The simple answer is as much as you can possibly get together. The larger the deposit you have, the smaller the loan you’ll need, the easier the approval process will be and the better the interest rate and loan terms you’ll be able to negotiate.
Lenders’ Mortgage Insurance
The minimum home loan deposit normally required is 10%, but you should try and get at least 20% together if you can. That’s because if you borrow more than 80% of a property’s value, your lender may require you to take out Lenders’ Mortgage Insurance.
This is insurance that covers the lender if you default on your loan repayments and it can cost you as much as $9,000 with a 10% deposit on a $500,000 home.
First Home Owner Grant
Good news though. If you’re a first home buyer, a First Home Owner Grant may help to bolster your deposit amount.
This is a government scheme that provides a one-off payment to first home owners. The grant amount and eligibility requirements vary between each state and territory, so visit the Federal Government’s First Home Owner Grant website for details on your particular region.
And finally, remember that when you’re saving for a home loan, you’ll also need enough to cover the other upfront expenses you’ll be required to pay along with your deposit.
These include legal fees (conveyancing), stamp duty, inspection fees, transfer fees and mortgage application and registration fees; not to mention home & contents insurance, utility connections and removalist fees.
Related articles from our Home loan guide
Can't afford a deposit? Here are 3 other ways to get a foothold in the market
7 ways to hack away at your home deposit savings goal
Why LMI isn't just for first home buyers
What is Lenders Mortgage Insurance (LMI) and how does it work?