Your Deposit Is Just One Part of the Story

Ask most first home buyers what they need before they can buy a home and they'll probably give the same answer:

"A deposit."

They're right.

But only partly.

Banks aren't simply asking,

"How much have you saved?"

They're asking a much broader question:

"What are you bringing to this purchase?"

This is known as Capital.

Your deposit is an important part of your Capital, but it isn't the whole story.

Understanding Capital helps you see the bigger picture—and often reveals options you didn't know existed.

What is Capital?

Capital is your financial contribution towards buying the property.

It includes things like:

Your deposit
Your savings history
Other assets
Government assistance
Family support
Existing equity (if applicable)

The stronger your Capital position, the lower the lender's risk.

Lower risk often means:

More lenders to choose from
More borrowing options
Lower costs
Greater flexibility

Let's look at the main components.

Your Deposit

Your deposit is simply the amount of the purchase price you're contributing yourself.

For example, if you're buying a $700,000 property and have saved $70,000, you've saved a 10% deposit.

Generally speaking, a larger deposit reduces the lender's risk.

But contrary to popular belief, you don't always need a 20% deposit to buy your first home.

Many Australians successfully purchase with much smaller deposits.

The right deposit depends on your circumstances, not a magic percentage.

Genuine Savings

Saving a deposit isn't only about reaching a target amount.

Many lenders also want to see how you saved it.

This is known as Genuine Savings.

Regular savings demonstrate that you've developed good financial habits and can consistently manage your money.

Some lenders require evidence of genuine savings.

Others don't.

Every lender has different policies, which is one of the reasons choosing the right lender matters.

Coming soon: Genuine Savings Explained

Lenders Mortgage Insurance (LMI)

One of the biggest myths in Australia is that you must save a 20% deposit before buying a home.

In many cases, that's simply not true.

If you borrow more than 80% of the property's value, you may need to pay Lenders Mortgage Insurance (LMI).

Despite its name, LMI doesn't protect you.

It protects the lender.

Sometimes paying LMI allows you to buy years earlier than waiting to save a larger deposit.

Other times, waiting may be the better financial decision.

Like many things in finance, there isn't one correct answer.

It depends on your circumstances.

Coming soon: Lenders Mortgage Insurance Explained

Other Ways to Strengthen Your Capital

Your own savings aren't the only way to improve your Capital position.

Depending on your circumstances, there may be other options available.

These include:

Government Assistance

Many first home buyers are eligible for grants, guarantees or stamp duty concessions.

Exactly what's available depends on your state, the property you're buying and your personal circumstances.

Because these programs change regularly, we've created separate state-specific guides.

Coming soon: First Home Buyer Grants & Concessions by State

Family Support

Some buyers receive assistance from family.

This might include:

A financial gift
A family guarantee
Help with purchase costs

These strategies can be extremely effective when used appropriately, but they also come with important risks and responsibilities.

Coming soon: Family Guarantees Explained

Myth: I need a 20% deposit before I can even think about buying a home.

Reality: There are many different ways to purchase a home, and the right strategy depends on your goals, your finances and the lenders available to you. Don't assume you're years away from buying simply because you haven't reached an arbitrary savings target.

Key takeaways

Capital is much more than just your deposit.
A larger deposit generally reduces the lender's risk, but it isn't the only factor.
Genuine savings demonstrate consistent financial behaviour.
You don't necessarily need a 20% deposit to buy your first home.
Government assistance and family support may strengthen your position.
Understanding your options is often more valuable than simply saving for longer.

How a Perch Broker Can Help

Understanding Capital is one thing.

Building the right deposit strategy is another.

When you become a Perch client, we'll look at your complete financial position—not just your bank balance.

Together we'll explore:

How much deposit you actually need.
Whether Lenders Mortgage Insurance is likely to apply.
Which lenders are most suitable for your deposit size.
Whether you're likely to qualify for government assistance.
Whether family support could be appropriate.
The advantages and disadvantages of each option.

There isn't one "correct" deposit strategy.

Our job is to help you understand your options, explain the trade-offs and recommend the strategy that best suits your goals.

Sometimes buying sooner makes sense.

Sometimes waiting is the smarter financial decision.

Either way, you'll understand why.