How much deposit do you actually need to buy a home in Australia?
It is the first question almost every aspiring buyer asks, and the answer is more flexible than you might think. The 20% deposit is the gold standard, but the minimum most lenders will accept is far lower, and several government schemes lower the bar even further.
The 20% benchmark
A 20% deposit remains the benchmark in Australian home lending for one simple reason: at 20% or more, you avoid Lenders Mortgage Insurance (LMI), a one-off cost that protects the lender (not you) if you default. On a typical purchase, LMI can add anywhere from a few thousand dollars to more than $20,000 to your costs.
On an $800,000 home, a 20% deposit is $160,000. That is a lot to save, which is exactly why most first home buyers do not wait for it.
The real minimum: 5%
Most lenders will accept a deposit as low as 5% of the purchase price. The trade-off is that borrowing more than 80% of the property value usually triggers LMI, and the smaller your deposit, the larger that premium tends to be.
| Deposit | LVR | What it means |
|---|---|---|
| 20%+ | 80% or less | No LMI, sharpest rates available |
| 10% to 19% | 81% to 90% | LMI applies, rates step up slightly |
| 5% to 9% | 91% to 95% | Higher LMI, fewer lenders, stricter assessment |
Buying with 5% (or even 2%) and no LMI
This is where government guarantee schemes change the maths entirely. Under the First Home Guarantee, eligible first home buyers can purchase with as little as a 5% deposit, with the government guaranteeing up to 15% of the loan. That means no LMI, even though you are putting down less than 20%.
From 1 October 2025, this scheme was significantly expanded: income caps and the annual cap on places were removed, and property price limits were lifted (for example, up to $1.5 million in Sydney and $1 million in Brisbane). That makes it accessible to far more buyers than before.
If you are a single parent or single legal guardian with at least one dependent child, the Family Home Guarantee goes further, allowing a purchase with as little as a 2% deposit and no LMI.
Do not forget the other upfront costs
Your deposit is not the only cash you need at settlement. Budget for:
- Stamp duty (transfer duty), though first home buyers in many states get a full or partial concession depending on the price.
- Conveyancing or legal fees, typically $1,000 to $2,500.
- Building and pest inspections, a few hundred dollars.
- Loan and government registration fees.
As a general guide, set aside an extra 3% to 5% of the purchase price on top of your deposit to cover these.
So what should you aim for?
If you can reach 20%, you get the cleanest deal and the lowest rates. If you cannot, that is completely normal, and a 5% deposit through a guarantee scheme may let you buy sooner and avoid LMI altogether. The right answer depends on your income, the property price, your eligibility for schemes, and how the numbers stack up against continuing to rent and save.
The bottom line
You do not always need 20%. Between low-deposit lending and the expanded government guarantee schemes, the path to your first home may be closer than you assume, just make sure you understand the LMI and the full set of upfront costs before you commit.