How Much Deposit Do I Need for a Home Loan in Australia?

The short answer: it depends on your strategy

The deposit question is the single biggest barrier for aspiring Australian homeowners. The short answer: you need a minimum of 5% of the property price, but 20% is the magic number that unlocks the best loan terms and avoids Lenders Mortgage Insurance (LMI).

But the real question isn't just "how much" — it's "how much for my situation?" Your ideal deposit depends on the property price, your state, whether you're a first home buyer, and how quickly you want to enter the market.

This guide breaks down every scenario so you can set a clear, realistic savings target.

Understanding deposit thresholds

The 5% minimum

Most Australian lenders will consider a home loan application with a 5% deposit, provided you meet their income and serviceability criteria. However, a 5% deposit means:

• Your loan-to-value ratio (LVR) is 95%, which is high risk for lenders
• You will pay Lenders Mortgage Insurance (LMI), which can add $15,000–$30,000+ to your costs
• You'll have fewer lender options and potentially higher interest rates
• You're more vulnerable to negative equity if property values dip

The 10% sweet spot

A 10% deposit (90% LVR) is a popular middle ground. LMI still applies, but premiums are significantly lower than at 95% LVR — often half or less. More lenders compete for your business at this level, and you start with a healthier equity buffer.

The 20% gold standard

A 20% deposit (80% LVR) eliminates LMI entirely, gives you access to the most competitive interest rates, and provides a strong equity buffer. For a $800,000 property, that's $160,000 — a substantial sum, but it could save you $15,000–$25,000 in LMI alone.

Beyond the deposit: total upfront costs

Your deposit is only part of the upfront equation. Budget for these additional costs:

Stamp duty (transfer duty)

Stamp duty is typically the largest cost after the deposit itself. It varies dramatically by state and property price:

• NSW: Up to 5.5% of property value (exemptions for FHBs on properties up to $800,000)
• VIC: Up to 5.5% (exemptions for FHBs on properties up to $600,000)
• QLD: Up to 4.5% (exemptions for FHBs on properties up to $550,000)
• WA: Up to 4.75% (concessions for FHBs on properties up to $530,000)

Legal and conveyancing fees

Budget $1,500–$3,000 for a solicitor or conveyancer to handle the legal side of your purchase, including contract review, title searches, and settlement.

Building and pest inspections

A combined building and pest inspection typically costs $500–$1,500 depending on the property size and location. This is money well spent — it can save you from costly surprises.

Loan application fees

Some lenders charge an application or establishment fee of $0–$600. Many competitive lenders have waived this fee, and your broker can help you find one that has.

Moving and connection costs

Don't forget practical costs: removalists ($500–$2,000), utility connections, mail redirection, and any immediate repairs or improvements.

Government schemes that reduce the deposit you need

Australian governments offer several schemes specifically designed to help buyers enter the market with a smaller deposit:

First Home Guarantee (FHBG)

The federal government's First Home Guarantee allows eligible first home buyers to purchase with just a 5% deposit without paying LMI. The government guarantees up to 15% of the property value. Key criteria:

• Must be an Australian citizen aged 18+
• Individual income up to $125,000 or couple income up to $200,000
• Property price caps apply by location
• Must be owner-occupied

Regional First Home Buyer Guarantee

Similar to the FHBG but specifically for buyers in regional areas, with the same 5% minimum deposit and no LMI requirement.

Family Home Guarantee

Designed for single parents (including separated or divorced parents with dependants), this scheme allows purchase with just a 2% deposit, with no LMI. You don't need to be a first home buyer to qualify.

First Home Owner Grant (FHOG)

A one-off cash grant for first home buyers, varying by state:

• NSW: $10,000 for new homes up to $600,000
• VIC: $10,000 for new homes up to $750,000
• QLD: $30,000 for new homes up to $750,000
• WA: $10,000 for new homes up to $750,000

First Home Super Saver Scheme (FHSSS)

This federal scheme lets you withdraw voluntary super contributions (up to $50,000) to use as a home deposit. Because super contributions are taxed at 15% instead of your marginal rate, this effectively boosts your savings rate.