Understanding the Deposit Gap and Its Impact on First Home Buyers – Kandid Loans

Buying your first home is a major milestone, but in today’s property market, it feels more challenging than ever. One of the biggest hurdles facing first home buyers is the deposit gap — the growing difference between what buyers can realistically save and the amount needed to secure a home loan. At Kandid Loans, your trusted independent mortgage broker in Sydney, we help first home buyers understand this challenge and find smart, practical solutions to overcome it.

The deposit gap has widened significantly in recent years due to rising property prices, stagnant wage growth, and increasing living expenses. As property values grow faster than savings, many first home buyers find themselves needing a larger deposit just to enter the market. Traditionally, lenders prefer a 20% deposit to avoid Lenders Mortgage Insurance (LMI). However, with median home prices reaching new highs, achieving that 20% target can take years longer than before.

This growing gap creates several issues for first home buyers. First, it delays homeownership, keeping many renters in the market longer. Second, it forces buyers to stretch their budgets, take on more debt, or consider less suitable properties. And third, it increases financial stress, making it harder to balance saving for a deposit with paying rent, bills, and day-to-day expenses.

But the good news is that the deposit gap doesn’t have to prevent you from buying your first home. With expert guidance, tailored loan comparisons, and access to government support programs, buyers can still step confidently into the property market.

As an independent mortgage broker in Sydney, Kandid Loans works closely with first home buyers to explore all available options. Many lenders now offer loans with deposits as low as 5%, and some even provide no-LMI loans for eligible applicants. We compare offerings from multiple lenders to find solutions that suit your financial situation and long-term goals.

Government incentives also play a crucial role in closing the deposit gap. Schemes such as the First Home Guarantee (FHBG), First Home Owner Grant (FHOG), and stamp duty concessions can significantly reduce upfront costs. However, these programs have specific eligibility requirements, and not every loan product qualifies. Our team helps you understand which benefits you can access and how to maximise them.

Another effective way to overcome the deposit gap is through financial structuring. This may include using genuine savings, leveraging rent history, or exploring family guarantee options. A guarantor loan, for example, allows family members to use their property’s equity to support your deposit, reducing or even eliminating the need for LMI. Many first home buyers are unaware of these strategies until they speak with an experienced mortgage broker.

At Kandid Loans, we understand that every buyer’s journey is different. That’s why we focus on personalised support, clear guidance, and honest comparison across a wide range of lenders. We help you calculate your borrowing power, understand deposit requirements, explore low-deposit home loan options, and build a realistic plan to achieve your homeownership goals.

The deposit gap may be growing, but it doesn’t have to hold you back. With the right advice, strategic planning, and expert mortgage support, first home buyers can still secure their dream home sooner than they think.

Let Kandid Loans guide you through every step — from understanding the deposit gap to choosing the best loan for your future. You won't believe how close your first house is.

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