The short version
- Textbook deposit: 20% of the purchase price. Below this, you'll usually pay LMI.
- Minimum without help: 5% to 10% with most lenders, but you'll pay LMI on top, often $10,000 to $30,000.
- Minimum with First Home Guarantee: 5%, with no LMI, if you qualify.
- Family Guarantee: as little as 0% if a parent provides equity in their home as additional security.
- Don't forget: stamp duty, legal fees, building inspections, removalists. Budget another 4 to 6% of the purchase price for upfront costs in most states.
Why 20% became the standard
Australian lenders apply the “Loan-to-Value Ratio” (LVR) test to every home loan. LVR is the loan amount divided by the property value. If you borrow $640,000 against an $800,000 property, the LVR is 80%. Most lenders treat 80% as the line above which they need extra protection against default risk, and they get that protection by requiring you to pay Lenders Mortgage Insurance (LMI). LMI is paid by you, but it protects the lender, not you. It can add tens of thousands to your loan.
So the “20% deposit” rule of thumb really means “the deposit big enough that you don't pay LMI”. That's where it comes from. It's not magic, and you can absolutely buy with less.
The numbers, by deposit size
Worked example for an $800,000 owner-occupier purchase in 2026 (rough figures, your actual numbers will vary by lender, state and stamp-duty status):
| Deposit % | Cash you bring | Loan size | LVR | Approx LMI |
|---|---|---|---|---|
| 20% | $160,000 | $640,000 | 80% | $0 |
| 15% | $120,000 | $680,000 | 85% | ~$11,000 |
| 10% | $80,000 | $720,000 | 90% | ~$20,000 |
| 5% | $40,000 | $760,000 | 95% | ~$32,000 |
LMI is usually capitalised onto your loan, meaning it's added to the borrowed amount and you pay interest on it for the life of the loan. A $32,000 LMI premium on a 30-year loan at 5.79% costs you about $36,000 in extra interest on top of the premium itself. That's the real cost of a low deposit.
How to avoid LMI without 20%
Three main paths. The right one depends on whether you're a first home buyer, a guarantor situation, or in a profession with a special carve-out.
1. The First Home Guarantee (formerly First Home Loan Deposit Scheme)
A federal scheme administered by Housing Australia. Eligible first home buyers can purchase with as little as a 5% deposit with no LMI, because the government guarantees the difference between your deposit and 20%. Income caps apply: $125,000 single or $200,000 combined for a couple, indexed annually. Property price caps vary by region. Limited number of places per financial year, so they go fast at the start of the cycle.
Related schemes under the same umbrella: the Regional First Home Buyer Guarantee for regional areas, the Family Home Guarantee for single parents (2% deposit), and the Help to Buy shared-equity scheme.
2. Family Guarantor (or Security Guarantee)
A parent (or other family member) offers part of their own home's equity as additional security on your loan. The combined security gets you below the 80% LVR threshold and avoids LMI. You can buy with essentially no cash deposit, although you'll still need money for stamp duty, fees and a buffer. Risk: if you default, the guarantor's property is at stake.
3. Professional packages
Some lenders waive LMI up to 90% LVR for certain professions: doctors, dentists, accountants, lawyers, actuaries, and a handful of others. The list and threshold vary by lender. If you're in one of these professions, ask your broker, the savings are significant.
What you also need to budget for (the upfront extras)
On top of your deposit, expect roughly 4 to 6% of the purchase price in extra upfront costs. For an $800,000 property, that's another $32,000 to $48,000 you need in savings or borrowed via the loan (where allowed):
- Stamp duty: the largest item, varies by state. First home buyer concessions can reduce or eliminate this. Use our stamp duty calculator.
- Legal and conveyancing fees: $1,000 to $3,000.
- Building and pest inspection: $400 to $700.
- Loan establishment fees: $0 to $700, varies by lender.
- LMI (if applicable): $0 to $40,000+.
- Lender's valuation: usually included or low-cost.
- Council and water rate adjustments: a few hundred dollars at settlement.
- Removalists, utility connections, contents insurance: $1,000 to $5,000 depending on how you move.
Genuine savings
Most lenders require at least 5% of the deposit to be “genuine savings”, money you've saved yourself over at least three months, evidenced by bank statements showing the balance growing. Gifts from family, inheritances, and First Home Super Saver Scheme withdrawals can usually count as part of your deposit, but they may not count toward the genuine savings test. If you're relying on a gift, the lender will want a signed gift letter from the giver.
The First Home Super Saver Scheme
The FHSSS lets first home buyers save for a deposit inside their super (where the tax rate is lower than their marginal tax rate), then withdraw it for a home purchase. You can contribute up to $15,000 a year (capped at $50,000 total) and the ATO works out the “released amount” based on your contributions plus deemed earnings. For most first home buyers on a normal salary, this is worth a few thousand dollars in tax savings versus saving in a regular savings account. Talk to a financial planner or accountant before committing, the rules around concessional vs non-concessional contributions matter.
How to actually grow your deposit faster
- High-interest savings accounts: most majors offer 4 to 5% on a savings account if you meet conditions (deposit X, no withdrawals, etc.). Check the bonus rate and the conditions every month, banks change them often.
- Term deposits: lock in a rate for a fixed period. Lower flexibility, slightly higher rates, useful if you have a clear timeline.
- FHSSS: as above, useful for first home buyers on PAYG income.
- Reduce expensive debt: clearing $5,000 of credit card debt at 18% saves you $900 a year in interest, and lifts your borrowing power because lenders treat your card limit (not balance) as a monthly liability.
- Family help: gifts, guarantor loans, or co-ownership. Each has trade-offs, especially around tax and relationship risk. Get advice.
What not to do
- Don't buy now and worry about LMI later if you can wait six months and save the extra deposit. The LMI you avoid usually exceeds the price growth on a typical property over six months.
- Don't hide gambling, BNPL, or speculative crypto trading from the lender. Bank statements tell the story, and unexplained activity gets your application declined.
- Don't stretch to your maximum borrowing. Borrowing the absolute most a lender will give you leaves no room for rate rises, life changes, or unexpected costs. Most planners recommend keeping repayments under 30% of take-home pay.
Bottom line
Aim for 20% if you can. If you can't, look at the First Home Guarantee, family guarantor, and professional package options before paying LMI. Run your numbers in our borrowing power calculator and LMI calculator first, then tell us your situation and we'll match you with a broker who knows which schemes you qualify for and which lenders price your scenario best.