How Much Deposit Do You Need for a House?

Most Australian lenders require a minimum 5% deposit to approve a home loan, but a 20% deposit is recommended to avoid paying Lenders Mortgage Insurance (LMI). The right deposit amount depends on your financial situation, the property price, and whether you qualify for government assistance schemes.

Deposit Amounts at Different Property Prices

The table below shows how much you would need to save at each deposit level for common Australian property prices.

LMI Implications at Each Deposit Level

Your deposit size directly determines whether you pay LMI and how much it costs:

• 5% deposit (95% LVR): LMI required. Expect to pay $15,000 - $42,000+ depending on the property price. This is the most expensive LMI tier. Available through the First Home Guarantee to avoid LMI.
• 10% deposit (90% LVR): LMI required. Expect to pay $8,000 - $21,000+. The most common deposit level for first home buyers without government scheme access.
• 15% deposit (85% LVR): LMI required but significantly cheaper at $3,500 - $10,000. Some professional packages waive LMI at this level.
• 20% deposit (80% LVR): No LMI required. This is the benchmark that eliminates LMI entirely and typically secures the best interest rates.

Government Schemes That Reduce Deposit Requirements

Several federal and state government programs help Australians buy a home with a smaller deposit:

• First Home Guarantee (FHBG): The federal government guarantees up to 15% of the property value, allowing eligible first home buyers to purchase with just a 5% deposit and no LMI. Property price caps apply (e.g., $900,000 in Sydney, $800,000 in Melbourne). Limited to 35,000 places per financial year.
• Regional First Home Buyer Guarantee: Same as FHBG but for buyers purchasing in regional areas. 10,000 places per financial year.
• Help to Buy (shared equity): The federal government contributes up to 40% of the purchase price for new homes (30% for existing homes) as a shared equity partner. You need as little as 2% deposit. The government share is repaid when you sell or can be bought out over time.
• First Home Owner Grant (FHOG): A one-off grant of $10,000 - $30,000 (varies by state) for eligible first home buyers purchasing or building a new home. This can be used toward your deposit.
• First Home Super Saver Scheme (FHSSS): Allows you to withdraw voluntary super contributions (up to $50,000) to use as a deposit. Contributions are taxed at 15% instead of your marginal rate, creating a tax-effective savings strategy.
• State stamp duty exemptions: While not reducing your deposit directly, stamp duty exemptions for first home buyers free up cash that can be redirected to your deposit. See our stamp duty guide for details by state.

Tips for Saving a House Deposit

• Open a dedicated high-interest savings account: Separate your deposit savings from everyday spending. Many banks offer bonus interest for regular deposits with no withdrawals.
• Use the First Home Super Saver Scheme: Contributing extra to super and withdrawing it under FHSSS can save you thousands in tax compared to saving in a standard bank account.
• Set up automatic transfers: Treat your deposit contribution like a bill — set up a recurring transfer on payday so you save consistently without relying on willpower.
• Track all your genuine savings: Lenders want to see a consistent savings pattern over at least 3 to 6 months. Regular, disciplined saving matters as much as the total amount.
• Budget for all upfront costs, not just the deposit: You will also need cash for stamp duty (unless exempt), conveyancing fees ($800 - $2,500), building and pest inspections ($400 - $800), and loan application fees ($0 - $600).
• Consider a family guarantee: If a parent or family member has sufficient equity, a guarantor arrangement can help you avoid LMI with a smaller deposit while keeping their property and your loan separate.

If you do not have enough cash for a traditional deposit, a deposit bond can serve as a substitute at exchange. You can also use our borrowing capacity calculator to see how much you can borrow at different deposit levels.

What Counts as "Genuine Savings"?

Most lenders require at least part of your deposit to be "genuine savings" — money you have saved yourself over time (usually 3 to 6 months minimum). Genuine savings include:

• Regular savings account deposits
• Term deposits held for 3+ months
• Shares or managed funds held for 3+ months
• Equity in an existing property
• FHSSS withdrawals

Gifts from family, tax refunds, inheritance, and the First Home Owner Grant are generally not considered genuine savings by most lenders. Some lenders are more flexible than others — a mortgage broker can help you find the right match for your deposit composition.