Your home loan questions answered

Thinking about buying a home but feeling a bit overwhelmed by all the jargon and numbers? You’re not alone.

Whether you're just starting to explore your options or already deep into house-hunting mode, understanding how home loans work can make a big difference. From deposits to stamp duty, we’ve simplified the key questions to help you feel confident in the process.

How much can I borrow, and what will it cost me each month?

Your borrowing capacity depends on several factors, including (but not limited to) your income, expenses, existing debts, and credit score.

Lenders use this information to assess your financial situation and determine how much you can borrow. Your monthly repayments will be based on the loan amount, the interest rate, and the loan term.

To get a clearer picture, use a mortgage calculator to explore different scenarios. It’s also a good idea to speak with a lender early in your home-buying journey so you’re well-informed from the start.

How much deposit do I need for a home loan?

The minimum deposit required varies, but some buyers may be eligible with as little as 5%. However, deposits under 20% usually require Lenders Mortgage Insurance (LMI).

Your deposit size affects your loan-to-value ratio (LVR). For example, a 5% deposit on a $600,000 home is $30,000 – this would mean a loan of $570,000 and an LVR of 95%.

If you borrowed $480,000, on that same $600,000 home, your LVR is 80%. A larger deposit typically means a lower LVR, which can lead to better interest rates and lower repayments.

Check out RACQ's mortgage calculators

How do I get pre-approval for a home loan?

Pre-approval, also known as conditional approval, is an estimate from a lender of how much you can borrow. To apply, choose a lender and submit your financial details, including income, expenses, and savings.

If approved, you’ll receive a pre-approval letter, usually valid for around 90 days (this can vary by lender). It’s not a guarantee as final approval will depend on property valuation and updated financial information, but it helps you house-hunt within your budget.

How much will transfer duty and government costs be?

Transfer duty, also known as stamp duty, is a state tax based on the property’s value and location, and it varies across states.

Other costs may include legal fees, transfer fees, bank charges, and mortgage registration.

First home owner grants and other schemes are available to some borrowers and should be explored with your lender. Grants can be explored on the State Government website as well. 

Got more questions? Chat with a lender at RACQ Bank. Visit racq.com/homeloans to get started.

*Banking and loan products issued by Members Banking Group Limited ABN 83 087 651 054 AFSL/Australian credit licence 241195 trading as RACQ Bank. Terms, conditions, fees, charges and lending policies apply. This is general advice only and may not be right for you. This information does not take your personal objectives, circumstances or needs into account. Read the disclosure documents for your selected product or service, including the Financial Services Guide and the Terms and Conditions, and consider if appropriate for you before deciding.

**RACQ BANK Spring Campaign Cashback Offer – Terms & Conditions

For a limited time, eligible individuals will receive $2,000 (two thousand dollars) cashback when financing a home purchase with RACQ Bank (Cashback Offer), subject to the following terms and conditions:

1. The applicant(s) must:
   1. personally apply for a home loan with RACQ Bank between 18 August and 31 December 2025; 
   2. receive conditional approval for the home loan by 5:00pm 31 December 2025; and 
   3. complete settlement of the home purchase (i.e., draw down on funding) no later than 31 March 2026. 
2. This offer is only valid for the financing of a personal home purchase with RACQ Bank (i.e., purchase of an Owner Occupied or Investment property by individuals (not partnerships, companies, trusts, or other legal entities)).
3. Refinances are excluded from the Cashback Offer. 
4. This offer is valid for Owner Occupied Home Loans and Investment Home Loans only. It is not available on Construction Loans, Bridging Loans, Business / Commercial Loans or where the finance is being conducted in the name of a non-personal entity.
5. A minimum loan application amount of $500,000 is required for the financing of a home purchase with RACQ Bank to receive the Cashback Offer.
6. The Cashback Offer is limited to:
1. One per application regardless of the number of applicants; and
2. One per applicant per 12-month period, regardless of the number of applications made by the applicant and regardless of whether any of those applications were made alone or with other people.
7. The cashback payment will be paid into an open RACQ Bank account within 30 days of settlement. For joint applications, the cashback payment will be made to an account in the name of the primary applicant (for the avoidance of doubt, this may include a joint account).
8. Tax consequences may arise from this promotion for investors and members should seek independent advice on any taxation matters.
9. Terms, conditions, fees, charges, and normal lending criteria apply. Refer to racq.com/home/home-loans for additional information.