Minimum deposit requirements for a home loan vary by lender and loan type, but many conventional loans allow deposits as low as 5-10%, while some government-backed programs allow even less.
A larger deposit reduces the amount borrowed, which lowers monthly payments and total interest paid over the life of the loan, and can help you qualify for a better interest rate.
Deposits below 20% often trigger a mortgage insurance requirement, an added monthly cost that protects the lender – not the borrower – in case of default, until enough equity is built up.
Saving a larger deposit takes longer, which delays buying, so there’s a genuine trade-off between waiting to save more and the ongoing cost of insurance on a smaller deposit.
The ‘right’ deposit size depends on your timeline, local market conditions, and whether the monthly savings from a larger deposit outweigh the opportunity cost of the extra time spent saving it.