Edited: 15th April 2026
TL;DR
- The 20% figure gets repeated constantly, but 5% is the common minimum — and total upfront cash almost always exceeds the deposit, once stamp duty, legal fees, and inspections are added.
- Below 20% LVR, Lenders Mortgage Insurance applies unless you qualify for a government guarantee, profession-specific waiver, or guarantor arrangement — LMI protects the lender, not you.
- Government schemes like the First Home Guarantee and Help to Buy do genuinely different things; understanding which one fits your situation matters before assuming you’re eligible.
- Whether to buy sooner with a smaller deposit or wait depends on your market, income trajectory, and risk tolerance — there’s no universal right answer, and it’s worth modelling properly before deciding.
Most people saving for their first home are aiming at a moving target. The 20% figure gets repeated so often it starts to feel like the only answer, but it is not the whole story — and for a lot of buyers, it is not even the right target. The real question is not just “how much deposit do I need?” but “how much total cash do I actually need, what genuinely changes based on my deposit size, and what is the smartest approach for my situation?”
Those are harder questions, but they are the ones worth answering. This guide works through all of them.
If you are already weighing up your options, it is worth knowing that there are pathways specifically designed for buyers who are not at the 20% mark yet — including low deposit home loans for buyers with 5% to 10% saved, and tailored support through a first home buyer loan if this is your first purchase. This guide explains how those options fit into the broader deposit picture.
The Short Answer (And Why It Is More Complicated Than It Looks)
The minimum deposit most lenders will accept is 5% of the property’s purchase price. The standard benchmark that avoids most of the extra costs is 20%. But here is the thing that catches a lot of buyers off guard: your deposit is not the only money you need at the table.
Stamp duty, legal fees, conveyancing costs, building and pest inspections, mortgage registration, and a financial buffer for after you move in — none of that comes from your deposit. It sits on top of it. So a buyer with exactly 5% saved has their deposit covered and essentially nothing else. Understanding the full cash picture, not just the deposit figure, is where proper planning starts.
As you start weighing up deposit size and loan options, it’s also worth thinking about who you’ll work with to secure the loan itself. Understanding the difference between going direct to a lender or working with a broker can shape both your borrowing options and overall experience — this guide on mortgage broker vs bank for first home buyers breaks down what to expect from each path.
The Three Deposit Targets Most Buyers Are Choosing Between
There is a reason buyers tend to cluster around three deposit levels. Each one represents a meaningfully different risk and cost profile.
5% Deposit
This is the entry point for most buyers who are not waiting to accumulate more. It is possible through standard lender products, and for eligible buyers, it is also the entry point for the federal government’s First Home Guarantee, which allows qualifying first-home buyers to purchase with a 5% deposit without paying Lenders Mortgage Insurance.
The trade-offs are real. At 5%, your loan-to-value ratio (LVR) is 95%, which is about as high as most lenders will go. Outside a government guarantee, you will pay LMI — and at 95% LVR, that premium is significant. Your loan is larger, your repayments are higher, and you have less equity buffer if property values soften after you buy. You also have fewer lender options, as not every product is available at 95% LVR.
That said, a 5% deposit is not automatically the wrong choice. If property prices in your target area are rising faster than you can save, the cost of waiting can exceed the cost of LMI. It depends on your market, your timeline, and how your income and savings are tracking.
10% Deposit
Ten per cent is a genuinely useful middle ground that does not always get enough attention. It reduces your LVR to 90%, which opens up more lender options and lowers your LMI premium compared to a 95% LVR loan — meaningfully so. Your repayments are lower, your loan balance is smaller, and you are starting with a bit more equity.
For buyers who cannot reach 20% in a reasonable timeframe but are uncomfortable with the full cost of a 5% deposit approach, 10% is often a smart target. It is also the level at which some lender-specific LMI waivers or professional packages kick in for certain borrower categories, such as medical professionals or lawyers, so it is worth checking what is available for your situation.
20% Deposit
The 20% threshold triggers a specific outcome: your LVR drops to 80% or below, which means most lenders will not require LMI. That saves you a potentially large one-off cost and immediately improves your loan options, your rate competitiveness, and your equity position from day one.
The obvious downside is time. In most Australian capital city markets, 20% of a median-priced property is a large sum, and saving it while paying rent takes years for most households. Every year spent saving is a year of potential capital growth that passes without you in the market. Whether that trade-off is worth it is genuinely context-dependent — it depends on property price growth in your target area, your household income growth, your rent relative to a mortgage payment, and your personal tolerance for financial risk.
There is no universally correct answer. What there is, is a decision worth thinking through carefully rather than defaulting to whichever number someone told you was “the rule.”
What Actually Changes When Your Deposit Is Below 20%
When your deposit is below 20% and you are not protected by a government guarantee or another LMI-waiver pathway, Lenders Mortgage Insurance applies. It is worth understanding exactly what this is, because the name misleads people.
LMI protects the lender, not you. If you default and the property sells for less than the outstanding loan balance, LMI covers the lender’s shortfall. You still owe any residual debt. The premium is calculated as a percentage of the loan amount and can range from under $5,000 at lower LVRs to well over $20,000 for high-LVR loans on more expensive properties. It is typically either paid upfront or capitalised into the loan — and if it is added to the loan, you pay interest on it for the life of the mortgage.
LVR also affects which loan products you can access. Some lenders restrict their most competitive rates and features to loans at or below 80% LVR. Above that, your choices narrow, which can affect your rate and your long-term cost.
None of this is a reason not to buy with a smaller deposit — it is just the financial reality you are working with, and it is better to know it clearly upfront than to be surprised at settlement.
The Cash You Need Beyond the Deposit
This is the section most deposit guides skim over, and it is arguably the most important one for practical planning purposes.
When you purchase a property, you need to come up with the contract deposit at the time of signing — usually 5% to 10% of the purchase price, paid on exchange. Then, at settlement, you need the remaining funds to complete the purchase. But you also need to cover a range of costs that sit entirely outside the deposit:
Stamp duty is the big one. It varies significantly by state and territory, by property price, and by whether you qualify for first-home-buyer concessions or exemptions. In some states it is a substantial five-figure sum; in others, first-home buyers are fully exempt below certain price thresholds. You need to look up the current rates and concessions for your specific state — the number matters a lot for your total cash requirement.
Legal and conveyancing fees cover the professional work involved in transferring property ownership. Budget roughly $1,500 to $3,000 depending on complexity and state.
Building and pest inspections are not compulsory but are strongly advisable for established properties. Factor in $500 to $800 or more depending on property type and location.
Mortgage registration and transfer fees are government charges associated with registering the mortgage and transferring the title. These are relatively modest but worth including in your budget — typically a few hundred dollars each.
Moving costs and immediate setup expenses are often forgotten in the deposit-planning phase. Removalists, utility connections, basic furniture or appliances, and minor repairs can add up to several thousand dollars quickly.
Putting this together practically: a buyer purchasing a $750,000 property in New South Wales with a 10% deposit needs $75,000 for the deposit, plus stamp duty (which for a property at that price and buyer profile could be substantial unless an exemption applies), plus legal fees, inspections, and other costs. Total upfront cash requirement could sit anywhere between $100,000 and $120,000+ depending on concession eligibility — very different from $75,000.
Running your own numbers before deciding whether you’re ready to buy is not optional. It is the whole exercise.
How Government Schemes Can Reduce the Barrier
There are several federal and state government programs designed to help buyers get into property sooner or with less upfront cash. They do genuinely different things, and it is worth understanding which is which.
The First Home Guarantee (5% Deposit Scheme)
This is the most widely used scheme. It allows eligible first-home buyers to purchase with a 5% deposit without paying LMI, because Housing Australia guarantees up to 15% of the loan value to the lender. The government is not handing you money — it is underwriting the lender’s risk so they do not need to charge you LMI.
There are income caps, property price caps (which vary by location), and eligibility rules around previous property ownership. Places are limited and allocated annually, so timing matters.
The Regional First Home Buyer Guarantee
Same structure as the First Home Guarantee, but specifically for buyers purchasing in regional Australia. Worth checking if you are targeting a regional area, as price caps may be more generous in proportion to typical property values.
The Family Home Guarantee
Designed for eligible single parents with at least one dependant child. It allows purchase with a deposit as low as 2% without LMI. Income and property price caps apply, and the purchaser does not need to be a first-home buyer — though they cannot currently own property.
Help to Buy (Shared Equity)
This scheme, now open for applications at the federal level, operates differently. The government co-purchases a share of your property — up to 40% for new builds and 30% for existing homes — which reduces the amount you need to borrow and lowers your repayments. The trade-off is that you do not own 100% of your home from day one, and the government holds an equity stake that is repaid when you sell, refinance, or choose to buy out the government share.
It is a genuine reduction in the cost of entry, but it is a different kind of arrangement to a straightforward mortgage. Whether it suits you depends on your long-term plans for the property.
State Grants and Stamp Duty Concessions
Most states and territories offer some form of First Home Owner Grant for eligible new or substantially renovated home purchases. The amounts and eligibility criteria vary by state. Many states also offer stamp duty concessions or exemptions for first-home buyers below certain price thresholds. These can make a meaningful difference to total upfront cash required — sometimes removing a five-figure cost entirely.
Check the current offerings in your state directly through the relevant state revenue office, as amounts and eligibility thresholds are updated periodically.
The First Home Super Saver Scheme (FHSSS)
This allows eligible first-home buyers to make voluntary contributions into their superannuation and then withdraw those funds (plus associated earnings) to use toward a deposit. The tax advantages of super can make this a more efficient savings vehicle than a standard bank account for some buyers. There are limits on how much can be released, and the scheme has specific rules around contribution types and timing.
Deposit Scenarios at Different Purchase Prices
To make this concrete, here is how deposit requirements look across a few common purchase prices. These figures cover the deposit only, not total upfront cash.
For a $600,000 property: a 5% deposit is $30,000, a 10% deposit is $60,000, and a 20% deposit is $120,000. A buyer using the First Home Guarantee at 5% may avoid LMI; a buyer without scheme access at 5% would pay LMI on a $570,000 loan, which could add around $15,000 to $20,000 to their costs depending on the lender.
For an $800,000 property: 5% is $40,000, 10% is $80,000, 20% is $160,000. Note that some government scheme property price caps may apply at this level depending on your state, which would affect your eligibility.
For a $1,000,000 property: 5% is $50,000, 10% is $100,000, 20% is $200,000. At this price point, most government low-deposit schemes have price cap restrictions that would exclude the property in most markets, so LMI becomes the likely cost of buying below 20%.
These are deposit figures only. Add stamp duty, legal costs, inspections and a buffer — and your total cash requirement is substantially higher than the deposit alone.
Off-the-Plan and New Builds: A Different Deposit Dynamic
Buying off-the-plan is sometimes pitched as an easier deposit pathway because your contract deposit is paid now but settlement may be one, two, or even three years away. That gives you more time to save the remaining funds.
However, the dynamics are more complex than they first appear. Your contract deposit — typically 10% — is tied up for the duration. And at settlement, the lender will conduct a fresh valuation of the completed property. If the market has moved since you exchanged contracts, or if the development has finished in a way that affects value, the valuation may come in below your purchase price. That creates a shortfall you need to cover in cash, potentially at short notice.
New builds that you commission through a builder also have a different deposit and drawdown structure, with funds released in stages as construction progresses. This usually involves a construction loan, which works differently to a standard mortgage and has its own assessment requirements.
Neither approach is better or worse as a general rule — they just require understanding before you commit.
Should You Buy Sooner With a Smaller Deposit or Wait?
This is the question that sits at the heart of most deposit conversations, and there is no single right answer.
The argument for buying sooner: in most major Australian markets over the medium term, property prices have grown faster than most buyers can save. Paying LMI hurts, but if the property you buy appreciates by 5% or 8% in the year you spent agonising over the decision, the LMI premium can look modest by comparison.
The argument for waiting: a larger deposit means a smaller loan, lower repayments, more lender options, and more financial cushion if life changes. Buying at the very edge of your capacity leaves almost no margin for rate rises, income disruption, or unexpected costs. And in markets where price growth is flat or uncertain, waiting costs far less.
The honest verdict is that this decision needs to be modelled for your specific market, income trajectory, and risk tolerance. A general rule from a blog post — including this one — is not a substitute for running the actual numbers. What a good mortgage broker can do is show you what your repayments and total interest cost look like at different deposit and loan size combinations, and help you weigh whether the market timing risk justifies buying sooner.
Building Your Deposit Without Undermining Your Application
Saving a deposit efficiently is one thing. Saving it in a way that satisfies a lender’s requirements is another, and the two are not always identical.
Most lenders expect to see what is known as genuine savings — funds you have accumulated yourself through regular, consistent contributions over time. A lump sum received from a family member or an inheritance shortly before you apply may not meet this standard, even if the money is sitting in your account.
Gifts from family can be included as part of a deposit under many lenders’ policies, but lenders will typically require a statutory declaration that the money is a gift and not a loan, and they may still want to see a portion of the deposit come from your own savings history.
Gambling winnings, cash deposits, and funds received very close to the application date are scrutinised more closely. The cleanest approach is a consistent savings record — regular transfers into a dedicated account, maintained over at least three to six months, ideally longer.
If you are planning to use the FHSSS, the timing of contributions and withdrawals needs to be planned in advance. You cannot access the funds on demand; there is an application process, and it can take several weeks.
What to Do Before You Make an Offer
Knowing your deposit size is step one. Before you start making offers, there are a few things worth having sorted:
Get a realistic estimate of your borrowing power, either through a mortgage broker or a lender assessment. Your deposit alone does not determine what you can borrow — your income, expenses, existing debts, and credit profile all factor in.
Calculate your total upfront cash requirement for your target price range and state, including stamp duty and all associated costs. Be conservative.
Check your eligibility for relevant government schemes before assuming you qualify. Income caps, property price caps, and previous ownership rules all affect access.
Get your documents in order early — tax returns, payslips, bank statements, identification, and evidence of your deposit savings.
Consider getting pre-approval if you are actively looking. It gives you a clearer budget ceiling and signals to vendors that you are a serious buyer.
Speak to a conveyancer or solicitor before you exchange contracts on anything. Not after.
Conclusion
The deposit question has a short answer and a long one. The short answer: 5% is the common minimum, 20% avoids LMI, and total upfront cash almost always exceeds the deposit figure. The long answer is the rest of this article — because what you really need to know is how those numbers interact with your income, your market, your eligibility for support schemes, and how much financial risk you are comfortable carrying.
There is no universally correct deposit target. There is only the one that makes sense for your situation, properly modelled and clearly understood before you commit. If you would like help working through what that looks like for you, the team at Q Financial can walk through your numbers honestly and without pressure.
Frequently Asked Questions
What is the minimum deposit to buy a house in Australia? Most lenders require a minimum of 5% of the purchase price. Some government-backed pathways, such as the Family Home Guarantee for eligible single parents, allow as little as 2%. Below 20%, you will generally pay Lenders Mortgage Insurance unless a government guarantee or specific lender waiver applies.
Do I really need a 20% deposit? No. Twenty per cent is the threshold that eliminates LMI and opens up the widest range of loan products, but many buyers purchase successfully with smaller deposits — particularly through government schemes or by accepting the LMI cost as part of their buying strategy.
Does a 5% deposit mean I only need 5% of the purchase price in cash? No. The deposit is separate from the other upfront costs you need to cover, including stamp duty, legal fees, building inspections, and mortgage-related government charges. In practice, your total upfront cash requirement is often 7% to 12% of the purchase price or more, depending on your state and eligibility for stamp duty concessions.
What is LMI and do I have to pay it? Lenders Mortgage Insurance is a premium charged by the lender when your deposit is below 20% of the purchase price (LVR above 80%). It protects the lender against loss if you default — not you. You pay it, but it covers their risk. It can be avoided through a 20% deposit, a government guarantee scheme, a guarantor arrangement, or some profession-specific lender waivers.
What is the difference between the First Home Guarantee and Help to Buy? The First Home Guarantee lets eligible first-home buyers purchase with a 5% deposit without paying LMI, because the government guarantees part of the loan. You own 100% of the property from the start. Help to Buy is a shared equity scheme where the government co-purchases up to 40% of the property with you, reducing your loan size and repayments — but you do not own the full property until you buy out the government’s share or sell.
Can a guarantor help me buy with a smaller deposit? Yes. A guarantor — usually a family member who offers equity in their own property as security — can allow you to borrow more than your deposit alone would support, sometimes enabling purchase without LMI. It carries risk for the guarantor, so it is a decision that should not be made lightly and ideally should involve legal advice on both sides.
Can I use a gift from family as part of my deposit? Most lenders will accept a gifted deposit from a close family member, provided the gift is documented with a statutory declaration confirming it does not need to be repaid. However, many lenders will also want to see a component of genuine savings — funds you have accumulated yourself — especially for higher-LVR loans.
How much deposit do I need for a $800,000 property? A 5% deposit is $40,000, a 10% deposit is $80,000, and a 20% deposit is $160,000. Add stamp duty and other upfront costs on top of whichever figure applies. Note that government scheme eligibility may be limited at this price point depending on your state and the scheme’s current property price caps.
Is it better to wait for a 20% deposit or buy sooner? It depends. In markets where prices are rising faster than you can save, buying sooner — even with LMI — can be the better financial outcome. In flatter markets, waiting preserves your financial cushion and reduces your loan size. The right answer depends on your specific market, income trajectory, and risk tolerance, and is worth modelling properly with a mortgage professional before deciding.
Do I need genuine savings for a home loan? Most lenders prefer to see genuine savings — money you have saved yourself through consistent contributions over time. The definition and requirements vary by lender and LVR, but as a general rule, the cleaner and more consistent your savings history, the stronger your application looks. Lump sums received close to the application date are scrutinised more closely.