How much deposit do you need for a first home?

There is no single deposit amount every first home buyer needs.

A 20% deposit is often used as a savings goal because it reduces the amount you need to borrow and can help you avoid Lenders Mortgage Insurance, or LMI. But you do not necessarily need to save 20% before buying your first home.

Some lenders may accept deposits from 5%, while eligible first home buyers may be able to buy with a minimum 5% deposit through the Australian Government 5% Deposit Scheme without paying LMI. Eligible single parents and legal guardians have a separate pathway with a minimum 2% deposit.

So the better question is not simply “How much deposit do I need?” It is “How much deposit do I need for the home, loan and pathway that apply to me?”

How much should you aim to save?

As a general starting point, Moneysmart suggests a savings goal of 20% of the property price plus enough to cover the other costs of buying. A larger deposit means you borrow less and may avoid LMI.

That does not make 20% a rule.

Your actual deposit requirement can depend on your lender, the property, your financial position and whether you qualify for a government-backed scheme.

Here is what the difference can look like on a $600,000 home:

These figures are simply percentages of the purchase price. They do not include other costs you may need to pay, and having the minimum deposit does not guarantee that a lender will approve your loan.

Why is 20% talked about so much?

Twenty per cent is commonly used as a home deposit benchmark because it leaves you borrowing 80% of the property’s value.

If you borrow more than 80% of the property’s value, your lender may require Lenders Mortgage Insurance. Moneysmart explains that LMI is a one-off cost that protects the lender if you cannot repay the loan. It does not protect you.

Saving 20% can therefore have some advantages. You are borrowing less, your repayments may be lower and you may avoid LMI.

The trade-off is time.

If waiting until you have 20% means spending several more years saving, it is worth understanding the lower-deposit options available rather than assuming 20% is your only way in.

Can you buy your first home with a 5% deposit?

Potentially, yes.

Some lenders offer home loans with deposits below 20%, although their lending criteria and LMI requirements vary.

There is also the Australian Government 5% Deposit Scheme. Eligible first home buyers can purchase with a minimum 5% deposit without paying LMI because the Australian Government provides a guarantee to the Participating Lender. There are currently no income caps or waitlists under the scheme. Property price caps and other eligibility requirements still apply.

For a $600,000 home, 5% is $30,000. On an $800,000 home, it is $40,000.

That is considerably less than a 20% deposit, but it also means you are borrowing a larger proportion of the property’s value. Your lender still needs to decide whether the loan and repayments are suitable for your circumstances.

Read more: Australian Government 5% Deposit Scheme

What about a 10% deposit?

A 10% deposit sits somewhere between the two.

It reduces the amount you need to borrow compared with a 5% deposit, but unless you qualify for an applicable guarantee or your lender offers another arrangement, a deposit below 20% may still mean paying LMI.

There is nothing inherently right or wrong about 5%, 10% or 20%. The difference is in how much you need upfront, how much you need to borrow and what additional lending costs may apply.

This is why it is useful to compare the whole loan rather than treating the deposit percentage as the only number that matters.

Can some buyers purchase with a 2% deposit?

Yes, but there are different 2% pathways and they should not be confused with one another.

Eligible single parents and single legal guardians can access a minimum 2% deposit pathway within the Australian Government 5% Deposit Scheme. It does not require LMI and currently has no income cap or waitlist.

Help to Buy also has a minimum 2% deposit, but it works very differently. Help to Buy is a shared-equity scheme where the Australian Government can contribute up to 40% towards an eligible new home or 30% towards an existing home. Income limits and other eligibility rules apply.

So seeing “2% deposit” does not tell you the whole story. The two pathways have different eligibility requirements and very different structures.

Read more: 2% Deposit Scheme for single parents and legal guardians

Read more: Help to Buy

What is Lenders Mortgage Insurance?

Lenders Mortgage Insurance may apply when you borrow a high proportion of the property’s value, commonly when your loan-to-value ratio is above 80%.

Despite the name, it is insurance for the lender rather than you. If you cannot repay the loan and selling the property does not cover the amount owing, LMI helps protect the lender.

Depending on your lender and loan, LMI may need to be paid upfront or may be added to the amount you borrow.

This is one reason a 20% deposit is attractive, but it is also why government-backed low-deposit schemes can make such a difference for eligible buyers. The Australian Government 5% Deposit Scheme allows qualifying first home buyers to purchase with a minimum 5% deposit without LMI, while its single-parent pathway starts at 2%.

Your deposit is not your whole first home budget

Reaching your deposit target does not necessarily mean you have saved everything you will need.

You may also need to allow for costs such as conveyancing or legal fees, transfer or stamp duty where it applies, loan fees, insurance, moving costs and other expenses associated with buying or building. Moneysmart recommends allowing for buying costs in addition to your home deposit.

First home buyers may be eligible for grants or duty concessions that reduce some of those costs, but the rules depend on the state, property and buyer.

It is usually better to keep some room in the budget than to reach your deposit number and discover you have allowed nothing for everything that comes next.

How does your deposit affect your home loan?

A larger deposit generally means a smaller home loan.

If you buy a $600,000 home with a $120,000 deposit, you would need to finance substantially less than someone buying the same home with a $30,000 deposit, before allowing for fees and other costs.

Borrowing less can mean lower repayments and less interest over the life of the loan. A larger deposit can also reduce your loan-to-value ratio and potentially remove the need for LMI.

The other side of the equation is how long it takes you to save that larger amount.

There is no bonus point for hitting 20% if a different deposit and loan structure makes more sense for your circumstances. This is something to work through with your lender or broker rather than choosing a percentage in isolation.

Can the First Home Super Saver Scheme help with your deposit?

Potentially.

The First Home Super Saver Scheme, or FHSS, allows eligible first home buyers to make voluntary contributions into super and later access eligible contributions plus associated earnings towards buying or building their first home.

Currently, up to $15,000 of eligible voluntary contributions per financial year can count towards FHSS, up to $50,000 across all years.

FHSS does not reduce the deposit your lender requires. Instead, it is a way eligible first home buyers can save towards that deposit.

It can also potentially be used alongside other government home-buying programs where the separate eligibility requirements are met.

Read more: First Home Super Saver Scheme

How does a deposit work when you are building?

Building can make the deposit question slightly less straightforward than buying an established home.

If you are buying land and then building, there will generally be a land purchase and a separate building contract. Your lender will look at the overall finance required for the land and construction, while the contracts themselves may have their own payment requirements.

That is why the amount you need available upfront and the deposit percentage used by your lender are not always exactly the same number.

If you plan to use the Australian Government 5% Deposit Scheme for a new build with separate land and building contracts, the total land price plus build costs must remain within the relevant scheme property price cap.

Before signing either contract, it is worth checking with your lender or broker what you need available, when different amounts become payable and how the construction finance will work.

Does a house and land package change how much deposit you need?

Not automatically.

A house and land package brings the land and home together as an option, but finance will commonly involve the land purchase and construction of the home.

The deposit you ultimately need will depend on the overall finance arrangement, your lender and whether you are using a government scheme.

If you are eligible for the Australian Government 5% Deposit Scheme, house and land packages and vacant land with a building contract are eligible property types, subject to the applicable property price cap and other requirements.

For someone building their first home, this is another reason to work out the finance before focusing purely on the advertised package price.

Should you save 20% if you can?

A larger deposit has clear advantages, but whether you should wait until you reach 20% is a personal financial decision.

Someone with 15% saved and a comfortable borrowing position may make a different decision from someone who has 5%, qualifies for a government scheme and would otherwise spend another few years saving.

Someone else may prefer to keep saving because they want a smaller loan and lower repayments.

There is no universally “best” deposit percentage.

What matters is understanding what the different options mean for your upfront savings, loan amount, repayments and overall budget.

How much should you save before speaking to a lender?

You do not need to wait until you have reached your final deposit target before finding out what your options are.

In fact, speaking with a lender or broker earlier can help you understand what deposit they may require, how much you may be able to borrow, whether LMI could apply and whether any government schemes are relevant to you.

That gives you a much more useful savings target than simply deciding that you need 20% because that is the number you have always heard.

How much deposit do you need for a first home FAQs

Is 20% deposit required to buy a house?

No. Twenty per cent is a common savings target rather than a universal requirement.

Some lenders may accept smaller deposits, and eligible first home buyers can potentially purchase with a minimum 5% deposit through the Australian Government 5% Deposit Scheme without paying LMI.

Can I buy my first home with a 5% deposit?

Potentially, yes.

Eligible first home buyers can access the Australian Government 5% Deposit Scheme with a minimum 5% deposit, subject to the scheme rules and lender approval. Some lenders may also offer other low-deposit loans.

Can I buy with less than a 5% deposit?

There are some specific pathways.

Eligible single parents and legal guardians may be able to buy with a minimum 2% deposit under the Australian Government 5% Deposit Scheme. Help to Buy also has a minimum 2% deposit but operates as a shared-equity scheme with different eligibility requirements.

Do I have to pay LMI with a 10% deposit?

It may apply.

LMI commonly applies when a borrower has a loan-to-value ratio above 80%, although requirements vary between lenders and some eligible government-backed arrangements can avoid LMI with a smaller deposit.

Is a bigger deposit always better?

A bigger deposit generally reduces how much you need to borrow and may help you avoid LMI. But it can also mean waiting longer before buying.

The right balance depends on your savings, borrowing capacity, repayments and personal circumstances.

Does the First Home Owner Grant count as my deposit?

A grant may help with the overall cost of buying or building if you qualify, but whether and how a lender allows it to form part of the funds required for your purchase depends on the lender and the timing of the grant.

Check this with your lender or broker rather than assuming the grant will replace the deposit you need.

Does FHSS reduce the deposit I need?

No.

The First Home Super Saver Scheme helps eligible first home buyers save towards a deposit using voluntary super contributions. Your lender still determines the deposit required for your home loan.

Do I need extra savings on top of my deposit?

Usually, it is sensible to allow for more than the deposit alone.

Buying costs can include legal or conveyancing costs, duty where applicable, loan costs, insurance and moving expenses. The exact costs depend on your property and circumstances.

How much deposit do I need to build a new home?

There is no universal percentage specifically for new builds. Your deposit requirement depends on your lender, financial position and the overall land and construction finance.

If you are using a government scheme, its own minimum deposit, eligibility and property requirements also apply.

Work out the deposit that makes sense for you

For some first home buyers, 20% will be the right savings goal. For others, a 5% deposit or another eligible pathway may make buying or building possible sooner.

The important part is knowing what each option means rather than assuming you cannot start until you have saved one particular percentage.

If you’re still working through the numbers, the next useful steps are to estimate your repayments with the Mortgage Calculator and compare the First Home Super Saver Scheme, Australian Government 5% Deposit Scheme and Help to Buy.

Important information

Information on this page is general in nature and does not take into account your personal circumstances. Deposit requirements, lending criteria, Lenders Mortgage Insurance and government scheme eligibility can vary and change. Speak with a lender, mortgage broker or appropriately qualified financial professional about your circumstances and check current government scheme requirements before making financial or property decisions.

Information last reviewed: August 2026.