How Much Deposit Do You Need to Buy a House in Australia?

The short answer

In Australia you can buy a home with as little as a 5% deposit, but a 20% deposit is the level at which you avoid Lenders Mortgage Insurance (LMI). Below 20%, most lenders charge LMI, a one-off premium that climbs as your deposit shrinks. So 5% and 10% are "enough" to get a loan approved (subject to serviceability), while 20% is "enough" to skip the LMI cost. Eligible first home buyers can sidestep LMI on a 5% deposit through the government's First Home Guarantee.

How the deposit actually works

Your deposit determines your Loan-to-Value Ratio (LVR), the loan divided by the property value. A $600,000 loan on a $750,000 home is an 80% LVR (a 20% deposit).

The key thresholds for the 2025–26 financial year:

Deposit	LVR	What happens
20%+	≤80%	No LMI
10–19%	81–90%	LMI applies (mid-range premium)
5–9%	91–95%	LMI applies (highest premium)
5% (eligible FHB)	95%	No LMI under the First Home Guarantee

LMI protects the lender, not you, if you default. It's typically a one-off premium that can be paid at settlement or capitalised (added to the loan and paid off over its life). The premium isn't a flat percentage. It rises sharply as LVR rises, so a 5% deposit usually costs far more in LMI than a 10% deposit.

A crucial point many buyers miss: your deposit is not the only cash you need. You also need stamp duty (unless concessions apply), conveyancing, registration fees and other upfront costs. See deposit plus stamp duty: total upfront costs.

Worked example: a $750,000 home in NSW

Say a first home buyer is looking at a $750,000 property in NSW. Here's how each deposit option plays out.

20% deposit ($150,000): Loan of $600,000, LVR 80%, so no LMI. In NSW, a first home buyer purchasing an eligible home at or under $800,000 pays zero stamp duty under the First Home Buyers Assistance Scheme (full exemption ≤$800k, tapering to $1m). So upfront cash is roughly the deposit plus conveyancing and registration fees.

10% deposit ($75,000): Loan of $675,000, LVR 90%. LMI now applies: for a loan this size at 90% LVR, True Loan estimates a premium of around $14,000 (roughly 2.1% of the loan). If capitalised, the loan grows by that amount and you pay interest on it for the life of the loan.

5% deposit ($37,500): Loan of $712,500, LVR 95%. LMI is at its steepest band here. Unless the buyer qualifies for the First Home Guarantee, where the government guarantees the gap so no LMI is charged.

On repayments, the loan size flows straight through. At an illustrative 6.0% p.a. over 30 years, a $600,000 loan is about $3,597/month; a $712,500 loan is about $4,272/month. True Loan uses true-periodic repayment maths, so if you choose fortnightly, the period rate is the annual rate divided by 26 (not "monthly ÷ 2"), a small but real difference over 30 years. See weekly vs fortnightly vs monthly repayments.

The 2025–26 First Home Guarantee change

From 1 October 2025, the First Home Guarantee was expanded: income caps and the annual cap on places were removed, and property price caps were raised (e.g. $1.5m for Sydney/regional centres, $850k for Perth). Eligible first home buyers can buy with a 5% deposit and pay no LMI (Housing Australia).

First home buyers can also boost a deposit through the First Home Super Saver scheme, releasing up to $50,000 of eligible voluntary super contributions (max $15,000 per year) plus associated earnings.

Model this in True Loan

Open the True Loan calculator and:

1. Set the property value (e.g. $750,000) and your deposit, and True Loan derives the loan amount and LVR.
2. Toggle first home buyer and pick your state so stamp duty uses the right concessions.
3. Watch the LMI estimate: it shows $0 at ≤80% LVR and a premium above that, with an option to capitalise it into the loan.
4. Check the total funds required at settlement to see deposit + duty + fees together.

To compare deposit sizes head-to-head, say 10% with capitalised LMI versus 20% with none, use the comparison tool. It shows both repayments and total interest side by side, and every scenario is shareable via URL.

Common questions and mistakes

Is a bigger deposit always better? A larger deposit lowers your loan, LVR and (often) LMI, but it ties up cash. Modelling both in True Loan shows the trade-off; we can't tell you which to choose.

Does the deposit include stamp duty? No. Stamp duty is on top of your deposit. Forgetting it is the most common budgeting mistake (see how much cash needed at settlement).

Can I add LMI to the loan? Often yes. It can be capitalised, but you then pay interest on it for the loan's life.

Is the First Home Guarantee automatic? No: eligibility and property price caps apply, and you apply through a participating lender. Check the official site for current rules.

Figures here are estimates for general information only, not financial or credit advice. Confirm stamp duty, LMI and scheme eligibility with your state revenue office, the ATO, moneysmart.gov.au and Housing Australia before relying on any number.