How Much Deposit Do I Need?
How much deposit do I need to buy a home in Australia?
By Andrew, franklenn FINANCE 6 min readUpdated 3 November 2026
The short answer
Most lenders prefer a 20% deposit, which lets you avoid lenders mortgage insurance (LMI), but many people buy with 5% to 10%. With a smaller deposit you will usually pay LMI unless you qualify for an exemption or a government scheme such as the federal 5% Deposit Scheme. On top of the deposit, budget for stamp duty (if it applies), legal fees, inspections and loan costs. The right deposit balances getting into the market sooner against borrowing more.
Detailed explanation
Why 20% is the common benchmark
Lenders measure risk using your loan to value ratio, or LVR. That is the loan amount as a percentage of the property's value. A 20% deposit means an 80% LVR, which most lenders treat as the threshold where they no longer need you to pay LMI.
LMI protects the lender, not you, if you cannot repay the loan. It can cost thousands to tens of thousands of dollars depending on the loan size and LVR, and it is often added to the loan.
A 20% deposit also gives you more lender choice and often access to sharper interest rates. But for many first home buyers, especially in higher priced markets, saving 20% while paying rent can take a long time, so it is worth weighing the cost of waiting as well.
Buying with 5% or 10%
Many lenders will lend up to 90% or 95% of a property's value for owner-occupiers with a good record of saving. You will usually pay LMI, but getting into the market sooner can make sense for some buyers, particularly if rents are high or saving a bigger deposit would take years.
The federal 5% Deposit Scheme lets eligible first home buyers buy with as little as 5% and no LMI, because the government guarantees part of the loan. From 1 October 2025 it was expanded with no income caps, unlimited places and higher property price caps. Eligibility rules still apply and can change, so check the current details.
- Some lenders waive LMI for certain professions, such as doctors, lawyers or accountants
- A family guarantee lets a parent use equity in their home as extra security instead of you paying LMI
- Gifted funds from family can count toward your deposit with many lenders
Do not forget the upfront costs
Your deposit is not the only cash you need. Stamp duty can be the biggest extra cost, although first home buyer concessions in Queensland and NSW may reduce or remove it for eligible purchases. You will also pay conveyancing, inspections, loan fees and moving costs.
As a rough guide, many buyers set aside an extra few thousand dollars for these, and much more where stamp duty applies. Use a stamp duty calculator for your state and price range.
We also suggest keeping a buffer after settlement, ideally enough to cover a few months of repayments and living costs. Life does not stop when you get the keys, and having some cash on hand means an unexpected bill does not end up on a credit card.
Genuine savings and why they matter
Some lenders want to see that at least part of your deposit, often 5%, is genuine savings. That usually means money you have saved or held over around three months. Rent paid on time can sometimes count toward this with certain lenders.
Even when genuine savings are not strictly required, a steady pattern of saving helps show a lender you can manage the repayments.
If you are not sure how a lender will view your savings, talk to us before you move money around. Shifting funds between accounts or receiving large unexplained deposits shortly before applying can raise questions, and it is easier to plan ahead than to explain it afterwards.
Worked example
Comparing deposits on a $684,000 home
Here is how three deposit sizes compare on a $684,000 purchase, using an illustrative rate of 5.89% p.a. over 30 years with principal and interest repayments. LMI is not included in these loan amounts.
| 5% deposit / loan amount | $34,200 / $649,800 |
| 5% deposit monthly repayment | $3,850.04 |
| 10% deposit / loan amount | $68,400 / $615,600 |
| 10% deposit monthly repayment | $3,647.41 |
| 20% deposit / loan amount | $136,800 / $547,200 |
| 20% deposit monthly repayment | $3,242.14 |
| Total interest over 30 years: 5% vs 20% deposit | $736,215.87 vs $619,971.26 |
Saving a 20% deposit instead of 5% lowers the monthly repayment by about $608 and saves around $116,244 in interest over the loan's life in this example, before any LMI. But it also means saving an extra $102,600, which could take years. The right answer depends on your situation.
Illustrative only. Figures are examples, not a quote or a recommendation.
Common mistakes
- Assuming you must have 20% before you can buy
- Forgetting stamp duty and other upfront costs when working out how much you need
- Not checking whether you qualify for the 5% Deposit Scheme or an LMI waiver
- Moving savings around between accounts right before applying, which makes genuine savings harder to show
- Emptying every dollar into the deposit and leaving no buffer for after settlement
Frequently asked questions
Next steps
Talk to franklenn FINANCE
Want to know how much deposit makes sense for you? Book a free discovery call with franklenn FINANCE and we will compare your options side by side.
This guide is general information only and does not consider your objectives, financial situation or needs. It is not financial, tax or legal advice. Lender policies, rates and government schemes change. Please speak with us, and with your accountant or solicitor where relevant, before acting.