How much deposit do I need for a home loan?

How much deposit do I need for a home loan in Australia?

Most lenders will approve a home loan with a deposit of 5% of the purchase price, and a few go lower for eligible buyers. At 20% you avoid lenders mortgage insurance and reach the widest range of products. In between, the loan is available but costs more. Eligible first home buyers can borrow with 5% and no LMI under the Australian Government 5% Deposit Scheme.

The deposit is only part of the cash you need at settlement. Stamp duty, conveyancing, a building and pest inspection, lender fees and a buffer all come out of savings too, so the question "how much deposit" really has two answers: the deposit the lender needs, and the cash you need to complete.

What the deposit bands mean: 5%, 10%, 15% and 20%

Lenders think in loan to value ratio, the loan as a percentage of the property value. Your deposit is the other side of that number.

The dollar gap between an 80% and a 95% loan is bigger than the rate difference alone suggests, because LMI, tighter product choice and sometimes a higher rate tier all land at once above 80%.

• 20% deposit, 80% LVR. No LMI, the full product range, and the pricing tiers most advertised rates are quoted at.
• 15% deposit, 85% LVR. LMI usually applies but the premium is modest; some lenders waive it for specific professions.
• 10% deposit, 90% LVR. LMI applies and the premium rises noticeably; product choice narrows.
• 5% deposit, 95% LVR. The floor for most mainstream lenders. LMI is at its most expensive, some lenders add a higher rate tier, and a few require the LMI to be paid upfront rather than capitalised.
• Under 5%. Only through a scheme (the 2% single parent stream), a family guarantee, or a state government lender in Western Australia or South Australia.

Worked example: the cash you need at each deposit size

This is arithmetic on a $700,000 purchase, not a quote. Duty, fees and LMI vary by state, lender and buyer status.

Two things the table hides. First, LMI capitalised into the loan raises the LVR further and is charged interest for the life of the loan. Second, an eligible first home buyer under the 5% Deposit Scheme sits in the last row with LMI removed, which is why the scheme changes the answer more than any rate difference does. Use the LMI calculator and the stamp duty calculator for your state and price.

What is lenders mortgage insurance and when do I pay it?

LMI is a one-off insurance premium that protects the lender, not you, if the loan is not repaid and the property sells for less than the debt. It applies when the LVR is above 80% at most lenders. The premium scales with the loan size and the LVR, so a 95% loan on a large purchase carries a premium in the tens of thousands, while an 85% loan on a modest purchase is far smaller.

You can avoid LMI with a 20% deposit, the 5% Deposit Scheme (eligible first home buyers), a family guarantee that brings the bank loan under 80%, or a profession-based waiver some lenders extend to medical, legal and accounting professionals. The LMI guide covers how the premium is calculated and whether to capitalise it.

The Australian Government 5% Deposit Scheme: current rules

From 1 October 2025 the scheme (formerly the First Home Guarantee under the Home Guarantee Scheme) has had no income caps, no waitlist and no cap on places. Eligible first home buyers can buy with a minimum 5% deposit and no lenders mortgage insurance because the government guarantees the portion of the loan above 80%. Single parents and single legal guardians can use a minimum 2% deposit under the same scheme.

Property price caps still apply and depend on where you buy. The official site has a price cap checker by location; confirm the cap for your suburb there before setting a budget. You still owe the whole loan, including the guaranteed part, and the loan must be with a participating lender.

General information only. Scheme settings can change; the current rules are on firsthomebuyers.gov.au and with participating lenders.

What counts as a deposit, and what is genuine savings?

Lenders separate the deposit into money you saved and money that arrived another way.

• Genuine savings: funds held or accumulated in your name over at least three months. Regular savings, term deposits, shares you have held, and in some cases rent paid on time count. Most lenders want 5% of the price as genuine savings on loans above 80% LVR.
• Gifts: a non-repayable gift from family is accepted by most lenders with a signed statutory declaration, but usually on top of the genuine savings minimum, not instead of it.
• First Home Super Saver releases, sale proceeds, inheritances and the First Home Owner Grant can all form part of the deposit; each lender treats them differently.
• A family guarantee is not a cash deposit. It uses equity in a relative's property as extra security so the bank treats the loan as 80% or lower. See the guarantor loan guide.

Deposit versus borrowing power: which one limits you?

You are capped by whichever is smaller: what your deposit allows at the LVR the lender accepts, or what your income and expenses allow the lender to approve. A 5% deposit on a $700,000 property only helps if you can service a $665,000 loan plus LMI at the lender's assessment rate. Work out both with the borrowing power calculator and the borrowing power guide, then shop inside the lower figure.

How to work out your own deposit number

Neither path is right for everyone. Prices, rates and the LMI premium all move, and the cost of waiting for a 20% deposit depends on what the market does while you save.

• Pick a realistic purchase price for the area, then check it against the 5% Deposit Scheme price cap if you are a first home buyer.
• Decide the LVR you are aiming at: 80% to avoid LMI, or 90% to 95% to buy sooner and accept the premium.
• Add stamp duty for your state and buyer status, conveyancing, inspections and lender fees.
• Add a buffer for moving costs and the first few months of repayments.
• Compare the two paths, buy now at 90% to 95% with LMI, or wait and buy at 80%, using current rates at each LVR from the low deposit home loans table and the home loan rates table.

Deposit questions people ask

The four questions below are the ones buyers ask most often. Each answer is arithmetic on the purchase price, not a quote: duty, fees and the LMI premium vary by state, lender and buyer status, and the scheme price cap for your location decides whether the 5% Deposit Scheme applies.

How much of a deposit do you need for a $500,000 house?

At 5% the deposit is $25,000, at 10% it is $50,000 and at 20% it is $100,000. Stamp duty, conveyancing, inspections and lender fees come on top, and vary by state and buyer status. Under 20% lenders mortgage insurance applies unless the 5% Deposit Scheme or a family guarantee removes it.

Is $40,000 enough for a house deposit?

Often, yes. At 5% it covers a purchase up to about $800,000 before costs; at 10% about $400,000. In practice the binding limit is usually borrowing power rather than the deposit, and duty, fees and a buffer have to come out of the same savings, which pulls the realistic price down.

Can I buy a house with a $20,000 deposit?

Possibly. At 5% it supports a property up to about $400,000, with lenders mortgage insurance unless a scheme removes it. The 2% single parent stream stretches the same cash further, and a family guarantee can replace part of the deposit with a relative's equity. Purchase costs still come on top.

How much deposit do you need for a $700,000 house?

The deposit is $35,000 at 5%, $70,000 at 10% and $140,000 at 20%. Add stamp duty for your state and buyer status, conveyancing, inspections, lender fees and a buffer. Above 80% LVR lenders mortgage insurance applies, at its most expensive at 95%, unless a scheme or guarantee removes it.