Home Loan Deposit · Free Guide · Clear Path Home Loan

How Much Deposit Do You Need?

The 20% deposit rule is not a law — it is a guideline. Australians buy homes with 5%, 10% and 20% deposits every day. Here is the honest breakdown of what each means for you.

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Last reviewed: April 2026

Minimum with First Home Guarantee — no LMI required

10%

Widely available with LMI — more lender options

20%

Avoids LMI entirely — maximum lender flexibility

5% deposit — possible but conditional

A 5% deposit is possible under the First Home Guarantee for eligible first home buyers. Outside the scheme, some lenders will lend at 95% LVR but LMI costs are high. You still need genuine savings — lenders want 3–6 months of consistent savings history.

10% deposit — the practical sweet spot

With a 10% deposit you have access to most mainstream lenders. LMI applies but is significantly lower than at 5%. For a $700,000 property, a 10% deposit is $70,000 — and LMI might add $10,000–$15,000 to your loan.

20% deposit — maximum flexibility, no LMI

At 20% you avoid LMI, access every lender, and qualify for the most competitive rates. The downside is the time required to save — and the risk that property prices rise faster than your savings in a strong market.

Genuine savings — what lenders actually require

Lenders want to see your deposit built up over time through regular contributions. A lump sum gift alone generally does not qualify. Most lenders want 3–6 months of savings history. What counts as genuine savings varies between lenders.

Other upfront costs to budget for

Your deposit is not the only cash you need. Budget for stamp duty, conveyancing ($1,500–$3,000), building and pest inspection ($500–$800), and loan application fees. Total additional costs on a typical Sydney purchase can reach $25,000–$40,000 on top of your deposit.

What people get wrong

Common mistakes to avoid

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Saving exactly 20% and forgetting other costs

Many buyers save precisely 20% and then discover they do not have enough for stamp duty, conveyancing and inspection fees. Budget for an additional $25,000–$40,000 above your deposit for a typical Sydney purchase.

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Assuming a gifted deposit disqualifies you

A gift from parents can be used as part of your deposit — but lenders want to see some genuine savings alongside it. The proportion of gift versus savings that is acceptable varies by lender. A specialist knows which lenders are most flexible with gifted deposits.

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Waiting indefinitely to save more

If property prices rise by 5% per year, a $700,000 property costs $735,000 in 12 months. The $35,000 increase may far exceed what you would have saved by waiting. Model the numbers before deciding to keep saving.

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Not considering a guarantor

A family guarantor — typically a parent using equity in their home — can allow you to buy with a smaller deposit and avoid LMI. This requires careful planning and has implications for the guarantor. A specialist can explain exactly how this works.

💡 Should you wait and save more — or buy now?

This is the most important deposit decision you will make — and it depends on your specific market and income trajectory. In rising markets, buying sooner with a smaller deposit and paying LMI often costs less than waiting years to save more. In flat markets, saving more makes better financial sense. A specialist can model both scenarios with your actual numbers.

Common questions

Frequently asked questions

Yes — through the First Home Super Saver Scheme (FHSS), eligible first home buyers can withdraw voluntary super contributions to use as a home deposit. Up to $50,000 in total contributions can be withdrawn. This is worth exploring if you have been making voluntary contributions.

Most lenders require at least some genuine savings alongside a gift — typically 5% of the purchase price from your own savings. Some lenders will accept a gift as the entire deposit with a strong income and credit history. A specialist knows which lenders have the most flexible gift policies.

No — stamp duty is a separate cost on top of your deposit. In NSW, first home buyers are exempt from stamp duty on properties up to $800,000 and receive a concession on properties between $800,000 and $1,000,000.

Yes — if you own property with equity, you can use that equity as security for your deposit rather than cash savings. Your lender will assess the combined security of both properties.

Most lenders require at least 10% deposit for investment properties plus costs. Some will lend at 90% with LMI. The requirements for investment properties are generally slightly more conservative than for owner-occupied homes.

Want to go deeper?

Read the full deposit guide →

Our comprehensive guide covers genuine savings requirements in detail, gifted deposit rules by lender, guarantor strategies, and a full breakdown of every upfront cost you need to budget for.

Read the comprehensive guide →

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