Buying a home is one of the biggest financial decisions you’ll ever make — and for most people, the biggest hurdle is the deposit.
You’ve probably heard you need a 20% deposit to buy a home. The reality? Many Australians buy with far less than that.
How Much Is a Standard Deposit?
Traditionally, lenders prefer a 20% deposit of the purchase price.
For example:
Purchase price: $700,000
20% deposit: $140,000
The main benefit of a 20% deposit is that it allows you to avoid Lenders Mortgage Insurance (LMI) and usually access better interest rates.
Can You Buy with a 5% Deposit?
Yes — in many cases, you can buy a home with as little as 5% genuine savings.
For example:
Purchase price: $700,000
5% deposit: $35,000
When you buy with less than a 20% deposit, Lenders Mortgage Insurance (LMI) usually applies. LMI protects the lender (not you) if the loan goes into default, and the cost is typically added to your loan.
What Is Lenders Mortgage Insurance (LMI)?
LMI is a one-off insurance premium charged when your loan exceeds 80% of the property value.
The cost varies based on loan size, deposit amount, and lender policy.
In many cases, paying LMI can be a strategic decision if it allows you to buy sooner and enter the property market earlier.
First Home Buyer Grants & Stamp Duty Savings
Depending on where you buy, you may be eligible for First Home Buyer Grants, stamp duty concessions, or shared equity schemes. These incentives can significantly reduce the cash needed upfront.
Common Deposit Mistakes to Avoid
Avoid using all your savings without keeping a buffer, borrowing at your maximum capacity, and forgetting about upfront costs like stamp duty, legal fees and inspections.
Final Thoughts
You don’t need a perfect financial situation or a 20% deposit to buy your first home. What you need is the right structure and advice tailored to your situation.
If you’re unsure how much deposit you need, a personalised assessment will give you far more clarity than an online calculator.