If you’re a first home buyer in WA, you’ve probably heard the “rule” that you need a 20% deposit to buy a house. It sounds responsible. Save hard, avoid debt, avoid fees — what’s not to like?

But here’s the catch nobody warns you about: while you’re saving that 20%, property prices don’t wait for you. For a lot of buyers, that “safe” strategy of waiting can actually end up costing more than just buying sooner with a smaller deposit.

Let’s break down how this works, using real numbers.

The Big Idea: Leverage

“High leverage” simply means borrowing a larger percentage of the property price, so you need a smaller deposit to get in. Instead of putting down 20%, you might put down 5% or 10%.

The trade-off is that when you borrow more than 80% of the property value, lenders require you to pay Lender’s Mortgage Insurance (LMI). This isn’t insurance for you — it protects the lender if you default and the property doesn’t sell for enough to cover the loan. But it’s what allows you to be approved with a smaller deposit in the first place.

LMI is usually a one-off cost, either paid upfront or added to your loan amount (“capitalised”). It can range from around 1% to 4%+ of the loan amount depending on your deposit size and lender.

The Worked Example

Let’s say you’re eyeing a $600,000 property in Perth.

Option A: Wait and save the full 20% deposit ($120,000)

• If you’re saving $1,500/month, that’s roughly 6-7 years of disciplined saving (before accounting for rent, which you’re still paying the whole time).
• Meanwhile, if property prices grow at a modest 5% per year, that same house is worth roughly $800,000+ in 7 years.
• Your 20% deposit target has now grown too — from $120,000 to $160,000. You’re chasing a moving target.

Option B: Buy now with a 10% deposit ($60,000) and pay LMI

• You could potentially buy today, borrowing 90% of the purchase price ($540,000).
• LMI on a 90% loan might cost somewhere around $15,000–$20,000 (capitalised into the loan, so you don’t need it in cash upfront).
• You start building equity today, and you lock in today’s price instead of tomorrow’s higher one.

	Wait & Save 20%	Buy Now with 10% + LMI
Time to purchase	~6-7 years	Now
Deposit needed	$120,000 (target keeps rising)(like the goal post just keep getting smaller)	$60,000
Extra cost	Years of rent paid to someone else	One-off LMI cost (~$15-20k)
Property price paid	Future, likely higher price	Today’s price
Equity growth	Starts in 7 years	Starts now

The one-off LMI cost can end up being a fraction of the capital growth you’d otherwise miss out on by waiting. Of course, this depends heavily on how fast the property market moves — which is why this is a conversation worth having, not a guarantee.

It’s Not Just About Price Growth

A few other things are worth factoring in:

• Peace of mind. Knowing that the place is yours and wont be asked to vacate the rental. And also to make the house look like a home.
• Rent vs mortgage repayments. Every dollar you pay in rent while saving builds your landlord’s equity, not yours.
• First Home Buyer support. Depending on your situation, you may be eligible for the First Home Guarantee (allows eligible buyers to purchase with as little as 5% deposit without paying LMI at all), the First Home Owner Grant (FHOG), or WA-specific schemes like Keystart, which has its own low-deposit options. These can significantly change the maths.
• Serviceability. Borrowing more means higher repayments, so lenders will check you can comfortably service the loan (including a buffer for rate rises). A smaller deposit strategy only works if the repayments actually fit your budget.
• LMI isn’t refundable. If you sell or refinance shortly after buying, you generally don’t get this money back — so it’s a cost best justified by a genuine, longer-term plan to hold the property.
• Interest on a larger loan. Borrowing more means paying more interest over time. It’s a genuine trade-off, not a free lunch — the case for buying sooner rests on capital growth and rent savings outweighing this extra interest and the LMI cost.

So, Which Is Right for You?

There’s no one-size-fits-all answer here. If prices in your target area are rising quickly and rents are high, buying sooner with a smaller deposit can put you ahead. If you’re close to that 20% mark anyway, or the market you’re buying into is flat, waiting a little longer might make more sense.

This is exactly the kind of decision where running your actual numbers — your savings rate, borrowing power, and the specific property market you’re looking at — makes all the difference between a guess and a genuine strategy.

If you’d like to see how this would play out for your situation, get in touch and we can run the numbers together.

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This article contains general information only and does not take into account your personal financial situation, needs, or objectives. It is not intended to be financial or credit advice. Before acting on any information in this article, you should consider its appropriateness to your circumstances and, where appropriate, seek advice from a qualified mortgage broker.