How Much Deposit Do I Need to Buy a House in Australia?
If you’re saving up for your first home (or your next one), the deposit question is probably keeping you up at night. Is it 20%? Is it 5%? Do you need to save six figures before a bank will even talk to you?
The good news is that the answer is more flexible than most people think. Let’s break it down in plain English, so you know exactly where you stand.
The Short Answer
Most lenders want you to have at least a 5% deposit, but the amount you actually need depends on three things:
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- How much the property costs
- Whether you want to avoid Lenders Mortgage Insurance (LMI)
- Whether you’re eligible for a government scheme that lowers the deposit even further
Let’s look at each of these properly.
The “Old Rule” of 20%
You’ve probably heard that you need a 20% deposit to buy a house. This isn’t a law; it’s just the amount that lets you avoid paying Lenders Mortgage Insurance (LMI).
LMI is a one-off insurance premium that protects the lender (not you) if you default on your loan. If your deposit is below 20% of the property price, most lenders will charge you LMI on top of your loan.
On a $700,000 property, a 20% deposit is $140,000. That’s a lot of saving for most people, especially with rents and everyday costs where they are. Thankfully, you don’t need to hit that number to get into the market.
What You Actually Need: 5% to 10% Is Common
Most banks and lenders will approve a home loan with a deposit as low as 5%, as long as you can show you’re a reliable borrower (stable income, good credit history, and manageable expenses). If you go below 20%, you’ll usually pay LMI, but that cost can often be added to your loan rather than paid upfront.
Here’s a rough guide on a $700,000 property:
What You Actually Need: 5% to 10% Is Common
Most banks and lenders will approve a home loan with a deposit as low as 5%, as long as you can show you’re a reliable borrower (stable income, good credit history, and manageable expenses). If you go below 20%, you’ll usually pay LMI, but that cost can often be added to your loan rather than paid upfront.
Here’s a rough guide on a $700,000 property:
Deposit Amount Needed LMI Payable?
20% $140,000 No
10% $70,000 Yes
5% $35,000 Yes (unless using a government scheme)
LMI costs vary depending on your lender and deposit size, but on a smaller deposit it can add tens of thousands of dollars to what you owe. This is where government schemes can make a real difference. For more details on LMI check out our article
Government Schemes That Lower Your Deposit
The rules around these schemes changed significantly from October 2025, and they’re now far more accessible than they used to be. Here’s where things stand.
First Home Guarantee – 5% Deposit, No LMI
This is the big one for first home buyers. Under the First Home Guarantee, eligible buyers can purchase with just a 5% deposit while the government covers the Lenders Mortgage Insurance, potentially saving tens of thousands of dollars.
The scheme was expanded significantly in October 2025. Key points:
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- There are now no caps on the number of places available, and no income caps.
- Eligible buyers with a minimum 5% deposit can borrow up to 95% of the property’s value, guaranteed by Housing Australia
- You need to be a first home buyer, or someone who hasn’t owned property in Australia in the past ten years
- Property price caps were significantly raised in October 2025
- Sydney is now $1,500,000, Brisbane $1,000,000, and Melbourne $950,000
It’s important to understand that this scheme is a guarantee, not a cash grant; you still need to service the full loan amount, and you still own 100% of the property.
Family Home Guarantee – 2% Deposit for Single Parents
If you’re a single parent, this scheme can bring your deposit down even further, to as little as 2%.
At Single Parents Home Loans, this is one of the schemes we help clients use most often, since it’s designed specifically to make homeownership realistic on one income.
Help to Buy – Shared Equity Scheme
This is a newer option, launched in December 2025. Under Help to Buy, the government contributes up to 40% of a new home’s purchase price, and you only need a 2% deposit.
It comes with income caps of $100,000 for individuals and $160,000 for joint applicants. Keep in mind Help to Buy and the First Home Guarantee can’t be used together, it’s one or the other, so it’s worth talking through which suits your situation better.
First Home Super Saver Scheme
This one works differently. Rather than lowering the deposit you need, it helps you save it faster. You can make voluntary contributions into your super of up to $15,000 a year and $50,000 in total, then withdraw those funds plus earnings later to put towards your first home deposit. Because super is taxed more favourably than your regular income, this can help you build a deposit quicker than a standard savings account.
Genuine Savings – Why It Still Matters
Even with a low-deposit scheme, most lenders want to see that at least part of your deposit is “genuine savings” – money you’ve saved yourself over time, rather than a lump sum that appeared in your account last week (like a gift). If a family member is helping you out, talk to your broker early so it’s structured in a way your lender will accept.
Don’t Forget the Other Costs
Your deposit isn’t the only money you’ll need upfront. Depending on your state and the property, you should also budget for:
Stamp duty (though first home buyers often get a discount or exemption)
Conveyancing and legal fees
Building and pest inspections
Loan application or valuation fees
Moving costs
As a rule of thumb, it’s smart to have a little extra set aside on top of your deposit so these costs don’t catch you out.
A Quick Example
Say you’re a first home buyer looking at an $800,000 property in Brisbane.
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- Without a scheme: You’d need a 20% deposit ($160,000) to avoid LMI, or a smaller deposit plus an LMI cost added to your loan.
- With the First Home Guarantee: You could buy with a 5% deposit ($40,000) and pay no LMI at all, as long as the property is under the relevant price cap and you meet the eligibility rules.
That’s the difference between waiting years longer to save, and getting into your own home much sooner.
So, How Much Do You Actually Need?
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- Best case with a government scheme: As little as 2–5% deposit
- Standard low-deposit loan: 5–10% deposit, plus LMI
- No LMI, no scheme: 20% deposit
The right path depends on your income, your savings, whether you’re a first home buyer or single parent, and what kind of property you’re after.
Every situation is different, and the schemes above have specific eligibility rules that are worth checking carefully before you get your heart set on a property.
Let’s Work Out Your Number
Deposit rules can feel confusing, especially with all the recent scheme changes. If you’d like to know exactly how much deposit you’d need for your situation and whether you qualify for a scheme that could get you into a home sooner we’re happy to run the numbers with you.
This article is general information only and doesn’t take into account your personal financial situation. Please speak with us or a licensed adviser before making any decisions about your home loan or deposit strategy.