Introduction
It’s the question I get asked more than any other.
A first home buyer sits across from me — or jumps on a call — and within the first five minutes they ask it: “So how much do I actually need saved up before I can buy?”
It sounds like a simple question. But the honest answer is: it depends — and the good news is that the number is probably lower than you think.
If you’re looking to buy in Melbourne’s west — suburbs like Werribee, Point Cook, Tarneit, Truganina or Williams Landing — this post is going to walk you through exactly what you need, what’s optional, and how some of my clients have bought their first home with as little as 5% saved.
The Standard Answer: 20% — And Why You Don’t Necessarily Need It
You’ve probably heard that you need a 20% deposit. That number gets thrown around a lot, and it’s not wrong — 20% is the threshold where lenders don’t charge you Lenders Mortgage Insurance (LMI).
But here’s the thing: most first home buyers in Melbourne’s west aren’t buying with 20% deposits. And many don’t need to.
Let’s look at what the numbers actually mean for this part of Melbourne.
The median house price in suburbs like Tarneit and Truganina currently sits around $580,000–$640,000. A 20% deposit on a $600,000 home is $120,000. That’s a long time saving — especially if you’re renting while you do it.
A 5% deposit on the same home? $30,000. That’s a very different conversation.
The Three Real Deposit Scenarios
Scenario 1: 5% deposit with the First Home Guarantee
The First Home Guarantee (formerly the First Home Loan Deposit Scheme) is a federal government scheme that lets eligible first home buyers purchase with just a 5% deposit — without paying LMI.
The government essentially guarantees the remaining 15% to the lender, which removes the need for mortgage insurance.
For a $600,000 home in Werribee, that means:
- Deposit needed: $30,000
- LMI payable: $0
- Government guarantee: covers the gap
There are no income caps but there are property price caps — but most homes in Melbourne’s west fall comfortably within the limits.
The catch? There are a limited number of spots available each financial year, and not every lender participates. This is exactly where having a broker matters — I know which lenders have spots available and which ones will move quickly to get your application in.
Scenario 2: 5–10% deposit without the scheme (LMI applies)
If you don’t qualify for the First Home Guarantee or miss out on a spot, you can still buy with a 5–10% deposit. You’ll just pay LMI, which is an insurance premium that protects the lender (not you) if you default.
LMI gets a bad reputation, but it’s worth putting in perspective. On a $600,000 home with a 5% deposit, LMI might cost you around $18,000–$22,000 — and it’s usually added to your loan, not paid upfront. If getting into the market now means you avoid two more years of rent and benefit from property growth, it can absolutely be the right financial decision.
The maths on this depends on your personal situation. I work through this with every client before they make a call either way.
Scenario 3: 10% or more
With 10% or more saved, you have stronger negotiating power with lenders, lower LMI costs (or none at all with the right scheme), and more flexibility on the type of property you can buy. If you’re in a position to save to this level before buying, it opens up more options.
What About Stamp Duty?
Here’s where Victorian first home buyers get a significant win.
If you’re buying a home under $600,000 in Victoria, you pay zero stamp duty. For homes between $600,000 and $750,000, you receive a concession.
On a $580,000 home, that’s potentially $30,000+ you’re not paying. This dramatically changes the deposit calculation — because the deposit is only part of what you need at settlement.
The other costs to factor in include:
- Conveyancing: $1,200–$2,500
- Building and pest inspection: $400–$700
- Loan application fees: varies by lender, sometimes nil
- Moving costs: $500–$2,000
Most first home buyers in Melbourne’s west should budget an additional $3,000–$6,000 on top of their deposit for these costs. I always walk through a full cost breakdown with clients so there are no surprises on settlement day.
A Real Example from Tarneit
One of my clients — a couple in their late 20s renting in Tarneit — came to me thinking they needed to save for another two years before they could buy.
They had $35,000 saved. Combined income just under $165,000. No credit card debt, one small car loan.
We got them into the First Home Guarantee, paired them with a lender that had spots available, and they settled on a 4-bedroom home for $612,000 four months later.
Their deposit? $30,600. Stamp duty? Significantly reduced given the price point. LMI? Zero.
They’re now paying a mortgage instead of rent — and their mortgage repayments are actually less than what they were paying in rent.
This isn’t unusual. It’s what happens when you understand your options before assuming you can’t buy yet.
The Most Common Mistake I See
First home buyers in Melbourne’s west often spend months — sometimes years — saving toward a 20% deposit without realising there are legitimate paths to buy sooner with less.
The problem isn’t savings discipline. The problem is not knowing what you’re actually working toward.
A 30-minute call with me will tell you exactly what deposit you need, which schemes you qualify for, and what a realistic timeline looks like. That’s it. No jargon, no pressure, no obligation.
Ready to Find Out What You Need?
If you’re buying in Melbourne’s west — whether that’s Werribee, Point Cook, Tarneit, Truganina or Williams Landing — I’d love to help you work out your exact number.
Book a free 30-minute call and I’ll tell you what you can borrow, which grants and schemes you qualify for, and what your path to buying looks like. In plain English.
Yash Duggal is a mortgage broker based in Melbourne’s west, specialising in home loans for first home buyers. Credit Representative Number 562209, authorised under Australian Credit Licence 389328.
The information in this article is general in nature and does not constitute financial advice. Your individual circumstances will affect what deposit and loan options are available to you. Always consult a licensed mortgage broker or financial adviser before making borrowing decisions.
