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Generally speaking, a 20% deposit is considered the gold standard. However, the recent rise in property prices has meant that 20% is unrealistic for some first-time home buyers. So, we have home loan options available with as little as a 5% deposit. You may also be eligible for a government incentive to avoid paying Lenders' Mortgage Insurance (LMI) while getting on the property ladder sooner.

The Loan to Value Ratio (LVR) is your deposit amount compared to the value of the property. The higher deposit you have, the lower your LVR will be.

LVR is expressed as a percentage. For example, if the home you’d like to buy is valued by the bank at $600,000 and your deposit is $120,000, the loan you need to purchase it is $480,000. This means the LVR is: $480k ÷ $600k = 80% LVR.

The LVR is based on the bank’s valuation of your property (which may differ from the amount you paid on the contract). From a lender’s perspective, the higher the LVR, the higher the cost and risk to the lender, which is why you’ll often see higher rates when you have a higher LVR.   Apart from getting a better rate, having 80% or lower LVR also means you could avoid paying Lenders' Mortgage Insurance (LMI).

If your deposit is less than 20% of the property’s value, most financial institutions will require Lenders' Mortgage Insurance (LMI). LMI is taken out to protect the lender in case of default. It’s a one-off cost that you can choose to pay upfront or add it to your loan.

Apart from your deposit, there are a few other upfront costs you’ll need to be prepared for. These include:

• Building and pest inspection
• Solicitors' fees
• Mortgage Registration Fee
• Home loan establishment fees
• Lenders' Mortgage Insurance (LMI) (if applicable)
• Transfer fees - also known as stamp duty (if applicable)
• Home and/or contents insurance
• Council rates and fees
• Furniture and appliances you don’t currently own
• Moving costs

In Episode 2, of The Clever Way Home Podcast, "How Much Will I Need?" we break down all the upfront costs to help you understand what to expect.

Unsure how much extra you need? Our upfront cost calculator can help you do the sums.

Great Southern Bank is the trading name of Credit Union Australia Limited. You may have previously known us as CUA.

For over 75 years we’ve helped our customers reach their financial goals. Fast-forward to today and we noticed that many people were finding the Great Australian Dream of homeownership out of reach. That’s why we’ve made it our purpose to help every Australian achieve the dream of owning their own home - and we can’t wait to help you get started.

Plus, being customer-owned means that you come first. Instead of chasing huge profits for shareholders, we reinvest back into the business to provide better products and services to our customers.