Potential homeowners who have a $50,000 home loan deposit prepared have the potential to borrow up to $250,000 depending on the individual mortgage broker or lending specialist. Generally, lenders will require a 20% deposit for a home loan, however, this does vary.
In total, you will need 8-10% of the purchase price in savings to afford a home. So for example, if you were buying a place for $400,000 you would need around 10% or $40,000 in savings.
This means if you're looking to buy a house with a value of $800,000, you'll need a deposit somewhere between $40,000 and $80,000. Read: The key to home ownership: know your borrowing power.
Owner-occupier home loan deposits
Simply put, that means if you were looking to buy a property for $500,000 you would need a deposit of $100,000. You can use a home deposit calculator to apply this to your own property purchase and work out how much of a deposit you will need.
Potential homeowners who have a $50,000 home loan deposit prepared have the potential to borrow up to $250,000 depending on the individual mortgage broker or lending specialist. Generally, lenders will require a 20% deposit for a home loan, however, this does vary.
So, if you're buying a home for $300,000 you'll need at least $60,000 to cover a 20% deposit.
On a $500,000 home, a 20% deposit is $100,000 in savings.
On an annual income of $80,000 after-tax, a lender may offer you a mortgage of $1.75 million. This assumes that the applicant's credit score is at least average. It also assumes that there are no outstanding debts owed.
Unfortunately, lenders base their mortgage offers on lower of the purchase price or current value of the property. If you have a large deposit you may be able to hold some of that back to carry out the work and borrow more on your mortgage, but generally lenders will not lend more than 90-95% of the current value.
Generally, banks and financial institutions will recommend you have a deposit of at least 20% of your prospective property's purchase price. So, if we go back to our $400,000 home, you'd want to provide $80,000.
A large deposit is defined as a single deposit that exceeds 50% of the total monthly qualifying income for the loan.
In Australia, banks prefer to lend to borrowers with a loan to value ratio (LVR) of less than 80%. That means you should aim to have at least 20% of the property's value saved up for a deposit. This shows the lender you're able to save and reduces your risk profile in their eyes.
To successfully buy a $500k house in Australia, an individual will need to make around $100,000 per year to comfortably afford the monthly mortgage payments.
A potential borrower in Australia who is interested in purchasing a home that costs $400k will need to make a yearly salary of $66,000 through $100,000 depending on the individual mortgage broker or lending establishment.
Can I buy a house with a $10,000 deposit? This really depends on the price of the house you're trying to buy. If the property value is $100,000, then a $10,000 deposit would be acceptable. However, if you need a larger loan amount then $10,000 may not be enough unless you have a guarantor.
$70,000 salary
A $70,000 annual gross income with a mortgage at 5.99% p.a. equates to a loan amount of up to $391,222. With a 10% deposit contribution, the maximum affordable property price would be $434,691, or with a 20% deposit $489,027.
That being said, most lenders will generally lend you up to four times your annual income. So, if you earn $75,000 per year, you could potentially borrow up to $300,000.
If you plan to deposit a large amount of cash, it may need to be reported to the government. Banks must report cash deposits totaling more than $10,000. Business owners are also responsible for reporting large cash payments of more than $10,000 to the IRS.
How much cash can you deposit? You can deposit as much as you need to, but your financial institution may be required to report your deposit to the federal government.
Depending on the situation, deposits smaller than $10,000 can also get the attention of the IRS. For example, if you usually have less than $1,000 in a checking account or savings account, and all of a sudden, you make bank deposits worth $5,000, the bank will likely file a suspicious activity report on your deposit.
Generally, borrowers require 20% of the purchase price as a deposit, but it can be as low as 5% – or even less – if you qualify.
Some lenders understand this and let you borrow more than 80% of the property's value. Some will lend you up to 95% – meaning your deposit will be 5%, plus the associated purchase costs. This means that if the property you want is $400,000, 5% of that would be a $20,000 deposit – a bit more doable.
Deposit Conclusion
The deposit needed to purchase a $250,000 house generally needs to be 5%-20% of a home's purchase price.