How Much Deposit Do I Need to Buy a House in Australia?

Quick Answer

The standard deposit for buying a house in Australia is 20% of the purchase price. This avoids Lenders Mortgage Insurance (LMI) and gives you access to the widest range of loan products. That said, many buyers purchase with a 5–10% deposit, either by paying LMI or using a government guarantee scheme.

Why 20% Is the Benchmark

Lenders set 20% as the threshold because it reduces their risk. If you borrow more than 80% of a property's value, the lender requires you to take out LMI — insurance that protects the bank (not you) if you default and the property sells for less than the loan balance.

A 20% deposit on a $700,000 home is $140,000. That is a significant savings target, which is why many buyers explore lower-deposit options.

Can You Buy With Less Than 20%?

Yes, and many buyers do. The key is understanding what it costs.

5–10% Deposit With LMI

Most major lenders will approve loans with a 5–10% deposit if you meet their serviceability criteria. The trade-off is LMI, which can add tens of thousands of dollars to your loan balance.

LMI is calculated as a percentage of the loan amount and varies by lender and LVR (loan-to-value ratio). A 5% deposit on a $700,000 property means borrowing $665,000. LMI on that amount could be $15,000 to $25,000 or more, typically added to your loan.

Government Guarantee Schemes

The federal government runs two key schemes that allow eligible buyers to purchase with a 5% deposit without paying LMI:

First Home Guarantee (FHBG): First-home buyers can purchase with as little as 5% deposit and the government guarantees up to 15% of the loan, eliminating LMI. Income and property price caps apply.

Regional First Home Buyer Guarantee: Similar to the FHBG but specifically for buyers in regional areas.

Family Home Guarantee: Single parents can purchase with as little as 2% deposit under this scheme.

Places in these schemes are limited and release annually. Check the Housing Australia website for current availability and eligibility requirements.

Guarantor Loans

A family guarantor — usually a parent — can use equity in their own home to secure part of your loan. This can allow you to borrow with a smaller deposit or avoid LMI. Guarantor arrangements carry real risks for the guarantor and require careful legal and financial advice for all parties.

What Counts as a Genuine Deposit?

Lenders distinguish between genuine savings and gifted funds. Most require that at least part of your deposit comes from savings held for three to six months in your name. Gifts from family, inheritances or proceeds from asset sales may be accepted but are treated differently.

Check your lender's requirements early. Some first-home buyer schemes have specific rules about what constitutes an acceptable deposit.

Other Costs to Budget For

Your deposit is just the start. Buying a property involves a range of additional upfront costs:

• Stamp duty: Varies by state and purchase price. First-home buyers may be exempt or receive concessions up to certain thresholds.
• Conveyancer/solicitor fees: $1,500–$3,000 typically.
• Building and pest inspection: $400–$800.
• Loan application and valuation fees: Varies by lender.
• Moving costs and connection fees: Often underestimated.

Budget an additional 3–5% of the purchase price for these costs on top of your deposit.

Realistic Example

Sarah is buying a $650,000 home in Brisbane. She has $65,000 saved (10% deposit). She cannot access a government guarantee scheme.

With a 10% deposit, her LVR is 90%. LMI on a $585,000 loan at 90% LVR might cost around $12,000–$18,000, which gets added to her loan. Her effective borrowing becomes approximately $597,000–$603,000.

If she waited and saved to $130,000 (20%), she would avoid LMI entirely and borrow $520,000. The difference in monthly repayments and total interest paid is significant over a 30-year loan.

Checklist: Preparing Your Deposit

• Set a savings target based on your purchase price range and the deposit percentage you need
• Check whether you qualify for the First Home Guarantee or other government schemes
• Confirm with your lender what counts as genuine savings
• Calculate stamp duty costs for your state — factor these into your total upfront budget
• Get a pre-approval to understand your borrowing capacity before starting your property search
• Factor in LMI if you are buying with less than 20% — calculate the exact cost with your broker
• Ask about the First Home Super Saver Scheme if you have been contributing to superannuation

Key Takeaways

• The standard deposit is 20% to avoid LMI, but many buyers purchase with 5–10%
• Government guarantee schemes allow eligible first-home buyers to purchase with 5% without paying LMI
• LMI protects the lender, not you — factor the cost into your total purchase budget
• Budget an extra 3–5% for stamp duty, conveyancing, inspections and other upfront costs
• What counts as genuine savings varies by lender — check early in your planning

FAQ

Can I buy a house with a 5% deposit in Australia? Yes. You can pay LMI or use a government guarantee scheme like the First Home Guarantee if you meet the eligibility criteria. Income caps and property price limits apply to the schemes.

Does stamp duty count as part of my deposit? No. Stamp duty is a separate upfront cost. You need your deposit plus funds for stamp duty and other purchase costs. Some states offer stamp duty concessions or exemptions for first-home buyers.

What is the First Home Super Saver Scheme? The FHSS allows eligible first-home buyers to withdraw voluntary super contributions (up to $50,000) to use as part of their deposit. There are conditions and tax implications — speak with a financial adviser before using this strategy.

How long does it take to save a 20% deposit? This depends entirely on your income, expenses, property price target and savings rate. A financial calculator or mortgage broker can model different scenarios based on your situation.

Run a Free Property Analysis on Marketli

Marketli helps you research suburbs and set realistic price targets so you know exactly what deposit you are working towards. Start your search before you reach your savings goal — understanding the market early makes better buyers.