How Much Deposit Do You Need to Buy a House?

The standard advice is "save 20%." But in 2026, with median house prices where they are, that's $150,000+ in most Australian cities.

The good news? You don't always need 20%. Here's what you actually need, what each deposit size costs, and how to decide what's right for you.

The 3 deposit options

5% deposit (with LMI)

Who it's for: First home buyers, people who can't wait

• You borrow 95% of the property value
• You pay Lenders Mortgage Insurance (LMI)
• LMI can cost $10,000-$30,000+ depending on loan size
• Banks see you as higher risk (might charge slightly higher rates)

Example: $700k house, 5% deposit ($35k), LMI ~$22,000

10% deposit (with LMI)

Who it's for: People halfway between 5% and 20%

• You borrow 90% of the property value
• Still pay LMI, but it's cheaper than 5%
• LMI cost: $8,000-$15,000 depending on loan size
• Slightly better rates than 5% deposit

Example: $700k house, 10% deposit ($70k), LMI ~$12,000

20% deposit (no LMI)

Who it's for: People with more savings or parental help

• You borrow 80% of the property value
• No LMI
• Better interest rates
• More lender options

Example: $700k house, 20% deposit ($140k), no LMI

What is LMI and why do you pay it?

Lenders Mortgage Insurance protects the bank (not you) if you default on your loan. You pay for it, but it covers them.

It's a one-off cost, usually added to your loan (so you're paying interest on it for 30 years).

LMI cost depends on:

• Your deposit size (smaller deposit = higher LMI)
• Your loan amount
• Whether you're buying as an owner-occupier or investor

Use our LMI Calculator to see what you'd pay.

Can you avoid LMI with less than 20%?

Yes, in a few situations:

1. First Home Loan Deposit Scheme (FHLDS)

If you're a first home buyer earning under $125k (single) or $200k (couple), you might qualify. The government guarantees part of your loan, so you can buy with just 5% deposit and no LMI.

Catch: Limited spots (10,000/year), property price caps vary by location.

2. Family guarantee

Your parents use their property as security. You can borrow up to 100% of the property value without LMI.

Catch: If you default, they're on the hook.

3. Some professions get LMI waivers

Doctors, lawyers, accountants, and some other professionals can borrow 90% without LMI from certain lenders.

Should you wait to save 20%?

Depends. Let's look at both sides:

Reasons to wait for 20%:

• Save $10,000-$30,000 in LMI
• Better interest rates
• Larger equity buffer if property prices drop
• Lower repayments (smaller loan)

Reasons to buy with 5-10%:

• Get into the market sooner
• Stop paying rent (which is also "dead money")
• Benefit if property prices rise while you're saving
• Start building equity now

The maths: If you're paying $600/week rent and it takes 2 years to save the extra 10%, that's $62,400 in rent. Compare that to the LMI cost.

What about stamp duty and other costs?

Your deposit isn't the only upfront cost. You also need:

• Stamp duty: $0-$40,000+ (varies by state, often waived/reduced for first home buyers)
• Conveyancing: $1,500-$3,000
• Building/pest inspections: $500-$1,000
• Moving costs: $500-$2,000

So if you're buying a $700k house with a 5% deposit, you need:

• $35,000 deposit
• $20,000 stamp duty (if not waived)
• $3,000 other costs
• Total: $58,000

Use our Stamp Duty Calculator to see what you'd pay in your state.

How much can you borrow?

Banks will lend you roughly 5-6x your annual income (depending on your expenses and debts).

Example:

• Income: $100k/year
• Borrowing capacity: ~$550k
• With 5% deposit: $550k ÷ 0.95 = ~$580k property
• With 20% deposit: $550k ÷ 0.80 = ~$690k property

Use our Borrowing Capacity Calculator to see your exact number.

What's the right deposit for you?

Here's how to decide:

Go with 5% if:

• You qualify for the First Home Guarantee (no LMI)
• You're paying high rent and want to stop ASAP
• Property prices are rising fast in your area
• You can afford the LMI cost

Go with 10% if:

• You're close to 20% but don't want to wait
• LMI at 10% is manageable but 5% feels too risky

Go with 20% if:

• You have the savings or family help
• You want the best rates and no LMI
• You're not in a rush

There's no wrong answer. It's about what makes sense for your situation.