How Much Deposit Do You Need to Buy a Home?

General information only, correct as at July 2026. Interest rates, government scheme rules, grant amounts and thresholds change regularly — always confirm current details with a Finconnex broker or the relevant government agency before making a decision based on any figure below.

Most people assume they need 20% saved before they can even think about buying. It's a useful benchmark, but it's not the only path in, and for a lot of first home buyers it's not the realistic one either.

The 20% benchmark, and why it exists

If your deposit is 20% or more of the property price, you avoid Lenders Mortgage Insurance (LMI), a one-off premium that protects the lender if you default, not you. Under 20%, most lenders will still approve you, but LMI gets added to the cost of the loan. On a $700,000 property, that gap is $140,000 versus a much smaller number, which is exactly why most first home buyers don't wait until they hit it.

Buying with less than 20%

Two main routes:

• Pay LMI. You can buy with as little as 5–10% deposit and either pay the LMI premium upfront or have it capitalised into your loan. It costs more, but it can mean buying years earlier rather than waiting to save the full 20%, while property prices keep moving.
• Use the Australian Government 5% Deposit Scheme. Eligible first home buyers can purchase with just 5% deposit (2% for single parents or legal guardians) with no LMI at all, because the government guarantees the gap to 20%. Since the scheme expanded in October 2025, there are unlimited places and no income caps, so far more buyers now qualify than under the old rules. Price caps still apply and vary by location, so it's worth checking what applies where you're looking.

Where the deposit itself can come from

Lenders generally want to see "genuine savings", typically a track record of savings held over a period of time, not a lump sum that landed the week before you applied. Common sources that count:

• Personal savings built up over time
• A gifted deposit from family (usually needs a signed gift statement)
• First Home Super Saver Scheme withdrawals (voluntary super contributions you can release to help fund a deposit)
• Proceeds from selling another asset

Deposit isn't the only number that matters

Budgeting for "the deposit" and stopping there is the most common first home buyer mistake we see. You'll also need to cover, where applicable: stamp duty (unless you qualify for an exemption or concession), conveyancing and legal fees, building and pest inspections, loan establishment fees, and LMI if you're under 20%. A broker can map the full cash-to-settlement number early, so there are no surprises three weeks out from exchange.

The bottom line

The right deposit strategy depends on your savings rate, your timeline, and whether you'd rather buy sooner with some LMI or scheme support, or wait longer to hit 20%. There's no single correct answer, only the one that fits your situation. That's exactly the kind of assessment a broker does before recommending a path forward.