How Much Deposit Do You Really Need to Buy a House in Australia?
The honest answer to "how much deposit do I need" is two numbers, not one. The number that avoids extra costs, and the number that actually gets you in the door.
For years the rule was 20% or you pay for it. That is still true if you want to dodge Lenders Mortgage Insurance. But in 2026, a 5% deposit with no LMI is on the table for far more first home buyers than it used to be.
Here is what each path really costs, what changed this year, and how to make sure you are not handing over thousands you did not need to.
The two deposit numbers that matter
20% of the purchase price is the deposit that keeps your loan at or below 80% of the property value. Hit it and you avoid Lenders Mortgage Insurance entirely. On an $800,000 home, that is $160,000.
5% of the purchase price is the floor most lenders will accept. On that same $800,000 home, that is $40,000. The catch is that borrowing 95% normally means paying LMI, unless you qualify for a government guarantee (more on that below).
Everything between 5% and 20% is a sliding scale. The bigger your deposit, the smaller your loan, the less LMI costs, and the more lenders compete for you.
What the deposit looks like at different prices
Here is the 5% and 20% deposit at a few common Australian price points. These are the deposit only, before stamp duty and other costs.
| Purchase price | 5% deposit | 20% deposit |
|---|---|---|
| $600,000 | $30,000 | $120,000 |
| $800,000 | $40,000 | $160,000 |
| $1,000,000 | $50,000 | $200,000 |
| $1,200,000 | $60,000 | $240,000 |
Deposit figures only. Add stamp duty (where it applies) and purchase costs on top.
The deposit gap on an $800,000 home
Deposit only, on an $800,000 purchase. The smaller deposit gets you in sooner. The larger one keeps your loan and your interest bill smaller.
The First Home Guarantee changed the game in 2026
This is the big one. The First Home Guarantee, run by the federal government through Housing Australia, lets eligible first home buyers purchase with just a 5% deposit, and the government guarantees the rest so you do not pay LMI.
From 1 October 2025 it got much broader. The income caps were removed, the annual limit on places was scrapped, and the property price caps were lifted, up to $1.5 million in Sydney and surrounding regional centres. In plain terms, a lot more first home buyers now qualify for a 5% deposit with no mortgage insurance.
That LMI saving is not small. On a low deposit it can run into the tens of thousands, and because LMI is usually added to your loan, avoiding it saves you the interest on top too.
Stamp duty: the cost that can dwarf the deposit
Stamp duty is the cost people forget until it is too late, and for first home buyers it is often where the biggest saving sits.
In NSW, eligible first home buyers pay no transfer duty on a home up to $800,000, and a reduced rate between $800,000 and $1,000,000, for both new and established homes. That can be tens of thousands kept in your pocket. Other states run their own concessions with different thresholds, so check your state revenue office or ask us.
The part most posts skip
A smaller deposit means a bigger loan. Buying with 5% gets you in sooner, which in a rising market can be the right call, but you borrow more and pay more interest over time. It is a trade, not a free lunch, and the right answer depends on your numbers.
Lenders look past the deposit. Your income, expenses, existing debts and credit history all shape how much you can actually borrow. A 5% deposit only helps if your borrowing capacity supports the loan behind it.
Genuine savings still matter. Many lenders want to see part of the deposit saved over time, not just gifted, though guarantor and gift options exist. Worth getting the structure right early.
This is general information, not financial or tax advice. Eligibility and thresholds change, so get advice specific to your situation.
So, what should you aim for?
If you can comfortably save 20%, you keep your loan smaller and skip LMI. If saving that much would mean waiting years while prices move, a 5% deposit through the First Home Guarantee can get you in now without the LMI hit. There is no single right answer, only the one that fits your income, your timeline and your market.
The smartest first move is to find out exactly what you can borrow and which schemes you qualify for, before you fall in love with a place. That is a quick conversation, and it is free.
Book a free strategy call
One short call, no obligation. We will work out your real deposit target, what you can borrow, and which first home buyer schemes you qualify for.
Book my free callMatty Teague, Mortgage Broker, Powered by Flint. Credit Representative 573962. Flint Group Pty Ltd ACL 488313.
FAQs
How much deposit do I need to buy a house in Australia?+
The traditional answer is 20% of the purchase price, which lets you avoid Lenders Mortgage Insurance. But you can buy with as little as 5%, and first home buyers using the First Home Guarantee can do that without paying LMI at all. On an $800,000 home, 20% is $160,000 and 5% is $40,000, before costs like stamp duty.
Can I buy a house with a 5% deposit?+
Yes. Most lenders accept a 5% deposit if your income and credit support the loan, though you would normally pay Lenders Mortgage Insurance. First home buyers who qualify for the First Home Guarantee can use a 5% deposit and the government covers the LMI, which can save tens of thousands.
What is Lenders Mortgage Insurance and how much is it?+
LMI is a one-off insurance premium that protects the lender, not you, when you borrow more than 80% of the property value. The smaller your deposit and the larger the loan, the more it costs, and on a low deposit it can run well into the tens of thousands. It is often added to your loan, so you also pay interest on it.
Do first home buyers pay stamp duty in NSW?+
In NSW, eligible first home buyers pay no transfer (stamp) duty on a home up to $800,000, and a reduced rate between $800,000 and $1,000,000, for both new and established homes. Thresholds differ in other states, so check your state revenue office.
What changed with the First Home Guarantee in 2026?+
From 1 October 2025 the scheme was expanded: the income caps and the annual cap on places were removed, and the property price limits were lifted (up to $1.5 million in Sydney). That means far more first home buyers can now buy with a 5% deposit and no LMI.
Besides the deposit, what other costs should I budget for?+
Stamp duty (if it applies), conveyancing and legal fees, building and pest inspections, loan and government fees, and moving costs. A good rule is to keep a few thousand dollars aside on top of the deposit so settlement does not stretch you.
Matty helps first home buyers and investors work out their real deposit, borrowing power and the schemes worth using, then gets the loan structured right from day one.
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