Apply NowHow Much Deposit Do You Really Need to Buy a Home?
Oliver Brennan
Broker – First Home Buyers
6 min readOne of the most common misconceptions about buying a home in Australia is that you need a 20% deposit. While 20% is the threshold at which Lenders Mortgage Insurance (LMI) is waived, thousands of Australians buy homes every month with far less. Here's exactly what you need to know — including the schemes that can get you into the market with just 5%.
The deposit tiers: what each level means
- 5% deposit (95% LVR): Available through the First Home Guarantee without paying LMI. Limited annual places, income caps apply.
- 10% deposit (90% LVR): Most major and non-major lenders available. LMI applies — typically $8,000–$22,000 capitalised into the loan.
- 15% deposit (85% LVR): Fewer LMI premiums, better rate options open up. Most lenders accessible.
- 20% deposit (80% LVR): No LMI. Full access to all lenders and most competitive rates.
- 30%+ deposit: Premium pricing available from most lenders — lowest rates and best terms.
The First Home Guarantee (FHBG)
The federal government's First Home Guarantee allows eligible first home buyers to purchase with a 5% deposit without paying LMI. The government guarantees the remaining 15% of the loan — up to 80% — to the lender. There are 35,000 places available each financial year across income-eligible buyers. Single applicants must earn under $125,000/year; couples under $200,000 combined.
Important:
The FHBG is not a cash grant — it doesn't reduce your purchase price or give you money. It simply means the government co-signs the loan so the lender doesn't require LMI. You still need the 5% deposit in genuine savings.
What counts as a genuine deposit?
Most lenders require at least 5% of the purchase price to be in "genuine savings" — typically defined as funds held in your bank account for at least 3 months. Lump sums from gifts, inheritances, or sales of assets may or may not qualify, depending on the lender. Some lenders also accept rent history as a substitute for savings history. Your broker will match you to lenders whose policies suit your deposit source.
Don't forget the upfront costs
- Stamp duty (varies by state, purchase price, and buyer type — use our calculator)
- Conveyancing fees: $800–$2,500 depending on complexity
- Building & pest inspection: $400–$800
- Loan application and valuation fees: $300–$800
- Moving costs: $1,000–$5,000+
- Council rates and utilities on settlement day
Fairbanks Tip
As a rule of thumb, budget an additional 3–5% of the purchase price on top of your deposit for upfront costs. First home buyer concessions on stamp duty can significantly reduce this — talk to your Fairbanks broker about what applies in your state.
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