How Much Deposit Do I Really Need to Buy a First Home in Australia?
There is no single deposit figure for a first home in Australia — what you need depends on LVR, lenders mortgage insurance, schemes and guarantors.
How much deposit do you really need?
There is no single number. The deposit you need for a first home in Australia depends on three things: the loan-to-value ratio (LVR) your lender will accept, whether you are prepared to pay lenders mortgage insurance (LMI), and whether you can access a government guarantee scheme or a family guarantor. Different combinations produce very different cash requirements, each with its own trade-offs.
A deposit is the part of the purchase price you pay from your own funds rather than borrow. How large it has to be is set by your lender’s risk rules, not by law. That is why the honest answer is a set of paths, not a percentage.
What is LVR and why does it decide your deposit?
LVR — loan-to-value ratio — is the size of your loan as a percentage of the property’s lender-assessed value. It is the main lens through which a bank prices risk.
LVR = loan amount ÷ lender-assessed property value × 100
Your deposit and your LVR are two sides of the same calculation. The dollar figures here are arithmetic on a hypothetical price, not market data: on a $600,000 purchase, a $120,000 deposit means borrowing $480,000, which is an 80% LVR. A $60,000 deposit produces a 90% LVR. A $30,000 deposit produces 95%.
Lenders treat higher LVRs as higher risk, because they are funding more of the property with less buffer beneath them. Above 80% LVR, lenders usually require LMI. The often-quoted 20% deposit is the convention built on that benchmark: with 20% down, the loan sits at 80% LVR or below, where LMI has not typically applied.
What are the main deposit paths — and their trade-offs?
Four paths cover most first home buyers. None of them is the “right” one; they trade time, cost and family involvement in different proportions.
| Path | Cash deposit required | LMI | Key trade-offs |
|---|---|---|---|
| Save the traditional 20% | The largest outlay | Generally not required at or below 80% LVR | Slowest; cheapest loan; buffer from day one |
| Smaller deposit plus LMI | Lower | One-off premium, priced on LVR and loan size | Faster; higher total cost; thinner buffer |
| Home Guarantee Scheme (5% Deposit Scheme) | Built around a 5% minimum | Not required — a government guarantee stands in for it | Eligibility rules and price caps apply and change |
| Guarantor loan | Can be minimal | Generally avoided | Family asset at risk; released as LVR falls |
Saving the traditional 20%
The slowest path and the cheapest loan. A larger deposit means borrowing less, repaying less each month, and holding an equity buffer if the market moves against you. The cost is time — often years of saving while you rent or live at home.
A smaller deposit plus LMI
If LMI covers the extra risk, lenders will generally accept a smaller deposit. You buy sooner. The trade is cost and buffer: the premium — and the interest on it, if it is added to your loan — raises the total cost of the purchase, and a smaller deposit leaves less equity between you and any fall in values. How this works is covered in the next section.
A Home Guarantee Scheme place
The Commonwealth’s 5% Deposit Scheme is built around a minimum deposit of around 5% — hence the name. Housing Australia guarantees part of the loan to the lender, so LMI is not required. Since its expansion on 1 October 2025 the scheme has no income caps and no limit on places — the boundary that remains is the property price cap for your state and region, covered below.
A guarantor loan
An immediate family member — most commonly a parent — offers equity in their own property as additional security, closing the gap between your savings and the deposit the lender wants. No cash changes hands, but the guarantor’s asset is genuinely at risk if you default. The arrangement usually stays in place until your LVR drops to the lender’s release point.
How does lenders mortgage insurance actually work?
LMI is an insurance policy that protects the lender, not you. If you default and the sale of the property does not cover the loan, the insurer pays the lender the shortfall — and can still pursue you for it. You pay the premium even though the lender is the one protected.
The premium is a one-off cost, priced on your LVR and loan size. Most lenders let you capitalise it — add it to the loan balance — rather than pay cash at settlement. Capitalising spreads the cost but means you pay interest on the premium for the life of the loan. There is no standard price list: the premium depends on your LVR, your loan size and the insurer, and no authority publishes a typical range. LMI provider Helia offers an LMI fee estimator that shows the premium for a given loan size and LVR.
Whether a one-off premium beats more months of saving is a genuine fork in the road. It depends on the premium at your LVR, how quickly you can close the deposit gap, your rent in the meantime, and your income stability. Those are personal-circumstance questions — a licensed mortgage broker or financial adviser can model both branches against your numbers.
Can government schemes lower the deposit you need?
Two federal mechanisms directly change the deposit maths for eligible first home buyers.
The Home Guarantee Scheme (the 5% Deposit Scheme, at firsthomebuyers.gov.au) does not lend you money. It guarantees part of your loan to the lender, which removes the LMI requirement, and since 1 October 2025 there are no income caps and no cap on the number of places. Property price caps still apply and vary by state and region. As at July 2026:
- NSW — $1,500,000 in the capital city and regional centres; $800,000 elsewhere in the state
- VIC — $950,000 in the capital city and regional centres; $650,000 elsewhere
- QLD — $1,000,000 in the capital city and regional centres; $700,000 elsewhere
Caps for every state and territory are listed on the scheme’s property price caps page.
The First Home Super Saver (FHSS) scheme, administered by the ATO, lets you make voluntary contributions into superannuation and later apply to have them released — with associated earnings — toward a first-home deposit. The scheme counts a maximum of $15,000 of eligible contributions from any one financial year, and $50,000 in total. The amount released is 100% of your eligible non-concessional contributions and 85% of your eligible concessional contributions, plus associated earnings. Superannuation rules are complex and the consequences of getting a contribution or release wrong can be significant — seek advice from a licensed financial adviser or registered tax agent before acting.
State schemes sit alongside these — grants and transfer duty concessions vary by state and price bracket, changing the total cash you need rather than the deposit percentage itself.
What counts as genuine savings?
Many lenders require part of your deposit to be genuine savings — money you accumulated yourself through regular saving, rather than a recent lump sum. A gift from family can still count toward your deposit, but lenders often want gifted funds held in your account first — typically around three months, though that is industry convention rather than a rule, and each lender sets its own policy. The purpose is simple — a savings history is evidence you can sustain repayments.
What costs sit on top of the deposit?
The deposit is not the whole cash requirement. On top of it, expect:
- Transfer (stamp) duty — a one-off state tax on property transfers; first home buyer exemptions and concessions vary by state and price. As at July 2026:
- NSW — no duty up to $800,000, and a concessional rate below $1,000,000 (Revenue NSW)
- VIC — no duty up to $600,000, and reduced duty from $600,001 to $750,000 (State Revenue Office Victoria)
- QLD — no duty on a first new home at any price (contracts from 1 May 2025), and no duty on an existing home up to $700,000, phasing out below $800,000 (Queensland Revenue Office)
- Conveyancing and legal fees — a professional fee that varies with the property and the practitioner; get a couple of quotes rather than relying on a typical figure
- Building and pest inspections — typically a few hundred dollars per report, varying by provider and property; get quotes
- Lender and government registration fees, plus moving costs and an adjustment buffer at settlement.
Where does fractional property investing fit in?
Saving a deposit in cash is the default path. Some Australians also look at fractional property products while they save, holding exposure to residential property before buying a whole one. A Brix is a fractional economic interest in a property — each Brix represents a proportional share of the property’s value, not ownership of the property itself. NestEgg, MyBrix’s deposit-building product, accepts contributions from $100 per month as at July 2026; contributions accumulate until a whole Brix can be acquired.
The limits matter as much as the mechanics. Liquidity is not guaranteed and depends on market conditions; as at July 2026, exit waiting periods are typically 30 to 90 days and an early exit fee of 10% of current Brix value applies. Brix are financial products — read the Product Disclosure Statement and Target Market Determination before making any decision. For how the model works end to end, see our guide to what fractional property investment is and how it works.
How do you choose between the deposit paths?
There is no universal answer — the four paths trade time, cost and family involvement in different proportions, and the deposit question is a comparison to run, not a test with one passing score. Which trade-offs matter most depends on your savings, income stability, family circumstances and scheme eligibility. A licensed mortgage broker or financial adviser can model the paths against your actual numbers.
