Most lenders prefer a 20% deposit (80% LVR) to avoid LMI; deposits of 5–10% may be possible, but note that lender criteria and LMI often apply.
Eligible first-home buyers may purchase with a 5% deposit via government guarantees and avoid LMI, subject to eligibility and local price caps.
Plan beyond the deposit: budget for stamp duty, conveyancing, inspections, and application/settlement fees.
Next steps: check borrowing power, estimate stamp duty, and speak with an Aussie Broker to compare LMI vs guarantee pathways and confirm eligibility.
If you're wondering how much deposit you need to buy a house in Australia, the answer depends on your goals, finances, and whether you qualify for government support.
Saving for a home deposit is often the biggest hurdle in the property journey, but it's not a fixed figure or one-size-fits-all goal. How much you'll need depends on the property price, the lender's criteria, and how much you can comfortably contribute upfront.
The good news is that there are flexible ways to enter the market sooner, including low-deposit home loans, government-backed guarantees, super-saving strategies, and family support.
In this guide, we'll explain how deposits work, what percentage most lenders prefer, and the options available if you don't have the full 20% saved. You'll also find practical tips to grow your deposit faster, including how to use superannuation, access grants, or explore guarantor support.
How big should your home deposit be?
When you’re planning to buy a home, your deposit is more than just your first payment. It shapes your borrowing power, your loan-to-value ratio (LVR), and the options lenders can offer you. Most buyers have heard of the "20% rule", but understanding what it means and why lenders prefer it can help you plan your next move confidently.
What is the 20% benchmark?
Most lenders prefer borrowers to contribute at least 20% of the property's value as a deposit. This level is seen as a sensible balance between savings effort and lending risk. It shows you've built financial discipline and reduces the portion you need to borrow.
For example, if you're buying a home worth $800,000, a 20% deposit would be $160,000. The remaining $640,000 would be covered by your home loan, subject to the lender's assessment and approval.
Why do lenders look for the 20% benchmark?
A 20% deposit typically sets your loan-to-value ratio (LVR) at 80%, meaning you're borrowing 80% of the property's value. From a lender's perspective, this provides a safety buffer if property values fluctuate. From your perspective, it helps position you as a lower-risk borrower, which may improve your access to more competitive loan options.
Having a larger deposit can also demonstrate your ability to save and manage finances effectively, reassuring lenders that you're prepared for the responsibilities of home ownership.
What are the benefits of a 20% deposit?
Saving a 20% deposit can open the door to several financial advantages:
Avoid paying Lenders Mortgage Insurance (LMI). LMI protects the lender (not the borrower) if you default on your loan. Avoiding it could save you thousands of dollars upfront.
Lower repayments over time. With a smaller loan balance, you'll pay less interest across the life of the loan, helping ease long-term repayment pressure.
Access to more loan products and lenders. An 80% LVR generally provides a broader loan choice and may help you secure a more competitive rate, depending on your eligibility and the lender's criteria.
But 20% isn't always required.
While 20% is the traditional benchmark, it's not the only way to buy a home. Many Australians purchase with smaller deposits (sometimes as little as 5%) through lender-approved low-deposit products or government-backed guarantee schemes.
What if you don't have 20% saved?
Not everyone has a full 20% deposit ready, and that's perfectly fine. Many Australians buy their first home with a smaller deposit and still secure a loan. What matters most is understanding your options, how lower deposits work, and what extra costs may apply.
Smaller deposits are still possible.
Most lenders can approve loans with deposits as low as 5–10% of the property's value, depending on your income, credit history, and lender criteria.
For example, a 10% deposit on a $700,000 home equals $70,000, with the remaining amount financed through your home loan (subject to approval).
A smaller deposit can help you get into the market sooner, especially if prices are rising faster than you can save, but it also changes how your loan is assessed and what you'll need to budget for.
When your deposit is below 20%, most lenders require Lenders Mortgage Insurance (LMI). This one-off premium protects the lender if you're unable to meet your loan repayments, but it doesn't cover the borrower.
The cost of LMI depends on your loan size, property value and LVR (loan-to-value ratio). LMI can either be paid upfront or added to your loan amount.
Some government-backed schemes, such as the First Home Guarantee, allow eligible buyers to purchase with a smaller deposit without paying LMI (From 1 October 2025, there are no income caps and places are unlimited; property price caps still apply).
Tip: Use our borrowing power calculator to get a clearer picture of your home loan options and total costs.
How to save for a home deposit faster
Saving for a home deposit can feel like a long road, but with clear goals and the right strategy, you can make steady progress and even reach your target sooner.
Here's how to build momentum and stay on track.
1. Know your savings target.
Start by setting a clear property goal. Think about where you want to buy and what type of property suits your lifestyle and budget, whether it's an apartment, townhouse, or house. Prices can vary widely between suburbs, so defining your target area helps you estimate a realistic deposit amount.
As a general rule, most buyers are required to deposit between 5% and 20% of the property's price, depending on the lender's criteria and eligibility for government schemes. However, remember that your deposit isn't the only upfront cost. You'll also need to budget for:
Stamp duty (varies by state and property value)
Tip: Use our stamp duty calculator to estimate state-based costs before you set your savings goal.
Your Aussie Broker can help you calculate how much you'll need, including these additional expenses, so you can work towards a realistic savings target.
You might also be interested in: How far over budget is too far when it comes to buying your home
2. Reassess your budget and spending habits.
Once you've set your goal, review where your money goes. Making small adjustments to your everyday spending can have a significant impact over time.
Review regular expenses. Identify subscriptions, memberships, or habits you can cut back on.
Automate your savings. Set up an automatic transfer into your deposit account each payday.
Track your progress. Use your bank's budgeting tools or a simple spreadsheet to see your growth month by month.
Boost your savings power. Consider keeping your funds in a high-interest savings account or an offset account, which can help reduce the interest on your loan once you buy.
Your Aussie Broker can explain how an offset account or redraw facility might help you make your money work smarter, both before and after settlement.
3. Take advantage of government grants and schemes.
If you're a first-home buyer, you may be closer to your deposit goal than you think. Several government programs are designed to help eligible Australians enter the market sooner:
First Home Owner Grant (FHOG): A one-off payment available to eligible Australians who are buying or building a new home for the first time.
First Home Guarantee: Lets eligible buyers purchase with a 5% deposit and pay no Lenders Mortgage Insurance (LMI).
Family Home Guarantee: Supports single parents or legal guardians in buying a home with as little as a 2% deposit.
Regional First Home Buyer Guarantee (RFHBG): Formerly known as the Regional Home Guarantee helps buyers purchase or build in regional areas with a 5% deposit.
Note: Eligibility, income limits and property price caps apply. Always check the current rules via Housing Australia or speak to your Aussie Broker for guidance.
Your broker can help you explore which grants or guarantees you may qualify for and manage the paperwork to simplify the process.
You might also be interested in: First home buyer guide: Government grants and concessions
4. Using superannuation to boost your deposit.
If you're saving for your first home, the First Home Super Saver Scheme (FHSSS) can help you build your deposit more efficiently by taking advantage of superannuation's tax benefits.
Under the scheme, eligible first-home buyers can:
Make voluntary contributions of up to $15,000 per financial year, and
Withdraw up to $50,000 in total (or up to $100,000 combined for couples) to put towards a first home deposit.
These contributions can be made from before-tax (concessional) or after-tax (non-concessional) income, offering flexibility depending on your savings strategy.
Because voluntary super contributions are generally taxed at 15%, which is lower than most income tax rates, the scheme can be a tax-effective way to save while also benefiting from compound growth within super.
Note: This information is general in nature and doesn’t take into account your personal circumstances. Consider seeking professional advice before making any changes to your super.
Your Aussie Broker can explain how the FHSSS could fit within your broader savings plan and coordinate your approach with your financial adviser if needed.
You might also be interested in: Buying property with super: A guide to SMSF investment
Can you use gifted money as a deposit?
It's not uncommon for parents or close family members to help with a deposit by gifting money. Lenders generally accept genuine gifts from immediate family, but they'll usually ask for a signed gift letter confirming the money doesn't need to be repaid.
Keep in mind:
Lenders still require proof of genuine savings, meaning you've shown the ability to manage and grow funds over time.
Combining a gift with your own savings can strengthen your application.
Tip: If part of your deposit will be gifted, speak with your Aussie Broker early. They can explain how different lenders treat gifted funds and help ensure your application is structured correctly.
Alternative ways to secure a deposit
If saving a large deposit feels out of reach, there are still pathways to help you move towards home ownership sooner.
Depending on your financial situation and support network, you can use family assistance or financial products that act as temporary deposit substitutes, such as a guarantor home loan or a deposit bond.
Each option has its advantages and responsibilities that are important to understand before committing.
Low deposit loans (5–10%)
Some lenders offer low-deposit home loans that let eligible borrowers purchase with as little as 5–10% of the property's value.
Who they suit | Low-deposit loans are often suited to buyers who: Have a stable income and a strong credit record. Can show consistent savings habits and responsible financial management. Are ready to buy but haven't yet reached the 20% benchmark. |
What to consider | A smaller deposit means you're borrowing more of the property's value, which may involve added costs or conditions: Lenders Mortgage Insurance (LMI) is often required when your deposit is less than 20%. This one-off premium protects the lender (not the borrower) and can add thousands to your total loan cost, depending on the amount borrowed. Interest rates can be slightly higher for some low-deposit products. You'll begin with less equity, which may make you more sensitive to changes in property values. |
If you’re looking for potential LMI-free pathways, you may be able to buy with a smaller deposit and avoid LMI through government-backed Home Guarantee Schemes, such as:
First Home Guarantee (5% deposit, no LMI)
Family Home Guarantee (2% deposit, for single parents or legal guardians)
Regional First Home Buyer Guarantee (5% deposit, for regional areas)
Tip: Speak with your Aussie Broker to check if you're eligible for one of these schemes and how they could reduce your upfront costs.
Using existing equity
If your current property has increased in value, you can use that equity as security for your next purchase.
For example, if your home is worth $900,000 and your remaining loan is $500,000, you have $400,000 in equity. Depending on your lender's policy, you could use a portion of that equity (often up to 80%) to secure your next property.
Who they suit | This approach can make sense for: Upgraders or investors who want to buy without dipping into savings. Borrowers with solid equity who are comfortable taking on higher repayments. |
What to consider | Risks to keep in mind: Using equity increases your overall debt and repayments. You'll have less flexibility if interest rates rise or property values fall. Lenders continue to assess income and servicing capacity before approving a loan. |
Using a Guarantor Home Loan
For many buyers, family support can make the difference between waiting and buying sooner. A guarantor home loan allows a parent or immediate family member to use the equity in their own home as additional security for your loan.
How it works: Instead of contributing cash, the guarantor offers part of their home's equity as backing for your loan. This can help reduce your loan-to-value ratio (LVR) to 80% or below, even if your own deposit is smaller.
Pros | Cons |
|---|---|
Buy sooner. Family support can help you purchase without needing to save the full 20% deposit. | Guarantor liability. If you miss repayments or default on your loan, the guarantor is legally responsible for the guaranteed portion of the loan. |
Avoid Lenders Mortgage Insurance (LMI). Reducing your LVR below 80% means you may not need to pay LMI, which can save thousands. | Equity at risk. If the borrower defaults, the guarantor's property could be used to cover the shortfall. |
Keep more of your cash. You can retain some of your savings for moving costs, furniture, or as a financial buffer. |
Important: Both the borrower and guarantor should seek independent financial and legal advice before proceeding. This ensures everyone understands the risks, responsibilities and protections available.
Your Aussie Broker can explain how guarantor home loans work, outline lender-specific requirements, and help both parties make an informed decision.
Using a Deposit Bond (Deposit Guarantee)
A deposit bond, also known as a deposit guarantee, can help secure a property without requiring a cash deposit up front.
How it works: A deposit bond is a financial guarantee issued by an insurer to the seller, confirming that the deposit will be paid in full at settlement. It's often used when buyers are waiting for funds from another sale or investment to clear.
Pros |
|---|
Secure a property sooner. Use a bond to exchange contracts while your cash is still tied up elsewhere. |
Keep your funds invested longer. Ideal if the settlement is months away and you want your savings to continue earning interest. |
Simplify timing and cash flow. You pay a one-off fee for the bond rather than providing a lump sum deposit upfront. |
Broker insight: Your Aussie Broker can assess whether a deposit bond suits your circumstances and connect you with lenders or insurers that offer them.
You might also be interested in: How deposit bonds help first-home buyers compete in a hot market
Why a bigger deposit is still worth it
Low-deposit loans and government schemes can help you get your foot in the door sooner. But if you can keep saving a little longer, a larger deposit can deliver solid long-term benefits, from lower repayments to more financial breathing room once you move in.
What are the advantages of saving more?
A bigger deposit doesn't just look good on paper. It can improve your options and strengthen your financial position.
Lower repayments: A smaller loan means you'll pay less interest over time and may find your monthly repayments easier to manage.
Avoid LMI (Lenders Mortgage Insurance): Once your deposit reaches 20% of the property's value, you generally won't need to pay LMI, saving you potentially thousands of dollars.
More loan options: A lower loan-to-value ratio (LVR) can open the door to more lenders and products, giving you greater flexibility and may help you secure a more competitive rate.
Greater financial freedom: A smaller loan can make budgeting simpler and help you build equity faster, setting you up for future opportunities like refinancing or investing.
Even if you're not at the 20% mark yet, every extra dollar saved can reduce your borrowing costs and give you more confidence when you apply for a loan.
Here's an example showing how your deposit size can affect your loan.
Deposit size | Total deposit | Loan amount | Estimated LMI cost | Estimated monthly repayment |
|---|---|---|---|---|
10% | $70,000 | $630,000 | ~$13,000 – $15,000 | ~$3,780 per month |
20% | $140,000 | $560,000 | $0 | ~~$3,360 per month |
Estimates are based on an interest rate of 5.5% p.a. over 30 years. Actual rates, LMI costs and repayments will vary by lender and individual circumstances.
That 10% difference in deposit size could save around $400 a month in repayments and eliminate LMI. Over the life of your loan, that's a significant saving.
Tip: Use our home loan repayments calculator to test different deposit amounts and see what fits your budget.
Tips from Aussie Brokers
At Aussie, we've helped thousands of Australians take the next step towards home ownership, and we know that every buyer's journey looks a little different.
From first-home buyers building their savings, to families helping their kids enter the market, and investors planning their next purchase, our brokers see it all.
Here are some of the insights our brokers often share to help you save smarter and buy with confidence:
1. Know your numbers early.
Understanding your finances upfront can save you time and reduce stress later. Knowing your borrowing power, loan-to-value ratio (LVR), and potential costs such as Lenders Mortgage Insurance (LMI) helps set clear expectations about what you can afford and where to focus your savings.
Tip: Use our borrowing power calculator to get an estimate and discuss your results with your broker to refine your budget and goals.
2. Don't overlook government support.
There is a range of national and state-based schemes designed to help Australians buy sooner; some require deposits as low as 5%. Key examples include the First Home Guarantee, Family Home Guarantee, and various stamp duty concessions depending on where you buy.
These initiatives can reduce upfront costs and make a real difference to how quickly you enter the market.
Note: Eligibility, income limits, and property price caps apply. Your Aussie Broker can help check which programs you may qualify for and guide your application.
3. Be strategic with your savings.
Consistency is key when building your deposit. Set up automated transfers into your savings account, track your progress regularly, and look for ways to make your money work harder.
Use a high-interest savings account to grow your balance faster.
Consider an offset account linked to your home loan to help reduce future interest costs.
Review your expenses regularly and direct any extra funds into your deposit goal.
Your Aussie Broker can also help you explore flexible loan features like offset or redraw accounts once you're ready to buy.
4. Keep your options open
Even if you haven't reached a 20% deposit, there are still ways to move forward. A broker can explain how low-deposit home loans or government-backed schemes might suit your situation, and how to balance your repayments, risk, and flexibility.
Our brokers often find that once buyers understand their real options and see how structured planning can fast-track their savings, the path to homeownership feels much clearer.
"We often see first-home buyers surprised by how much faster they can reach their goal once they explore government schemes or optimise their savings strategy. A quick chat can make the difference between feeling uncertain and having a clear plan forward." - Aussie Broker.
How Aussie helps at this step
Your local Aussie Broker understands both the national lending landscape and the local market where you're buying. They can:
Assess your deposit goal and borrowing potential.
Check eligibility for grants or guarantees.
Compare lender options tailored to your situation.
Help you map a savings strategy that aligns with your property goals.
Book a free^ chat with an Aussie Broker today to plan your deposit strategy and take your next confident step towards owning your home.
