How Much Deposit to Buy a House in Australia: 2026

The 20% deposit rule is real, but it’s a cost threshold, not a legal requirement. Lenders will approve a home loan with a 5% deposit, a 2% deposit, or in some cases no deposit at all. What changes below 20% is what you pay for the privilege: either Lenders Mortgage Insurance (which can add $15,000 to $30,000 to your upfront costs), or the eligibility requirements for a government scheme that waives it entirely.

Understanding the deposit system before you start saving means you know exactly what you’re working toward, and whether a pathway exists to get you there sooner than you think. This guide covers every deposit tier, what each one costs and unlocks, and the five ways Australian first home buyers can enter the market with less than 20%.

Deposit Tiers: What Each Level Costs and Unlocks

The deposit you bring to a purchase determines your Loan-to-Value Ratio (LVR): the percentage of the property’s value you’re borrowing. Different LVR levels trigger different lender requirements, costs, and options.¹

Deposit	LVR	LMI payable?	What this unlocks
2%	98%	No (via specific programs only)	Keystart (WA only) or Single Parent Scheme
5%	95%	No (via scheme) or Yes (standard lending)	Federal 5% Deposit Scheme (LMI-free) or standard lending with LMI
10%	90%	Yes (reduced) or No (some lenders, some professions)	Wider lender choice, lower LMI premium than 5%
20%	80%	No	Standard lending, no LMI, widest lender access and best rate options

The 20% benchmark exists because lenders historically treat 80% LVR as the threshold where default risk becomes manageable without insurance. Below 80% LVR, the lender requires either the borrower to pay LMI (a one-off premium that protects the lender if you default) or a government guarantee that replaces it.

The deposit you need also depends on what you’re purchasing. Most lenders require at least 5% of the purchase price to come from genuine savings held in your account for at least three months. Grants, gifts, and inheritance payments can often supplement that savings base but typically can’t replace it entirely. This matters for buyers planning to use the First Home Owner Grant as part of their deposit strategy.

Not sure which deposit tier is realistic for your income and savings timeline? We can map your options before you approach any lender. Book a free assessment.

How Much Deposit You Need by City

The deposit amount you need is a percentage of the property you’re buying, so it scales with local property prices. The figures below are indicative estimates based on approximate median property values for each capital city as of 2026. Always verify current median prices through CoreLogic, Domain, or REIWA before planning your deposit target.²

City	Property type	Approx. median value	5% deposit	10% deposit	20% deposit
Sydney	House	~$1,300,000	~$65,000	~$130,000	~$260,000
Melbourne	House	~$950,000	~$47,500	~$95,000	~$190,000
Melbourne	Unit	~$580,000	~$29,000	~$58,000	~$116,000
Brisbane	House	~$900,000	~$45,000	~$90,000	~$180,000
Adelaide	House	~$800,000	~$40,000	~$80,000	~$160,000
Perth	House	~$750,000	~$37,500	~$75,000	~$150,000
Perth	Unit	~$500,000	~$25,000	~$50,000	~$100,000

These figures exclude upfront costs beyond the deposit: stamp duty (or the exemption where a first home buyer exemption applies in your state), legal and conveyancing fees, building inspection, and lender fees. For most first home buyers, the true upfront cash requirement is the deposit plus $5,000 to $15,000 in additional costs, though stamp duty exemptions can eliminate the largest of these in many states.

Two takeaways from the table are worth holding: a Melbourne or Perth unit sits at a price point where a 5% deposit falls under $30,000, achievable for many buyers within one to two years of focused saving. A Sydney house at 20% deposit requires $260,000, a figure that puts the standard lending threshold out of reach for most first home buyers without family support or a government scheme.

LMI: The Cost of Buying Below 20%

Lenders Mortgage Insurance (LMI) protects the lender if you default on your loan and the property sale doesn’t cover the outstanding debt. Despite the name, it protects the bank, not you. And you pay for it.

LMI is calculated as a percentage of the loan amount, with the rate increasing as the LVR rises. At 85% LVR, the premium typically runs around 0.9% of the loan. At 95% LVR, it can reach 3.5% or more. Two providers, Helia (formerly Genworth) and QBE, supply most Australian LMI, though some major banks self-insure. This means costs vary between lenders for the same loan profile, which is another reason why comparing lenders through a broker matters.¹

Property value	5% deposit (95% LVR)	10% deposit (90% LVR)	15% deposit (85% LVR)
$500,000	Approx. $15,750	Approx. $7,500–$9,000	Approx. $3,500–$4,500
$700,000	Approx. $22,000–$26,000	Approx. $10,500–$13,000	Approx. $5,000–$7,000
$900,000	Approx. $28,000–$35,000	Approx. $14,000–$17,000	Approx. $7,000–$9,000

LMI is typically capitalised: added to the loan balance rather than paid in cash at settlement. That means you pay interest on it for the life of the loan, making the true cost higher than the headline premium. A $20,000 LMI premium capitalised at 6.84% over 30 years adds approximately $44,000 in total interest to the loan, depending on repayment behaviour.¹

Whether paying LMI is worth it depends on the property market you’re entering. In a market where prices are rising steadily, entering a year earlier by paying LMI now may produce a better financial outcome than waiting to save a larger deposit while prices move. In a flat or falling market, the calculation looks different. Your broker can model both scenarios before you decide.

The Five Ways to Buy With Less Than 20%

LMI is not the only option for buyers below the 20% threshold. Five distinct pathways allow eligible buyers to purchase with a smaller deposit, some with no LMI at all.

Pathway	Min. deposit	LMI	Who qualifies	Key condition
Federal 5% Deposit Scheme	5%	None (government guarantees 15%)	All eligible first home buyers. No income cap since October 2025	Property must be within scheme price caps (vary by city)
Help to Buy	2%	None (government co-purchases up to 40%)	Income below $100,000 (singles) or $160,000 (couples)	Government owns a share of the property, repaid on sale
Guarantor loan	As low as 0% (depends on guarantor equity)	None (guarantor property used as additional security)	Buyer needs a qualifying family member as guarantor	Guarantor’s property is at risk. Independent legal advice required
Standard lending with LMI	5%	Yes, payable by borrower	Any borrower who meets lender’s income and credit criteria	LMI premium applies and is capitalised on the loan
Keystart (WA only)	2%	None	WA residents within income and property value thresholds	Higher interest rate than mainstream lenders; plan the exit to mainstream

The Federal 5% Deposit Scheme is typically the first pathway to assess. It has no income caps since October 2025, no annual place limits, and is delivered through mainstream lenders at market rates. Property price caps apply and vary significantly by city. Sydney sits at $1,500,000, Perth Metro at $850,000. A buyer purchasing within the cap gets the LMI waiver without any ongoing government stake in the property.

Help to Buy suits buyers who want the lowest possible monthly repayments and are comfortable with the government co-ownership structure. At 2% deposit and the government contributing up to 40% of the purchase price, the borrowing amount and monthly repayments are substantially lower, but the government’s share must be repaid at sale, and income caps apply.³

For a detailed breakdown of all available schemes, see our First Home Buyer Grants and Schemes guide.

Comparing which pathway suits your income, deposit, and target property? We work across the full panel of scheme-participating lenders and can confirm your options before you apply anywhere. Book a free call or message us on WhatsApp at 0478 388 215.

Genuine Savings: What Counts and What Doesn’t

Having a 5% deposit in your account isn’t always enough. Most lenders require the deposit to meet their genuine savings definition: evidence that you’ve accumulated the funds yourself through disciplined saving rather than receiving them all at once.

The genuine savings test exists because lenders use it as a proxy for financial discipline. A borrower who has held $30,000 in a savings account for six months and watched it grow through regular contributions demonstrates the same behaviour a mortgage requires. Consistent, sustained financial commitment.

Funds type	Generally counts as genuine savings?	Notes
Regular savings held for 3+ months	Yes	The standard definition. Most lenders require at least 3 months of savings history.
Term deposit held for 3+ months	Yes	Treated the same as a standard savings account.
FHSS withdrawal	Yes (at most lenders)	First Home Super Saver Scheme withdrawals are accepted by most lenders as genuine savings.
Shares held for 3+ months	Yes (most lenders)	Must be held consistently. Short-term share trading doesn’t qualify.
Gifted funds from family	No (alone)	Can supplement genuine savings but generally can’t replace them entirely. Some lenders accept gifts with a statutory declaration.
First Home Owner Grant (FHOG)	No (alone)	The FHOG is received at or after settlement. It can’t be used as a pre-settlement deposit component.
Inheritance received recently	No (if recent)	A recently received lump sum typically needs to age in the account for 3+ months before it qualifies.
Tax refund	No (alone)	Needs to be held alongside regular savings for 3+ months to contribute to the genuine savings requirement.

Lender definitions vary. Some lenders require 5% of the purchase price from genuine savings with no minimum holding period. Others require the full deposit to have been held for at least three months. A smaller group takes a more flexible view on what constitutes evidence of financial discipline. The right lender for your specific deposit structure is one of the most important decisions your broker makes when comparing options.

The First Home Super Saver Scheme

The First Home Super Saver Scheme (FHSS) allows first home buyers to make voluntary contributions to superannuation and then withdraw those contributions, plus associated earnings, to use toward a first home deposit. The tax advantage inside super accelerates savings compared to a standard bank account.⁴

The scheme allows withdrawals of up to $15,000 of voluntary contributions per financial year, with a total cap of $50,000 across all years. Contributions made under the concessional tax rate inside super (typically taxed at 15% rather than your marginal income tax rate) produce a tax saving that effectively boosts your deposit savings rate compared to saving in an after-tax bank account.

Key FHSS details to understand before using it:⁴

• You must apply to the ATO for a FHSS determination before signing a property contract
• Withdrawal requests must be made before signing a property contract
• The funds must be applied to a first home purchase within 12 months of release (extendable to 24 months in some circumstances)
• If you don’t purchase a home, you can recontribute the funds to super or pay a 20% tax on them
• Most lenders accept FHSS withdrawals as genuine savings
• The scheme is compatible with state grants, stamp duty exemptions, and the Federal 5% Deposit Scheme

For a buyer saving $15,000 per year into the FHSS over three years, the total accessible withdrawal (including associated earnings) may approach $50,000, the full cap. That $50,000 sits alongside any other savings accumulated outside super. For buyers with a long savings horizon, the FHSS is one of the most tax-effective deposit acceleration tools available.

What Catches First Home Buyers Out

Planning to use the FHOG as part of the deposit. The First Home Owner Grant is paid at or after settlement, not before it. It can’t fund the initial deposit required to exchange contracts. A buyer who plans their deposit around a $10,000 to $30,000 FHOG that arrives after the fact has a gap in their upfront cash position.

Confusing the deposit with the full upfront cash requirement. The deposit is the largest upfront cost, but not the only one. Stamp duty (unless your situation qualifies for the first home buyer exemption), legal fees, building and pest inspection, and lender fees add $5,000 to $30,000 on top of the deposit depending on the state and property value. Buyers who save to exactly the 5% deposit figure and then discover they’re short for settlement costs need to delay or borrow the shortfall.

Applying before the genuine savings requirement is met. A buyer with $40,000 received as a gift three weeks ago doesn’t have genuine savings in most lenders’ eyes. Applying before the three-month seasoning period has passed results in either a decline or a requirement to reapply later. Either way, a credit inquiry stays on the file for five years. Check whether your deposit meets the lender’s genuine savings definition before applying anywhere.

Assuming all pathways to 5% deposit are the same. A 5% deposit through the Federal 5% Deposit Scheme is fundamentally different from a 5% deposit with LMI. The scheme eliminates a $15,000 to $30,000 upfront cost. Applying at the wrong lender (one not on the scheme’s participating panel) means the buyer pays LMI they didn’t need to pay. Always confirm scheme participation before submitting any application.

Treating the 20% deposit as the only safe path. In a rising market, waiting to save a full 20% deposit can cost more than the LMI it avoids. If a $700,000 property rises 8% over 18 months, the 20% deposit target increases from $140,000 to $151,200, and the buyer is $11,200 further from the threshold while also having paid 18 months of rent. The right decision depends on the market, the scheme access, and the buyer’s income and savings rate.

Your Next Steps

1. Calculate your actual deposit target based on your target property type and city. Use the indicative figures in this guide as a starting point and verify current median prices in your specific suburb through REIWA, CoreLogic, or Domain.
2. Check whether your savings meet the genuine savings definition. If you have a mix of regular savings, gifts, and lump sums, map out which components qualify and which need time to season before you approach a lender.
3. Assess your scheme eligibility before planning your deposit size. Where the Federal 5% Deposit Scheme applies to your purchase, your effective deposit target is 5% rather than 20%, which changes the savings timeline significantly. If Help to Buy suits your income, a 2% deposit is the entry point.
4. Consider the FHSS if your timeline allows it. If you have 12 or more months before you plan to purchase, contributing to super via the FHSS provides a tax-effective savings mechanism that most buyers don’t use.
5. Include upfront costs beyond the deposit in your savings target. Add an estimate for stamp duty, check your exemption eligibility, conveyancing fees, and inspection costs to your total cash requirement, not just the deposit percentage.
6. Get your deposit position confirmed by a broker before applying anywhere. Different lenders assess genuine savings differently. The right lender for your specific mix of savings types, scheme access, and property target is the decision that determines whether your application succeeds.

Frequently Asked Questions

Do I really need a 20% deposit to buy a house in Australia?

No. Lenders will approve loans with deposits as low as 2% through specific programs, or 5% through standard lending or the Federal 5% Deposit Scheme. The 20% threshold is where Lenders Mortgage Insurance stops applying, not where lending starts. Below 20%, you either pay LMI, use a government scheme that replaces it, or use a guarantor arrangement.

What is the minimum deposit for a first home buyer in Australia?

The minimum depends on the pathway. Through Keystart in WA or the Help to Buy scheme (income-tested), 2% is possible. Through the Federal 5% Deposit Scheme or standard lending with LMI, 5% is the floor for most buyers. A guarantor arrangement can allow purchase with a smaller deposit depending on the guarantor’s equity position and the lender’s policy.

How long do I need to have my savings for genuine savings requirements?

Most lenders require at least three months of savings history. Some require six months. A lump sum received recently (through a gift, inheritance, or tax refund) typically needs to sit in your account for at least three months before it contributes to genuine savings. Check the specific lender’s policy before applying.

Does the First Home Owner Grant count as part of my deposit?

No, not for the initial deposit. The FHOG is paid at or after settlement. It doesn’t arrive in time to fund the exchange deposit. It can be factored into your broader financial position for settlement costs and subsequent repayments, but it can’t replace the upfront cash required to exchange contracts or secure a property.

What is the First Home Super Saver Scheme and how much can I withdraw?

The FHSS lets you make voluntary superannuation contributions and withdraw up to $15,000 per financial year, to a total cap of $50,000 across all years. The tax advantage inside super (typically 15% contribution tax versus your marginal rate) means the effective savings are higher than an equivalent after-tax amount. You must apply to the ATO for a FHSS determination before signing a property contract. Most lenders accept FHSS withdrawals as genuine savings.

Can I use a gifted deposit to buy my first home?

Gifted funds can supplement a deposit but generally can’t replace the genuine savings component entirely. Most lenders require at least some portion of the deposit to come from savings built up over time. The proportion varies by lender. Some require a statutory declaration from the gift-giver confirming the funds are a gift, not a loan. A broker can identify lenders with more flexible genuine savings policies if your deposit is primarily gifted.

This article contains general information only and does not constitute financial or credit advice. It does not take into account your personal financial situation, objectives, or needs. Deposit requirements, LMI costs, government scheme eligibility criteria, property price caps, and genuine savings definitions vary by lender and are subject to change. All figures in this article are indicative estimates only and should not be relied upon for financial planning without independent verification. Before acting on any information in this article, seek advice from a licensed mortgage broker or financial adviser. Credit products are subject to lender approval. Broker360 Pty Ltd is not responsible for any actions taken based solely on the content of this article. Information is accurate as of May 2026 and is subject to change.

Sources

1. LMI cost estimates based on Westpac LMI calculator (NSW), Money.com.au LMI comparison, and Helia/QBE published premium schedules. LMI at 95% LVR approximately 3.5% of loan amount; at 85% LVR approximately 0.9% of loan amount. Actual LMI costs vary by lender, state (stamp duty applies to LMI premiums in most states at 9–11% of the premium), property type, and borrower type. Always verify LMI costs directly with your lender or broker before purchasing. Sources: westpac.com.au; money.com.au, April 2026.
2. Indicative median property values are approximate estimates for planning purposes only, based on publicly available data as of early to mid-2026. City medians vary significantly by suburb and property type. Verify current median values for your specific target suburb at Cotality, Domain, or the relevant state property authority before setting your deposit target. All deposit calculations are a percentage of these estimates only.
3. Housing Australia, Federal 5% Deposit Scheme and Help to Buy Scheme. Income caps removed from Federal 5% Deposit Scheme from 1 October 2025. No annual place limits. Help to Buy launched 5 December 2025: income thresholds $100,000 (singles), $160,000 (couples and single parents). Government contributes up to 40% (new homes) or 30% (existing homes). 10,000 places per year. housingaustralia.gov.au. Subject to change.
4. Australian Taxation Office, First Home Super Saver Scheme. Maximum release: $15,000 per financial year, $50,000 total cap. Concessional contributions tax: 15%. Application for FHSS determination required before signing a property contract. ato.gov.au. Subject to change.

The deposit question is answerable for your specific situation. It’s not a general rule. The right deposit size, pathway, and lender depend on your savings structure, income, and target property. Book a free deposit assessment here.