TL;DR — Key takeaways
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It’s the question every aspiring home owner asks first. And it’s the one with the most variables. The short answer is: it depends on the property price, your lender, and whether you’re eligible for any government schemes. The longer answer is what this guide covers.
If you haven’t already, read our First Home Buyer’s Guide to Home Loans for the full picture of the buying process. And if you’re confused about LMI, our LMI explainer covers exactly what it is and how to avoid it.
The 20% deposit: the benchmark and why it matters
A 20% deposit is the standard most lenders and financial advisers reference. At 20%, you borrow no more than 80% of the property’s value — your Loan-to-Value Ratio (LVR) sits at 80% — and two important things happen:
Benefit 1 No LMI Lender’s Mortgage Insurance is not required at 80% LVR or below. On a $750,000 purchase that’s a saving of $20,000–$35,000+ depending on the lender. |
Benefit 2 Better rates Lenders reserve their most competitive interest rates for borrowers with 20%+ deposits. Higher LVR loans carry more risk — and that’s priced into your rate. |
But 20% is a high bar. On a median Sydney property price of around $1.2 million, that’s $240,000 in savings — before you account for stamp duty and other costs. For most first home buyers, getting to 20% while paying rent can take a decade or more. That’s why understanding the alternatives matters.
How much deposit do you actually need by property price?
Here’s what different deposit levels look like across a range of property prices. These figures show the deposit only — see the section below on total upfront costs to understand what you actually need in the bank on settlement day. Use our borrowing power calculator to estimate how much you can borrow based on your income and expenses.
These figures are the deposit only. You’ll also need funds for stamp duty, conveyancing, building and pest inspections, and moving costs. See the total upfront cost section below for a realistic picture of what you need in the bank.
Can you buy with less than 20%?
Yes. Most lenders accept deposits as low as 5%. According to MoneySmart, some lenders may accept a deposit as little as 5% — but a smaller deposit means higher costs like LMI unless you’re eligible for a government scheme. Here’s how the options stack up:
What counts as genuine savings?
Most lenders require your deposit to be “genuine savings” — meaning money you’ve accumulated yourself over time. This demonstrates to the lender that you can manage money and service a loan. What counts and what doesn’t varies by lender, but here’s the general picture:
Usually counts Genuine savings ✓ Savings held in a bank account for 3+ months ✓ First Home Super Saver (FHSS) withdrawals ✓ Equity from a previously sold property ✓ Shares or term deposits held 3+ months ✓ Rental history showing consistent saving behaviour |
May not count Non-genuine savings ✕ Cash gifts from parents (some lenders accept with conditions) ✕ Inheritance received recently ✕ Tax refunds deposited just before application ✕ Large lump sums with no savings history ✕ Borrowed funds (personal loans or credit card advances) |
If your deposit includes a gift from family, tell your broker upfront. Some lenders accept gifted funds if they’ve been held in your account for 3 months before application. Others require 100% genuine savings regardless. Your broker will know which lenders are flexible on this.
The real upfront cost: deposit plus everything else
The deposit is just the start. On settlement day, you need significantly more in the bank. Here’s a realistic breakdown for a first home buyer purchasing a $700,000 property in NSW with a 10% deposit. For a full breakdown of every cost, see our guide on the hidden costs of buying a home.
Rule of thumb: Plan for your deposit plus an additional 3–5% of the property price to cover all upfront costs. On a $700,000 property, that’s $21,000–$35,000 on top of your deposit. Having a buffer also demonstrates to your lender that you can manage money responsibly.
Ways to boost your deposit faster
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Should you wait to save more, or buy now with what you have?
This is the most important question in the deposit conversation — and the one most people get wrong by making it purely about the deposit size rather than the market conditions and their total financial position.
The RBA’s March 2026 Financial Stability Review noted that recent housing market activity has been supported by the expansion of the 5% Deposit Scheme, with high LVR lending to first home buyers increasing. Property values in major cities have continued to rise, meaning the cost of waiting to save more can outpace the LMI you’re trying to avoid.
Example: You have a $50,000 deposit and are targeting a $700,000 property. You’re $20,000 short of 10%, so you consider waiting 12 months to save more. In that time, the property rises 5% to $735,000. You now need $73,500 for 10% — $3,500 more than you’d have saved. You’ve saved diligently and fallen further behind. This is the deposit trap. A broker can model your exact scenario and tell you whether buying now with LMI is actually cheaper over 5 years than waiting.
Use our loan repayment calculator to understand your monthly repayments at different deposit levels, then speak to a Rateseeker broker who can model the buy-now vs wait scenario with current market data for your target area.
Frequently asked questions
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