First home buyers
How much deposit do you really need to buy a house in Australia?
Ask five people how much deposit you need and you’ll hear the same answer: 20%. It’s a useful benchmark, but treating it as a hard rule keeps plenty of would-be buyers renting for years longer than necessary. Here’s how deposits actually work in 2026 — for a house, an investment property or a block of land — and the paths buyers use to get in with less.
Why 20% is the benchmark
Lenders describe loans by their loan-to-value ratio (LVR), the loan amount as a percentage of the property’s value. Borrow $480,000 against a $600,000 home and your LVR is 80%.
At or below 80% LVR, lenders consider the loan lower-risk, and you generally avoid lenders mortgage insurance (LMI). Above 80%, LMI usually applies. That’s the whole story behind the 20% rule: it’s the LMI threshold, not a legal minimum.
The quick version: deposit by price
Here’s the raw deposit at three common LVRs. It’s just arithmetic, but it makes the target concrete:
| Property price | 5% deposit | 10% deposit | 20% deposit |
|---|---|---|---|
| $600,000 | $30,000 | $60,000 | $120,000 |
| $700,000 | $35,000 | $70,000 | $140,000 |
| $800,000 | $40,000 | $80,000 | $160,000 |
A $700,000 purchase is around the median for a northern-corridor suburb like Craigieburn, so those middle numbers are realistic for a lot of Melbourne first-home buyers. Remember these are the deposit alone — you’ll also need funds for stamp duty and costs (next section).
What your deposit actually needs to cover
Your savings need to stretch beyond the deposit itself:
- Stamp duty, a state tax that varies with price and buyer type. In Victoria, eligible first home buyers pay no stamp duty up to $600,000, and a reduced amount on a sliding scale between $600,001 and $750,000 (State Revenue Office; current as at August 2026 — always confirm, as thresholds change).
- Conveyancing and legal fees
- Building and pest inspections
- Lender and government fees at settlement
- A buffer — moving costs, immediate repairs, and simple peace of mind.
A workable budget counts all of it, which is why “we have $60,000 saved” doesn’t translate directly to a deposit figure without doing the sums. Our calculators are a quick way to sanity-check the numbers.
Path 1: Buy with less than 20% and pay LMI
LMI protects the lender, not you, if the loan defaults. It’s a one-off premium that can usually be added to the loan. The cost rises with your LVR and loan size, and it can be substantial.
Paying LMI isn’t automatically bad. If prices in your target area are rising faster than you can save the difference, buying sooner with LMI can leave you ahead. That’s a personal calculation, and one worth doing with real numbers rather than vibes.
Some professions are also eligible for LMI waivers with certain lenders at higher LVRs, worth checking before assuming you’ll pay.
Path 2: A guarantor
A family member, usually a parent, offers part of the equity in their own property as additional security. Done well, this can let you borrow with little or no cash deposit and avoid LMI entirely.
The obligations are real: the guarantor’s property is partly on the line until the guarantee is released, typically once your LVR drops below 80%. Everyone involved should understand the arrangement fully, and guarantors should seek their own advice before signing.
Path 3: Government low-deposit schemes
If you’re an eligible first home buyer, three schemes can stack to slash the cash you need up front. As at August 2026:
- First Home Guarantee — buy with as little as a 5% deposit and no LMI, with the government guaranteeing part of the loan. Under the settings from October 2025 there are no income caps and no place limits, and the property price cap is $950,000 for Melbourne (Housing Australia).
- First Home Owner Grant (FHOG) — a $10,000 grant for new homes only (building or buying brand new) in Victoria (State Revenue Office).
- Stamp duty exemption / concession — as above, $0 duty up to $600,000 and a concession to $750,000.
Eligibility rules, income caps, price caps and available places change regularly, sometimes between federal budgets. Treat the figures above as a starting point, not gospel — have your eligibility checked against the current criteria when you’re ready. It takes a broker minutes.
How much deposit for an investment property?
Investors generally need a larger deposit than owner-occupiers. Many lenders look for 10–20%, and LMI applies above 80% LVR just like it does on your own home. The first-home schemes above are for owner-occupiers, so they usually don’t apply to an investment purchase.
The common workaround isn’t cash at all: if you already own property, you may be able to use the equity in it as your deposit instead of saving a fresh lump sum. That’s one of the most useful — and most misunderstood — moves in property finance, and it’s worth a proper look. See investment loans.
Buying land or building? Deposits work differently
For a house-and-land package or a knockdown-rebuild, the deposit is usually assessed on the combined land + build value, and the loan is released in stages as construction hits milestones (progress payments) rather than all at once. The $10,000 FHOG is aimed squarely at new builds, which makes building an appealing path for first-home buyers in Melbourne’s growth corridor.
Building finance has its own rules and traps — see construction loans for how it actually works.
So what’s the right number for you?
It depends on the property price, your income, the path you take, and your timeline. A realistic session with a broker turns “we should save more” into “we need $X by roughly Y, and here’s the path” — a far easier target to hit. That’s exactly what a free consultation is for.
This article is general information only and doesn’t consider your personal circumstances. Lending criteria and government scheme rules apply and change over time. Confirm current figures with the linked government sources before acting.