Last Updated: 4th January, 2022

First Home Buyer Deposit Dilemma

Published by Otto Dargan on September 4, 2020

70% of first home buyers have been forced to chip into the deposit funds they had saved towards fulfilling their home ownership dreams. 

This startling figure was revealed in a nationwide study conducted by Gateway Bank. The study surveyed 700 aspiring first home buyers in May 2020 and found their plans to get into the property market had been delayed due to the economic impact of COVID-19. 

Where have first home buyers used their deposit?

To help make ends meet during COVID-19, potential first home buyers have spent their home deposit savings on the following: 

  • 45% of them used it for everyday expenses. 
  • 17% said they used it to support a family member who was in financial distress. 
  • 11% used it on stock/investments. 
  • 11% used it for term deposits or high-interest deposits. 
  • 10% used it for travel purposes 
  • 10% used it to upgrade or buy a motor vehicle.
  • 6% of them used it to upgrade their accommodation.  

Chipping into their savings has thwarted their property purchase plans. 

  • 60% said they would need one to three more years to save for a deposit again
  • 25% said they would need more than 3 years to save for the deposit. 

While various government schemes help first home buyers, not everyone knows about the schemes and concessions.

22% of them could not identify the first home buyer schemes available for 2020. 

What grants and schemes are available for first home buyers in 2020? 

  • The First Home Loan Deposit Scheme is a federal scheme that allows eligible first home buyers to get a home loan with a low deposit (less than 20%) without paying Lenders Mortgage Insurance. There are only 10,000 places available for the scheme. 
  • The $25,000 HomeBuilder grant is available for first home buyers who are interested in building their first home. 
  • The First Home Super Saver Scheme helps first home buyers to save for a deposit inside their super. 

First home owners grant and stamp duty concessions 

As well as the schemes from the federal government, state-specific grants and exemptions are available. 

The First Home Owners Grant is available for first home buyers who want to either buy or build a new home. 

Stamp duty exemptions and concessions are also available for first home buyers. Each state has its own threshold on the amount of stamp duty concessions or exemptions available. 

Learn more about what grants and schemes are available for first time buyers in 2020. 

First home loan deposit options 

Since saving for a first home deposit is becoming challenging due to the pandemic, options are available for low deposit home loans for first home buyers.

  • If you have saved a deposit of between 3% to 15% for your first home, then you could qualify for the myriad of low deposit home loans. 
  • We also have a lender on our panel who is offering $1 LMI fee if you’re borrowing $850,000 with a loan to value ratio of 85%.

Get a guarantor home loan

A guarantor home loan is a good option for first home buyers if you have no deposit to buy a house. You could borrow up to 105% of the property value with a guarantor without paying Lenders Mortgage Insurance. 

Get the keys to your dream home 

Learn how you can save a house deposit for your first home and why it might be a good option to buy sooner rather than later.

We have created a detailed guide exclusively for first home buyers to navigate the process from saving a deposit to applying for a home loan. 

Our mortgage brokers have helped thousands of first home buyers get the keys to their homes. We can help you too. Call us on 1300 889 743 or fill in our free assessment form.