Are you ready for mortgage season?

It's only one week until spring and that means neighbourhoods across the country will be dotted with 'open house' signs every weekend. Thanks to steady house prices nationwide, it's a buyer's market.

But what does it take to be a qualified buyer these days and how much deposit do you need saved to secure a home loan?

Ideally, you should have at least a 10 percent down payment to get a foot on the property ladder. However, if you're intending to borrow more than 80 percent of the purchase price then you'll have to factor in the extra expense of lender's mortgage insurance (LMI).

Based on RP Data's 2011 house price records, the average Australian home costs $417,500. Buy in Brisbane, Canberra, Darwin, Melbourne, Perth or Sydney and you'll pay significantly more, on average.

If you're paying rent, saving $41,750 may seem an unachievable goal, but it can be done.

How to reach your goal

Saving for a 10 percent deposit is possible within four years, particularly if you invest using a high-interest savings account such as UBank's USaver at an ongoing variable rate of 6.51 percent or Virgin Money's Virgin Saver at 6.51 percent for four months, for instance. Other competitive savings accounts are available with RaboDirect, Citibank and CUA all with rates above 6.2 percent p.a.

By saving $800 per month at 6.51 percent you'll have reached $44,000 within four years (less tax and if the rate stays the same). There are a lot of great tools online now to help you get there, including the government's Money Smart free online budget planner. This will give you a guide as to how much you can comfortably afford to spend servicing a home loan, but remember that if rates increase your repayments may rise so don't take on more debt than you can afford to repay.

First home saver accounts offer future home buyers a tax effective savings alternative with an added incentive of government contributions. So if you're aged between 18 and 65 and saving for your first property you could be eligible for a 17 percent government contribution on the first $5500 you save per year in a first home saver account. There are conditions attached to these types of accounts, but the rewards are significant.

Can't wait to save $40K?

There are some options out there for people who have less than 10 percent deposit which are mortgages with a loan to value ratio (LVR) above 90 percent.

For instance, if you are buying a $400,000 home and the home loan you want has an LVR of 95 percent, then you will be able to apply for a loan of $380,000. You'll need the remaining 5 percent, or $20,000, to get you over the line. RateCity monitors more than 1000 residential home loans with LVRs above 90 percent up to a maximum of 98 percent LVR.

Despite which road you decide to take to owning your first home, always do your research and compare mortgages online before you buy because the difference in costs between two home loans can be significant.

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