How Much Deposit Do You Need to Buy a House in Australia? (2025)
5%, 10% or 20%? Understand how deposit size affects LMI costs, borrowing power and First Home Guarantee eligibility — with real dollar examples for Australian buyers.
The size of your deposit is one of the most consequential decisions you'll make when buying a home in Australia. Get it wrong and you either pay thousands in unnecessary Lenders Mortgage Insurance, or you wait years longer than you need to while prices move beyond reach. This guide covers every key threshold — 5%, 10%, 20% — what each one costs, and how schemes like the First Home Guarantee can change the equation.
The three deposit thresholds that matter
Australian lenders and government schemes are structured around three key deposit levels. Each has meaningfully different costs and eligibility outcomes.
| Deposit | LVR | LMI required? | First Home Guarantee eligible? | Typical interest rate impact |
|---|---|---|---|---|
| 5% | 95% | Yes (significant) | Yes (if eligible) | Higher rate (riskier LVR) |
| 10% | 90% | Yes (moderate) | No | Moderate rate |
| 20% | 80% | No | No (not needed) | Best rates available |
What does LMI actually cost? Real Australian examples
Lenders Mortgage Insurance (LMI) protects the lender — not you — if you default. You pay it, but you get no benefit from it. The premium depends on your loan amount and LVR. Here are realistic estimates using common Australian property prices:
| Property price | Deposit | LVR | Loan amount | Estimated LMI |
|---|---|---|---|---|
| $600,000 | $60,000 (10%) | 90% | $540,000 | ~$9,720 |
| $600,000 | $30,000 (5%) | 95% | $570,000 | ~$21,660 |
| $800,000 | $80,000 (10%) | 90% | $720,000 | ~$12,960 |
| $800,000 | $40,000 (5%) | 95% | $760,000 | ~$28,880 |
| $1,000,000 | $100,000 (10%) | 90% | $900,000 | ~$16,200 |
The good news: LMI can usually be added (capitalised) onto your loan rather than paid upfront, though this means paying interest on it over the life of the loan. On a $21,000 LMI premium at 6% over 30 years, the total cost including interest is approximately $45,000.
Use our Mortgage Repayment Calculator to model your repayments with and without LMI capitalised into the loan.
The First Home Guarantee — 5% deposit, no LMI
The First Home Guarantee (previously the First Home Loan Deposit Scheme) allows eligible first home buyers to purchase with just a 5% deposit and pay zero LMI. The federal government guarantees the remaining 15% to the lender, meaning you avoid both the LMI premium and any rate loading for high-LVR loans.
Eligibility for 2025–26:
- Australian citizen or permanent resident
- First home buyer (never owned a property in Australia)
- Income test: singles ≤ $125,000 taxable income; couples ≤ $200,000 combined
- Intend to live in the property as principal place of residence
- Property price must be within the regional cap (see table below)
- 50,000 places available per financial year
| Location | Price cap (2025) |
|---|---|
| Sydney / NSW capital / major regional centres | $900,000 |
| Melbourne / VIC capital / major regional centres | $800,000 |
| Brisbane / Gold Coast / Sunshine Coast | $700,000 |
| Perth / Adelaide / ACT | $600,000 |
| Regional NSW, VIC, QLD, WA, SA | $600,000 |
| NT / TAS / remaining areas | $500,000 |
Places fill quickly — apply through a participating lender (the major banks and many regional lenders participate). The scheme is administered by Housing Australia.
Your total upfront costs — deposit is only part of it
A common mistake: first home buyers save the deposit amount but forget that stamp duty, conveyancing fees and inspection costs must also be paid in cash — they cannot be included in your home loan.
Example total upfront budget for a $700,000 home in NSW, first home buyer with 10% deposit:
| Cost | Amount | Notes |
|---|---|---|
| Deposit (10%) | $70,000 | Held by your solicitor, transferred at settlement |
| Stamp duty | $0 | FHB exemption for NSW ≤ $800k |
| LMI (90% LVR) | ~$11,400 | Can be capitalised into loan |
| Conveyancing / legal | ~$2,000 | Varies by solicitor |
| Building & pest inspection | ~$600 | Essential for established homes |
| Loan application / settlement fees | ~$600 | Varies by lender |
| Total cash required | ~$73,200 | LMI capitalised |
For the same property in Victoria (non-FHB), stamp duty would add approximately $36,830 to this total — taking total upfront cash to ~$110,000.
Calculate your exact stamp duty and see the full upfront cost breakdown with our Stamp Duty Calculator. Tick "First Home Buyer" to see how much you save.
Saving your deposit faster — practical strategies
First Home Super Saver Scheme (FHSSS)
Make voluntary contributions into super (up to $15,000/year, $50,000 total) and withdraw them for a first home purchase. Contributions are taxed at 15% rather than your marginal rate — saving a 30% taxpayer up to $2,250/year in tax on $15,000 of contributions, effectively turbocharged savings.
Genuine savings requirement
Most lenders require at least 5% of the purchase price to be held as genuine savings — funds saved over at least 3 months through regular contributions. A lump-sum gift from parents alone typically doesn't qualify. Plan accordingly: start building your genuine savings account well before you plan to buy.
The rent vs. buy-with-LMI maths
Whether it's better to pay LMI and buy now, or rent while saving a 20% deposit, depends entirely on your local market. If properties are rising at 8% per year and you need 3 more years to save 20%, the capital growth may far exceed the LMI cost. If prices are flat or falling, waiting costs you nothing. Run the numbers for your specific situation rather than applying a general rule.
Frequently asked questions
What is the minimum deposit required to buy a house in Australia?
The minimum deposit most lenders accept is 5% of the purchase price. However, with a deposit below 20% you will generally be required to pay Lenders Mortgage Insurance (LMI), which can add thousands to your upfront costs. Some lenders accept a 2% deposit under specific government guarantee schemes.
What is the First Home Guarantee and how does it help?
The First Home Guarantee (formerly First Home Loan Deposit Scheme) is a federal government program that allows eligible first home buyers to purchase with a 5% deposit and avoid LMI. The government guarantees the remaining 15% to the lender. There are 50,000 places per year with income caps ($125,000 for singles, $200,000 for couples) and property price caps that vary by location.
What is LMI and how much does it cost in Australia?
Lenders Mortgage Insurance (LMI) is insurance that protects the lender (not you) if you default on your loan when your deposit is less than 20%. Costs depend on your loan size and LVR: at 90% LVR on a $600,000 loan, LMI is approximately $10,800. At 95% LVR on the same loan, it rises to approximately $20,280. LMI can usually be capitalised into your loan.
Does the deposit include stamp duty in Australia?
No — stamp duty is a separate cost that must be paid in cash at settlement and is NOT included in the deposit. For a $700,000 home in NSW, stamp duty for a non-first-home buyer is approximately $26,335. First home buyers in NSW pay $0 stamp duty on homes up to $800,000. Always budget for stamp duty on top of your deposit.
What counts as 'genuine savings' for a home loan deposit?
Most lenders require you to demonstrate that at least 5% of the purchase price is held as genuine savings — funds that have been in your account for at least 3 consecutive months and built up through regular saving. Gifts from family, inheritance lump sums, and tax refunds generally do not qualify as genuine savings on their own, though some lenders have exceptions. The remaining deposit funds can come from any source.
Is a 20% deposit always better than a smaller deposit?
Not necessarily — it depends on your situation. A 20% deposit avoids LMI and gives you access to better interest rates. But saving a 20% deposit takes longer, during which property prices may rise faster than your savings rate. If you can access the First Home Guarantee or factor in LMI as an upfront cost worth paying to enter the market sooner, a smaller deposit can be the right financial decision. Run the numbers both ways.
Can I use the First Home Super Saver Scheme (FHSSS) for my deposit?
Yes — the FHSSS allows eligible first home buyers to make voluntary contributions into their superannuation fund (up to $15,000/year, $50,000 total) and then withdraw those contributions plus earnings for a first home purchase. Because contributions are taxed at 15% rather than your marginal rate, this can accelerate deposit savings. Withdrawals are taxed at your marginal rate minus a 30% offset.
LMI cost estimates in this article are approximate and based on typical insurer rates as at mid-2025. Actual LMI premiums vary by lender and insurer. First Home Guarantee details are based on the Housing Australia scheme as at July 2025 — eligibility criteria and place allocations change annually. This article is general information only and does not constitute financial or credit advice.