How much deposit do you need

How Much Deposit Do You Need? Tips for First Home Buyers

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Buying your first home is one of life’s biggest milestones, but for many Australians, saving a home loan deposit can feel like the biggest hurdle. One of the most common questions is: How Much Deposit Do You Need to get started?

There’s a widespread belief that you need a 20% deposit to buy a home—but is that really true?

The good news: No, you don’t always need a 20% deposit.

In this blog, we’ll answer How Much Deposit Do You Need based on lender requirements, explore government schemes that can help, and share practical tips to fast-track your savings. If you’re a first home buyer in Australia, keep reading to find out How Much Deposit Do You Need and how to make your property dream a reality.

Understanding the 20% Deposit Myth

You’ve probably heard that banks require a 20% deposit for a home loan. While it’s often recommended, it’s not a strict rule. So, how much deposit do you need to actually get started? Let’s break it down.

What is a 20% Deposit?

A 20% deposit means you’re paying 20% of the property price upfront. For a $600,000 home, that’s $120,000. This reduces your loan-to-value ratio (LVR) to 80% or lower, which lenders prefer. But again, the question remains: how much deposit do you need for your specific situation?

Why is 20% Considered the Benchmark?

With a 20% deposit:

You usually avoid Lenders Mortgage Insurance (LMI).
You may qualify for better interest rates.
It signals lower risk to the bank.

But Here’s the Reality…

Most first home buyers don’t have a full 20%, and many lenders accept deposits as low as 5%. So how much deposit do you need to secure a loan? It depends on your lender, eligibility, and whether you’re using any government grants or schemes. The good news: it’s still possible to buy a home with a smaller deposit — you just need to explore your options.

How Much Deposit Do You Actually Need?

5% Deposit

Many lenders accept a 5% deposit, especially for first home buyers. On a $600,000 home, that’s $30,000.
How Much Deposit Do You Need? Tips for First Home Buyers often start with this low-deposit option, particularly when supported by government schemes.

Tip: The deposit must be genuine savings in many cases (e.g., saved over 3+ months). If you’re wondering how much deposit do you really need, this could be your starting point.

10% Deposit

With a 10% deposit, you may access a broader range of lenders and reduce your LMI costs compared to 5%.
So, how much deposit do you need to open up more loan options? A 10% deposit is a smart middle ground that balances affordability and flexibility.

15–19% Deposit

This range can improve your borrowing power and reduce LMI premiums significantly.
How Much Deposit Do You Need to reduce upfront costs but not quite reach 20%? This deposit band is worth considering if you’re close to hitting the LMI-free threshold.

20% or More

Ideal but not mandatory. This is often the point where LMI is waived completely, and interest rates are most competitive.
Still asking how much deposit do you really need? While 20% is great, many buyers succeed with less. Just be sure to understand your trade-offs.

What is Lenders Mortgage Insurance (LMI)?

LMI is an insurance policy that protects the lender if you default on your loan. It doesn’t protect the borrower but can allow you to buy with less than a 20% deposit—so if you’re asking how much deposit do you need, this is a key factor to consider.

How Much Does LMI Cost?

LMI costs vary based on your deposit size, property value, and lender. It can range from a few thousand dollars to tens of thousands.

Example: On a $600,000 property with a 10% deposit, LMI could cost around $10,000.

This highlights why it’s important to understand how much deposit do you really need and how it affects your overall loan costs.

Can You Avoid LMI?

Yes, through:

A 20% deposit (a key consideration when figuring out how much deposit do you need).
A guarantor loan (e.g., using equity from a parent’s property).
Eligible government schemes (explored in How Much Deposit Do You Need? Tips for First Home Buyers).

Government Schemes That Can Help First Home Buyers

First Home Guarantee (FHBG)

Allows eligible first home buyers to purchase with just a 5% deposit—answering the common question, how much deposit do you need—without paying LMI. The government guarantees up to 15% of the loan, helping buyers enter the market sooner.

First Home Owner Grant (FHOG)

A one-off payment (up to $10,000 depending on your state) for buying or building a new home. This incentive can make a big difference when you’re asking, how much deposit do you really need.

First Home Super Saver Scheme (FHSSS)

Lets you save for your deposit using your superannuation, potentially reducing tax and increasing your deposit. It’s a strategic tool when considering how much deposit do you need? Tips for First Home Buyers often include this option.

Stamp Duty Concessions

Many states offer discounts or full exemptions for first home buyers, reducing upfront costs and influencing how much deposit do you need overall.

Realistic Deposit Scenarios for First Home Buyers

Let’s say you’re looking at a home priced at $600,000. Here’s how the deposit and LMI scenarios may play out—perfect for understanding how much deposit do you really need depending on your chosen path.

Tips to Help First Home Buyers Save and Navigate Deposits

1. Work with a Mortgage Broker

A broker like Triple O Finance can help you find lenders who accept low deposits and guide you through government schemes.

2. Use the First Home Super Saver Scheme

Contribute extra to your super and later withdraw it to use as a deposit — with tax benefits.

3. Explore Guarantor Loan Options

If your parents or a close family member can offer equity in their home, you could buy with no deposit or avoid LMI.

4. Budget and Automate Your Savings

Set up an automated deposit into a high-interest savings account or offset account to grow your deposit faster.

5. Understand the Full Upfront Costs

Besides the deposit, you’ll need funds for:

Stamp duty (unless exempt)
Legal fees
Building/pest inspection
Loan application fees (sometimes waived)

6. Keep Your Credit Clean

Pay your bills on time and avoid unnecessary debts. A good credit score boosts your chances of approval with a lower deposit.

Final Thoughts: How Much is Enough?

There’s no one-size-fits-all deposit requirement. How much deposit do you really need? It depends on your goals, financial situation, and available support. Whether you’re aiming for 5%, 10%, or 20%, understanding your borrowing power, eligibility for schemes, and total upfront costs is crucial.

How Much Deposit Do You Need? Tips for First Home Buyers often highlight that the 20% rule is more of a guideline than a strict requirement. With a range of low deposit options and government incentives, how much deposit do you need might be less than you think.

With expert guidance from a broker like Triple O Finance, you can develop a strategy tailored to your situation—helping you buy your first home sooner with confidence.