How Much Deposit Do I Need to Buy My First Home?
Saving for a deposit is one of the biggest challenges for first-home buyers — but the amount you actually need might be less than you think.
This guide breaks down minimum deposits, lender rules, government schemes and smart strategies to help you get into your first home sooner.
1️⃣ Understanding Minimum Deposit Requirements
Most first-home buyers assume they need a 20% deposit, but that’s old thinking. Today, the minimum requirements vary depending on the lender and the scheme you use.
- 5% deposit: The standard minimum for most lenders.
- 2–5% deposit: Possible when using a government scheme.
- 10–20% deposit: Ideal if you want to avoid LMI entirely.
Many buyers enter the market with far less than 20% — especially with the government support available in 2025.
2️⃣ Do You Really Need a 20% Deposit?
A 20% deposit helps you avoid Lenders Mortgage Insurance (LMI), but it is not a requirement.
Here’s what a 20% deposit really achieves:
- Avoids LMI (saves thousands)
- Improves borrowing power
- Reduces monthly repayments
- Makes your loan application stronger
If reaching 20% will take years, it may actually cost you more in rising property prices than the LMI itself.
3️⃣ How Government Schemes Reduce Your Deposit
2025 offers several schemes that allow you to buy a home with a much smaller deposit.
Key programs include:
- First Home Guarantee: Buy with as little as 5% deposit, no LMI.
- Regional First Home Buyer Guarantee: Also 5%, no LMI.
- Family Home Guarantee: For single parents with 2% deposit.
- First Home Super Saver Scheme (FHSSS): Withdraw voluntary super contributions to boost your deposit.
These incentives can save you tens of thousands and cut your saving time dramatically.
4️⃣ Genuine vs Non-Genuine Savings
Lenders classify your deposit as either “genuine” or “non-genuine” savings.
- Genuine savings: Money you’ve saved yourself over time (usually 3+ months).
- Non-genuine savings: Gifts, tax refunds, bonuses, FHSSS withdrawals, etc.
Most lenders require at least 5% genuine savings, but in some cases we can get exceptions — especially when using government guarantees.
5️⃣ How Much Deposit Do You Actually Need?
Here’s a simple breakdown for a $600,000 property:
- 5% deposit: $30,000
- 10% deposit: $60,000
- 20% deposit: $120,000
But with schemes:
- Government Guarantee: Still 5%, but LMI is waived.
- FHSS Scheme: Boosts your deposit using pre-tax contributions.
You may be closer than you think.
6️⃣ Deposit + Additional Buying Costs
Your deposit isn’t the only cost to plan for. Make sure you account for:
- Conveyancing & legal fees
- Building & pest inspection
- Bank application fees
- Moving costs
- Stamp duty (often discounted or waived for first-home buyers)
We can calculate your total upfront costs based on your location and property type.
7️⃣ Smart Ways to Build Your Deposit Faster
If you’re still working toward your deposit, here are strategies that make a genuine difference:
- Automate weekly savings transfers.
- Use offset or high-interest savings accounts.
- Reduce short-term lifestyle expenses where possible.
- Leverage the First Home Super Saver Scheme.
- Use cash gifts or bonuses as non-genuine savings (where allowed).
Every dollar moves you closer to the front door.
8️⃣ When Waiting Longer Will Cost You More
Many buyers delay purchasing until they reach 20% — but this can backfire.
If property prices increase while you’re saving, your deposit target moves further away.
In many cases, buying sooner with a smaller deposit (especially using a scheme) ends up being more cost-effective.
9️⃣ Example: How Much Deposit You Need Based on Price
| Property Price | 5% Deposit | 10% Deposit | 20% Deposit |
|---|---|---|---|
| $450,000 | $22,500 | $45,000 | $90,000 |
| $600,000 | $30,000 | $60,000 | $120,000 |
| $750,000 | $37,500 | $75,000 | $150,000 |
These numbers help you understand what to aim for based on your target price range.
🔟 Ready to Check Your Borrowing & Deposit?
Your borrowing power and required deposit are unique to your income, expenses, credit score and the type of property you’re considering.
Want a personalised deposit plan?
Book a free first home buyer session with the Loan Location team — we’ll calculate your deposit options, borrowing power and eligibility for government schemes.