First Home Buyers
First Home Buyer Prep Guide: What To Do Before You Start House Hunting
Expert Tips and Guides And How to Avoid Them Buying your first home can feel huge. There’s a lot of noise, a lot of opinions,
FHSS & KiwiSaver
“How much deposit do I actually need?” is one of the first questions almost every first home buyer asks. The internet will happily throw numbers at you – 5%, 10%, 20% – without explaining what they really mean in practice.
In this guide, we’ll walk through the deposit question using a simple $700,000 property example. We’ll look at:
Most first home buyers think in terms of a simple percentage deposit – “I’ve got 10%” or “I’m aiming for 20%”. That’s a good starting point, but when it comes to actually settling on a property, what really matters is your total funds to complete.
Your deposit is the chunk of money you put towards the purchase price.
example:
On a $700,000 property, a 10% deposit would be $70,000.
A 20% deposit would be $140,000.
Your funds to complete is the total cash you need available by settlement, which usually includes:
Your upfront costs – for example, stamp duty (if payable), conveyancing/solicitor fees, building and pest inspections, and government/bank fees.
Your buffer – what you have left after settlement for furniture, small repairs and sanity.
In plain English: Your deposit is what you put into the purchase price. Your funds to complete is the total cash you need to safely get the keys and still have something left in the bank.
The short answer: not necessarily.
A 20% deposit has traditionally been seen as the “gold standard” because it typically means you avoid Lenders Mortgage Insurance (LMI) with most lenders. On a $700,000 property, 20% would be $140,000. But plenty of first home buyers purchase with less than 20%. You might buy with 10%, 5%, or even less in some cases – it just changes the trade-offs.
Deposit: $140,000
Deposit: $70,000
Loan amount: $560,000
Loan amount: $630,000
LMI: Usually not required
LMI: Usually required (can add $10,000–$20,000+ depending on lender and situation)
Estimated upfront costs: ~$15,000–$25,000 (varies by state and situation)
–
Total funds to complete: Roughly $155,000–$165,000 plus your buffer
Total funds to complete: Roughly $85,000–$110,000 plus your buffer (depending on LMI and costs)
Neither option is right or wrong. It depends on your timeline, how quickly you’re saving, and how comfortable you are with a larger loan and potentially paying LMI.
LMI is insurance that protects the lender (not you) if you default on your loan. It’s typically required when you borrow more than 80% of the property’s value – in other words, when your deposit is less than 20%.
If you’re buying a $700,000 property with a 10% deposit, you’re borrowing 90% of the property value. That usually triggers LMI. The cost of LMI varies based on your deposit size, loan amount, and the lender. On a $630,000 loan (90% LVR), LMI could be anywhere from $10,000 to $20,000+ – it depends on the lender and your situation.
LMI is usually added to your loan balance (capitalised), so you don’t have to pay it upfront out of your savings. That can actually help you get into a property sooner, since you’re not draining your cash reserves.
The trade-off: you’re borrowing more and paying interest on the LMI amount over time.
If you’re an Australian citizen or permanent resident, the First Home Super Saver (FHSS) scheme may help you boost your deposit by making extra contributions into your super.
How FHSS works in simple terms
A very simple FHSS-style example: Let’s say you’ve been making voluntary super contributions over the past few years and have built up $50,000 in eligible FHSS amounts. You could apply to withdraw that $50,000 (subject to release rules and any tax) and add it to your other savings. If you had $90,000 in regular savings plus $50,000 from FHSS, you’d have $140,000 available – enough for a 20% deposit on a $700,000 property.
If you’re a New Zealander who’s moved to Australia, you might have money sitting in KiwiSaver back in NZ that could potentially be used towards your first home here.
Under trans-Tasman portability rules, you may be able to transfer your KiwiSaver balance into an eligible Australian superannuation fund. Once it’s in Australian super, it generally follows Australian super rules – including, potentially, the FHSS scheme.
If your transferred KiwiSaver funds are held in your Australian super, you may be able to use a portion via the FHSS scheme – up to the relevant caps and rules.
Example: if you transfer $40,000 from KiwiSaver and then make additional contributions, you might eventually be able to release some of that via FHSS towards your deposit.
This is a technical area with changing rules. Before you make any moves, it’s worth speaking with your KiwiSaver provider, your Australian super fund, and potentially a tax adviser.
Here are three simplified scenarios to show how deposit, LMI, and FHSS can fit together.
- Cash savings: $90,000
- FHSS withdrawal: $50,000
- Total deposit: $140,000 (20%)
- Loan amount: $560,000
- LMI: Not required
- Estimated costs: ~$20,000
- Total funds to complete: ~$160,000
- Cash savings: $90,000
- Deposit: $70,000 (10%)
- Loan amount: $630,000
- LMI (capitalised): ~$15,000
- Estimated costs: ~$20,000
- Total funds to complete: ~$90,000 (plus buffer)
- Current savings: $50,000
- Expected FHSS/KiwiSaver contribution: $20,000
- Target deposit: $70,000 (10%)
- Timeline: 12–24 months of additional saving
Decide on a rough target price range (for example, around $700,000).
Work out your current savings, debts and super/KiwiSaver balances.
Estimate your deposit position now – is it closer to 5%, 10% or 20% of your target price?
Get a rough feel for your total funds to complete (deposit + costs + buffer).
If you’re a citizen or PR, check whether FHSS might fit into your plan.
If you’re a Kiwi, find out what’s possible with your KiwiSaver and potential transfer to Australian super.
Check what first home buyer grants, concessions or schemes might apply in your state or territory.
Book a chat to put all of this together and see whether waiting or buying sooner makes more sense for you.
This article is general information only. It doesn’t take into account your full financial situation, needs or objectives. Home loan policies, government schemes, FHSS rules and KiwiSaver transfer rules all change over time.
Before you make big decisions about buying a home or using super/KiwiSaver towards a deposit, it’s worth getting personalised advice based on your real numbers. If you’d like a calm, no-pressure chat to map out your deposit options, you’re welcome to get in touch and we can go through it together.
Expert Tips and Guides And How to Avoid Them Buying your first home can feel huge. There’s a lot of noise, a lot of opinions,
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