR), and putting in an 8% - 9% deposit covers the 5% required deposit plus lenders mortgage insurance. We've outlined below where an 8% - 9% deposit is likely possible.
|An 8% - 9% deposit home loan is generally available to:|
|Permanent employees (1 payslip) or casual (3 months minimum)|
|Australian Permanent Residents or citizen.|
|Must have 'genuine savings' aka funds saved/held for 3 months. A rental ledger through a Real Estate Agent is available in some circumstances.|
|Good credit history.|
|Applicants that are self employed need to have been trading for 24 months.|
|Situations where you would need a 10% - 20% deposit:|
|If you've been self employed for less than 2 years. Refer to self employed home loan requirements for specific details.|
|If you have bad credit: generally more than 1 or 2 defaults will require 15% deposit or more.|
|If you don't have 'genuine savings', you will need a 10% - 15% deposit.|
|When buying an usual property: common examples are high density apartments in Brisbane CBD, or properties over 5 acres.|
|If you don't meet Lenders Mortgage Insurance's criteria, you may require a 20% deposit.|
|If you are not a permanent resident of Australia.|
What different deposit amounts mean in QLD?
Using the minimum allowable deposit is a great option for many people to get into the housing market without saving a large deposit; however, if you have more funds available, there are distinct advantages for using a larger home loan deposit:
- 0% Deposit: Can only be done using equity in a guarantor's property. See how a guarantor works for more information.
- 5% Deposit: The absolute minimum cash deposit required to buy a house in QLD. Generally a great option for first home buyers eligile for the FHLDS. Whithout the FHLDS, you will need a very strong application to get approved - but it is possible.
- 8% - 9% Deposit: To account for the Lenders Mortgage Insurance Premium, most major and second tier banks will require approximately 8% as a deposit for homes under $500k.
- 10% Deposit: Some lenders will not lend above 90% of the value of the property (90% LVR). Having a 10% deposit will open these lenders up to you and could mean you get a better deal. Lender's Mortgage Insurance Premiums are also much less with a 10% home loan deposit. You can also get away without genuine savings with one lender at this LVR and may have an easier time getting approved with most lenders.
- 15% Deposit: Most banks will accept "non-genuine savings" at 85% LVR, so this is often a good figure if you are using a gift from your parents as a deposit. There are sometimes specials on at this LVR to enable minimal/no LMI.
- 20% Deposit: A 20% deposit will get you a very competitive interest rate. You also will not need to pay a Lender's Mortgage Insurance Premium in most cases, and will be subject to less strict approval criteria in general.
5% Deposit using the First Home Loan Deposit Scheme
First home buyers eligible for the FHLDS can buy at a true 5% deposit with no LMI costs, and is a great option where possible. You can check your eligibility here. There are a limited number of lenders available currently, with the 2 major banks not having any spaces left (as at 11/08/2020) unless another applicant cancels; officially, the Government will not be releasing new spots again. There are still some smaller lenders with spaces currently available and very competitive interest rates. Please contact us for assistance in getting a pre-approval and FHLDS reservation (valid for 3 months).
TLDR; How much deposit do I need in QLD?
Usually 8% - 9% of the purchase price. Talk to a Mortgage Broker in QLD to check your eligibility etc. We can do all checks and lodge the application on your behalf and don't charge any fees - if you found this information useful we would really appreciate you giving us a call.
DISCLAIMER: You must not rely on the information in the report as an alternative to financial advice from an appropriately qualified professional. If you have any specific questions about any financial matter you should consult an appropriately qualified professional. We do not represent, warrant, undertake or guarantee that the use of guidance in the report will lead to any particular outcome or result. The content, calculations and opinions contained in this article are of the writer only, and are not necessarily those of Blue Fox Finance.