How Much is a Deposit For a House in QLD?

Why Do Lenders Ask for a 20% Deposit for a House?

A 20% deposit is the standard requirement for most banks. This amount helps reduce the lender's risk in case you default on your loan. When a lender issues a loan, it's an investment—they earn a profit through the interest you pay on the borrowed amount. If you fail to make your repayments, the lender could face financial losses.

A larger deposit decreases the lender’s risk because it lowers the loan-to-value ratio, making it more likely that the lender can recoup the loan amount if the property needs to be sold. However, a 20% deposit is out of reach for many renters. For example, on a $500,000 mortgage, a 20% deposit would amount to $100,000—an unattainable sum for most renters.

This is where Low Deposite Dream Homes can make a difference. We offer solutions that allow you to become a homeowner without needing to come up with such a substantial deposit.

Use Lenders Mortgage Insurance for a Lower Deposit on a House

If you secure a mortgage with less than a 20% deposit, you'll typically need to obtain Lenders Mortgage Insurance (LMI). This insurance is arranged by the lender but paid for by you. LMI protects the lender from potential losses if you default on the loan, allowing you to purchase a home with a smaller deposit.

Using the First Home Loan Deposit Scheme

The First Home Loan Deposit Scheme (FHLDS) is a government initiative designed to help first-time home buyers by reducing the required deposit to just 5%. If you qualify for this scheme, you won’t need to pay Lenders Mortgage Insurance (LMI). During our pre-qualification process, we’ll evaluate your situation to see if you meet the eligibility criteria.

Can I Use the First Home Owners Grant for My Deposit?

Yes, you can. The Queensland First Home Owners Grant (FHOG) can be used as part of your deposit. Many first-time buyers take advantage of this grant to help with their home purchase. The QLD FHOG is $15,000, which can be applied towards your deposit or used to cover legal fees and other costs associated with buying a home.

What Are Genuine Savings and How Do They Affect My Deposit?

When applying for a home loan, lenders require that your deposit funds meet certain criteria to be considered ‘genuine.’ Genuine savings are a reflection of your financial discipline and ability to manage your finances responsibly. They show that you have saved the money yourself over time, rather than receiving a lump sum from other sources.

Lenders use genuine savings to evaluate your capability to make mortgage repayments. Typically, they want to see a history of savings demonstrated through bank statements. Funds that come from sources other than your regular income, such as:

• Gifts

• Dividends

• Inheritance

• Tax refunds

are generally not considered genuine savings by lenders. These types of funds may not be accepted for your deposit, as they don’t provide evidence of your personal saving habits.

The exact eligibility criteria for genuine savings can vary between lenders, so it's important to check with each one individually to understand their specific policies. Alternatively, you can rely on the experts at Low Deposit Dream Homes to handle this for you.

The deposit amount required for a house in QLD will depend on your individual circumstances. Without the right knowledge and experience, securing the best deal can be challenging. This is where our expertise at Low Deposit Dream Homes comes into play.