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.