If you’re a first-home buyer in Australia, the minimum deposit for a home loan isn’t just a single number; it’s a strategic decision based on your Loan-to-Value Ratio (LVR) and genuine savings history. While 5% is the common entry point, specific government schemes now allow for as little as 2%, and high-earning professionals may even skip Lenders Mortgage Insurance (LMI) altogether. This guide breaks down exactly how to calculate your total cash required and how a mortgage broker in Brisbane can help you prove to the banks that you’re ready to borrow.
What Is A Home Loan Deposit?
A home loan deposit is your initial cash contribution toward your property purchase. Think of it as your equity stake in the home. It proves to the bank that you have “skin in the game.”
The lender provides the remaining balance through a mortgage. For example, if you buy an $800,000 home with an $80,000 deposit, you borrow $720,000.
Typical Minimum Deposit: 5% to 20%
In Australia, most lenders require a deposit between 5% and 20% of the purchase price. While a 5% deposit gets you into the market sooner, a 20% deposit offers major financial perks.
Current 2026 data shows the average Australian deposit is approximately $173,000. However, your specific requirement depends on your loan strategy:
- 5% Deposit: The standard minimum for low-deposit loans (with LMI).
- 2% Deposit: Available for eligible single parents via the Family Home Guarantee.
- 20% Deposit: The “gold standard” to avoid extra insurance costs.
The "3-Month Rule" for Genuine Savings
Banks do not just care about the amount of your deposit; they care about the source. To a lender, where the money came from is a major indicator of your financial reliability.
- What are Genuine Savings? This is money you have physically saved over time. Banks generally want to see these funds held in your account for at least 3 months. It includes salary credits, term deposits, or shares.
- What are Non-Genuine Savings? These are “lump sum” additions to your wealth that don’t necessarily prove saving habits. Examples include cash gifts from parents, an inheritance, a tax refund, or the First Home Owner Grant (FHOG).
- Why it matters: If you are borrowing more than 80% of the property value, most lenders strictly require at least 5% of the purchase price to be proven “genuine savings.” If your $40,000 deposit for an $800,000 home was a gift yesterday, the bank may reject the application until that money has sat in your account for 90 days.
Deposit Breakdown for an $800,000 Home
Deposit Percentage | Amount Required | LVR (Loan to Value Ratio) |
5% Deposit | $40,000 | 95% |
10% Deposit | $80,000 | 90% |
20% Deposit | $160,000 | 80% |
Why Your Deposit Size Matters
Your deposit size dictates your Loan-to-Value Ratio (LVR). Lenders use this ratio to assess their risk. A smaller deposit means a higher LVR, which banks view as a riskier investment.
Because of this risk, a small deposit often leads to:
- Higher Interest Rates: Lenders often charge a premium for LVRs above 80%.
- Stricter Criteria: Expect more scrutiny on your savings history and income.
- LMI Costs: The mandatory cost of Lenders Mortgage Insurance (LMI).
Understanding Lenders Mortgage Insurance (LMI)
If your deposit is under 20%, you must usually pay LMI. This insurance protects the bank if you default on your repayments. It does not protect you, but you pay the premium.
LMI costs vary based on your loan size and LVR. For an $800,000 property, LMI can range from roughly $21,850 (at 85% LVR) to over $41,000 (at 95% LVR).
Pro Tip: You can often “capitalise” LMI into your loan. This means you add the cost to your total mortgage rather than paying it upfront.
Your Deposit is the Foundation
Your deposit sets the stage for your entire home-buying journey. It determines your borrowing power and monthly repayment amounts.
Essentially, a larger deposit gives you more control over your financial future. If you can’t reach 20% yet, don’t worry. An experienced mortgage broker can help you navigate government grants to reduce your upfront costs.
How Your Deposit Affects Your Loan Options
Your deposit size directly impacts your borrowing costs and loan flexibility. Understanding these tiers helps you choose the most cost-effective path to homeownership.
Standard Home Loans – 20% Deposit
A 20% deposit is the industry “gold standard.” It lowers the lender’s risk and unlocks significant benefits. With this amount, you achieve an 80% Loan-to-Value Ratio (LVR).
- Avoid Lenders Mortgage Insurance (LMI): You save thousands in upfront costs.
- Unlock Lower Rates: Most lenders offer their most competitive interest rates at 80% LVR or lower.
- Faster Approval: Lenders view your application more favorably with a strong equity stake.
Low Deposit Loans – 5% to 10%
You can certainly buy with less than 20% down. Many Australian lenders offer low-deposit options starting at 5% to 10%.
- Market Entry: These loans help you stop renting and start building equity sooner.
- LMI Requirement: You will likely need to pay LMI, which protects the lender.
- Risk Premiums: Lenders may charge slightly higher interest rates for high-LVR loans.
Government Schemes – As Low As 2%
Federal initiatives now offer incredible support for first-home buyers. These programs allow you to skip LMI even with a tiny deposit.
- First Home Guarantee: Buy with a 5% deposit while the government guarantees the rest.
- Help to Buy Scheme: A shared equity model where you only need a 2% deposit.
Family Home Guarantee: Supports single parents or guardians with just 2% down.
Choosing The Right Option for You
There is no one-size-fits-all strategy for your deposit. Your choice depends on your income, savings, and how fast you want to buy. While a 20% deposit saves you money long-term, a 5% deposit gets you through the door today.
Real Deposit Amounts for an $800,000 Home
Visualizing the numbers helps you set a clear savings target. Here is what you need for a property valued at $800,000:
Deposit Percentage | Amount Required | Estimated LMI Cost* |
5% Deposit | $40,000 | ~$41,000+ |
10% Deposit | $80,000 | ~$22,000+ |
20% Deposit | $160,000 | $0 |
*LMI estimates vary by lender and are often capitalised into the loan.
Compare Deposits Across Property Prices
Use this table to compare deposit requirements for common Australian price points.
Property Price | 5% Deposit | 10% Deposit | 20% Deposit |
$500,000 | $25,000 | $50,000 | $100,000 |
$600,000 | $30,000 | $60,000 | $120,000 |
$700,000 | $35,000 | $70,000 | $140,000 |
$800,000 | $40,000 | $80,000 | $160,000 |
$900,000 | $45,000 | $90,000 | $180,000 |
$1,000,000 | $50,000 | $100,000 | $200,000 |
Minimum Deposit and Lenders Mortgage Insurance (LMI)
As a first-home buyer, you have likely heard the term Lenders Mortgage Insurance (LMI). But what does it actually mean for your deposit?
In simple terms, LMI is an insurance policy that protects the lender—not you. It triggers if you can no longer make your loan repayments. Generally, you must pay LMI if your deposit is less than 20% of the property’s purchase price.
From the bank’s perspective, a smaller deposit represents a higher risk. They charge this premium to offset that risk.
How Much Does LMI Cost?
The cost of LMI is not a flat fee. Instead, it is a percentage of your total loan amount. The price fluctuates based on your lender, your total loan size, and your Loan-to-Value Ratio (LVR).
For an $800,000 property, the difference in LMI can be tens of thousands of dollars:
- 5% Deposit ($40k): Your LMI premium could be roughly $32,000 to $41,000.
- 10% Deposit ($80k): This usually reduces your LMI to approximately $14,000 to $29,000.
- 20% Deposit ($160k): You pay $0 in LMI.
Most lenders allow you to “capitalise” this cost. This means they add the premium to your total loan amount. While this saves you upfront cash, it increases your monthly repayments and total interest paid.
How LMI Impacts Your Borrowing Power
Many buyers assume LMI is just an extra fee. In reality, it directly reduces your “effective” borrowing power if you add it to your loan balance.
Most Australian lenders have a Maximum Total LVR (usually 98% including LMI). If your LMI premium pushes you over this limit, the bank may force you to reduce your loan amount.
The "LMI Eat-Back" Calculation ($800,000 Home)
Let’s look at how this works with a 5% deposit on an $800,000 home.
- Base Loan Needed: $760,000 (95% LVR)
- Estimated LMI Premium: $32,000
- Strategy A (Pay Upfront): You pay the $32,000 from savings. Your loan stays at $760,000.
- Strategy B (Capitalise LMI): You add $32,000 to the mortgage. Your new loan is $792,000.
The Trap with strategy B: Your LVR jumps to 99%. Since most banks cap total lending at 98%, the bank may reject this loan unless you pay a portion of the LMI upfront to fit the cap.
The Interest Trap: Long-Term Cost
Capitalising LMI adds the fee to your principal, meaning you pay interest on it for 30 years.
LMI Strategy | Total Interest Paid on LMI* | Total Cost of LMI |
Paid Upfront | $0 | $32,000 |
Added to Loan | ~$43,000 | $75,000 |
*Assumes a 6.00% interest rate over a 30-year term.
Pros and Cons of Paying LMI
Pros | Cons |
Buy your home sooner with a smaller deposit. | Adds significant costs to your total loan. |
Build equity faster if property prices rise. | Protects the lender, providing no cover for you. |
Secure a property before you’re priced out. | Increases monthly repayments and total interest. |
Is Paying LMI a Smart Move?
Do not panic if you cannot reach a 20% deposit. For many Australians, paying LMI is a strategic choice to avoid rising property prices.
The key is to run the numbers with a broker. We can help you compare the cost of LMI against the cost of waiting another three years to save. Sometimes, getting in now is the best financial path.
How To Save For A Home Loan Deposit Faster
Saving for an $800,000 home can feel like a mountain to climb. However, with the right strategy, you can cut years off your timeline. Whether you need $40,000 (5%) or $160,000 (20%), here is how to make your money work harder in the 2026 market.
1. Use the First Home Super Saver Scheme (FHSSS)
The FHSSS is arguably the most powerful tool for Australian first-home buyers. It allows you to save for a deposit inside your superannuation fund, where it is taxed at a lower rate (15%).
- Contribution Limits: You can contribute up to $15,000 per financial year.
- Total Cap: You can withdraw up to $50,000 in total voluntary contributions.
- The Benefit: Because you save from your pre-tax income (salary sacrifice), you could reach your goal up to 30% faster than saving in a standard bank account.
2. Master the "50/30/20" Rule
Consistency beats intensity every time. To save for an $800,000 home, you need a disciplined framework. Try the 50/30/20 budgeting method:
- 50% for Needs: Groceries, rent, and utilities.
- 30% for Wants: Dining out and subscriptions.
- 20% for Your Deposit: Transfer this amount the moment you get paid.
3. Optimise for High Interest Rates
With the RBA cash rate sitting at 3.85% in early 2026, your choice of savings account matters. Don’t leave your deposit in a low-interest transaction account.
- High-Interest Savings Accounts (HISA): Look for accounts offering bonus interest for regular deposits.
- Offset Accounts: If you have a generous family member, you can save your deposit in an offset account linked to their mortgage. This helps them save on interest while keeping your cash accessible.
4. Reducing Debt to Boost Borrowing Power
Lenders look at your “Debt-to-Income” ratio. High credit card limits or “Buy Now, Pay Later” debts can significantly reduce how much a bank will lend you.
- The Math: A $10,000 credit card limit can reduce your borrowing power by approximately $40,000 to $50,000, even if the balance is zero.
- The Action: Close unused credit cards and pay off personal loans before applying. This ensures more of your income goes toward your mortgage, not old debt.
How Long Will It Take to Save?
To buy an $800,000 property, here is the estimated time to save a 5% deposit ($40,000) versus a 20% deposit ($160,000) based on a household saving $2,500 per month:
Deposit Goal | Total Amount | Estimated Time |
5% Deposit | $40,000 | 1.3 Years |
20% Deposit | $160,000 | 5.3 Years |
Note: These estimates do not include the FHSSS tax benefits, which could shorten these timelines.
Read more: List of Government grants to buy first home
What Other Costs Do You Need to Consider?
Saving the minimum deposit for a home loan is just the beginning. Many first-home buyers are surprised by the “hidden” upfront costs that arise during settlement. If you aren’t prepared, these extras can eat into your deposit and stall your purchase.
For an $800,000 property, you should budget for these key expenses to ensure a smooth transition into homeownership.
Expense #1: Stamp Duty (and 2026 First-Home Buyer Savings)
Stamp duty (transfer duty) is a state government tax. It is usually your largest cost after the deposit. However, in 2026, many states have expanded their support for first-home buyers.
- NSW: You generally pay $0 stamp duty on homes up to $800,000. This saves you approximately $31,000 in upfront costs.
- QLD: For contracts signed from May 2025, first-home buyers pay $0 stamp duty on new homes of any value. For established homes at $800,000, you may qualify for a concessional rate of roughly $24,000.
- VIC: You may receive a full exemption up to $600,000, with concessions tapering up to $750,000. For an $800,000 established home, expect to pay the full duty of approximately $43,000.
Expense #2: Legal and Conveyancing Fees
You need a solicitor or licensed conveyancer to manage the legal transfer of the property. They review the contract, conduct title searches, and coordinate settlement.
- Estimated Cost: $1,000 to $2,500.
- Pro Tip: Solicitors usually cost more than conveyancers but offer more protection if the legal structure of the sale becomes complex.
Expense #3: Building and Pest Inspections
Never buy a home without checking for structural damage or termites. These reports give you the power to negotiate the price or walk away from a “lemon.”
- Estimated Cost: $500 to $900 for a combined report.
- Why it matters: Spending $600 now can save you $60,000 in future repairs.
Summary of Total Upfront Cash Needed ($800,000 Home)
To give you a realistic target, here is the total cash “out of pocket” you might need, assuming a 5% deposit in a state like QLD or NSW where concessions apply.
Expense Item | Estimated Amount |
5% Base Deposit | $40,000 |
Stamp Duty (Concessional) | $0 – $24,000 |
Conveyancing & Legal | $1,500 |
Building & Pest Inspection | $600 |
Mortgage Registration & Fees | $500 |
Total Cash Required | $42,600 – $66,600 |
The "Buffer Rule": Total Cash Required vs. Base Deposit
A common mistake is assuming your deposit is the only cash you need. At Hunter Galloway, we recommend the Buffer Rule: aim to have 8% to 10% of the purchase price in total cash, even if you are only using a 5% deposit scheme.
Government Grants & Support For Buyers With A Minimum Deposit
In 2026, the Australian Government and State Treasuries have significantly expanded support for first-home buyers. These initiatives can slash your upfront costs and, in some cases, eliminate the need for Lenders Mortgage Insurance (LMI) entirely.
If you are aiming for an $800,000 home, here is how you can leverage these programs to bridge the gap.
The QLD Government has extended the doubled $30,000 grant until 30 June 2026. This is a massive win if you are building or buying a brand-new home.
- The Amount: A one-off tax-free payment of $30,000.
- The Cap: Your total property value (land + build) must be under $750,000.
The Strategy: For an $800,000 property, you won’t qualify for the grant on the full purchase. However, if you are looking at a house and land package where the total stays under $750k, this grant could cover nearly 75% of your 5% deposit.
This federal scheme is a game-changer for those who have a 5% deposit but want to avoid the $30,000+ LMI fee.
- How it works: Housing Australia “guarantees” the other 15% of your loan. This allows you to borrow as if you had a 20% deposit.
- Property Caps: In 2026, the price cap for Brisbane/Regional Centres is $1,000,000 and $700,000 for the rest of QLD.
- Eligibility: Since 1 October 2025, income caps have been removed in many streams, making this accessible to more Australians. You must be an Australian citizen or permanent resident.
The Help to Buy Scheme is a shared equity program. It is designed for those who have high stable income but struggle to save a large deposit.
- Your Stake: You only need a 2% deposit.
- Government Stake: The government contributes up to 40% for new homes or 30% for existing homes.
- The Math ($800,000 Home): If you buy an existing home, the government “owns” $240,000 (30%). You only need a mortgage for $544,000 and a deposit of $16,000.
- Price Cap: In QLD, the cap for this scheme is $1,000,000 for capital cities.
Summary of Benefits for an $800,000 Purchase
Scheme | Deposit Needed | LMI Cost | Who it suits? |
Standard 5% Loan | $40,000 | ~$41,000 | Most buyers with stable savings. |
First Home Guarantee | $40,000 | $0 | Buyers who want to save $30k+ in fees. |
Help to Buy Scheme | $16,000 | $0 | Low-deposit buyers who don’t mind shared equity. |
Family Home Guarantee | $16,000 | $0 | Single parents with at least one dependent. |
Navigating The Fine Print
While these grants are incredibly helpful, they come with strict residency rules. You must usually move into the property within 12 months and live there for at least 6 months continuously.
Applying for these can be a paperwork nightmare. At Hunter Galloway, we manage the application process for you as part of your home loan approval, ensuring you don’t miss out on a single dollar.
Risks Of Using A Minimum Deposit
Buying a home with a small deposit is the fastest way to stop paying rent, but it isn’t without its challenges. While low-deposit loans and government schemes open doors, you must understand the long-term trade-offs. Being aware of these risks helps you build a more resilient financial plan for your home.
Risk #1: Higher Interest Rates
Lenders use “risk-based pricing.” Because a 5% deposit represents a higher risk to the bank, they often charge a higher interest rate compared to someone with a 20% deposit.
The Cost: Even a 0.50% difference in your interest rate on a $760,000 loan can cost you an extra **$250 per month** in repayments. Over 30 years, that is nearly $90,000 in extra interest.
Risk #2: Exposure to Negative Equity
Negative equity occurs when your home’s value drops below your outstanding loan balance. If you start with only 5% equity ($40,000) in an $800,000 home, a small market dip could leave you “underwater.”
- The Impact: Being in negative equity makes it extremely difficult to refinance to a better rate or sell the property without owing the bank money.
Risk #3: Increased Mortgage Stress
With a smaller deposit, your loan balance is larger, which means your monthly repayments are higher. This leaves less “breathing room” in your budget for rising living costs or unexpected repairs.
The Danger: If interest rates rise by even 1%, a high-LVR borrower feels the pinch much sooner than someone with a smaller loan-to-value ratio
How to Mitigate These Risks
You don’t have to wait for a 20% deposit to be safe. Follow these professional strategies to protect your investment:
- Get Pre-Approval First: Knowing your exact limit prevents you from overstretching on a property you can’t comfortably afford.
- Create a “Repayment Buffer”: Calculate your repayments as if interest rates were 2% higher than they are now. If you can still afford the loan, you have a solid safety net.
- Maintain an Emergency Fund: Never spend your last dollar on the deposit. Aim to keep 3–6 months of living expenses in a separate high-interest account.
- Focus on Capital Growth: Choose properties in areas with strong historical growth. This helps you build equity through price appreciation, even if you started with a small deposit.
Minimum Deposit For Home Loan - Frequently Asked Questions (FAQ)
What is the absolute minimum deposit for a home loan in Australia?
The standard entry point is 5%, but for eligible buyers, it can be as low as 2%.
- 5% Deposit: Standard for most low-deposit loans (usually requires Lenders Mortgage Insurance).
- 2% Deposit: Available via the Family Home Guarantee (for single parents) or the Help to Buy Scheme (shared equity).
- 0% Deposit: Only possible through a Guarantor Loan, where a family member secures the loan with their own property equity.
Is $20,000 enough for a house deposit?
It depends on the property price. $20,000 is a 5% deposit for a $400,000 home, which is viable for many regional properties or units. However, for an $800,000 home, $20,000 is only 2.5%. To make this work, you would need to qualify for a 2% government scheme or have a guarantor to cover the shortfall.
How much deposit do I need for an $800,000 home?
To buy an $800,000 property, your targets are:
- $160,000 (20%): The “Gold Standard” to avoid LMI and get the lowest interest rates.
- $80,000 (10%): A common middle ground that reduces your LMI premium.
- $40,000 (5%): The minimum for most first-home buyer schemes.
- $16,000 (2%): The minimum for specific government shared equity programs.
Can I avoid LMI with only a 10% deposit?
Generally, no—LMI is mandatory for deposits under 20%. However, you can skip it if you are an eligible medical, legal, or accounting professional. In 2026, many banks also offer LMI waivers for Nurses and Midwives with a 10% deposit, potentially saving you over $20,000 upfront.
Is LMI a one-off payment or a monthly fee?
It is a one-off premium paid at settlement. Most buyers “capitalise” it, meaning the bank adds the fee to your loan balance. While this saves you cash upfront, you will pay interest on that insurance premium for the life of the loan (30 years).
What are "Genuine Savings" and why do banks care?
Banks want to see that you have the discipline to save. “Genuine savings” is money held in your account for at least 3 months. Even if you receive a large cash gift for your deposit, most lenders still require you to show at least 5% of the purchase price in funds you saved yourself.
Can I use a gift from my parents as a deposit?
Yes, but you will need a signed “Gift Letter” stating the money is a non-repayable gift. If your deposit is under 20%, remember that banks still look for that 3-month history of your own “genuine savings” alongside the gift.
How does my HECS/HELP debt affect my deposit?
HECS debt doesn’t change the size of the deposit you need, but it significantly impacts your borrowing power. Because HECS repayments are deducted from your salary, banks see you as having less “disposable income” to pay a mortgage. In 2026, many lenders will ignore HECS debt in their calculations only if the balance is under $5,000 or nearly paid off.
What is the minimum deposit for an investment property?
Investors are viewed as higher risk, so you typically need at least 10% plus costs. Most government 2% and 5% deposit schemes are strictly for owner-occupiers and cannot be used for investment properties.
Does my credit score affect my minimum deposit?
Yes. If you have a “thin” credit file or recent defaults, a lender may cap your LVR at 80%. This means even if you want to buy with a 5% deposit, the bank might force you to provide 20% to mitigate their risk.
Final Thoughts: What’s The Best Deposit Strategy For You?
When it comes to your minimum deposit for a home loan, there isn’t a one-size-fits-all answer. In the 2026 Australian market, your best strategy depends on your timeline, your career, and how much “skin in the game” you can afford today.
Whether you’re aiming for the traditional 20% deposit to bypass Lenders Mortgage Insurance, leveraging a 5% government guarantee, or exploring Guarantor loans, each path has trade-offs to consider.
The Strategy Matrix
- The “Wait and Save” Strategy: Aiming for 20% lowers your monthly repayments and secures the sharpest interest rates. However, you risk being priced out if property values rise faster than you can save.
- The “Get in Early” Strategy: Using a 5% deposit (and paying LMI) gets you into your $800,000 home years sooner. This allows you to start building equity immediately, which often outweighs the cost of the insurance in a growing market.
- The “Professional” Strategy: If you’re a Doctor, Lawyer, or Engineer, you may not need to choose. You can often secure a 90–95% loan with $0 LMI, giving you the best of both worlds.
Plan Your Move with Confidence
Don’t forget to factor in the “hidden” costs like the $24,000+ in stamp duty (unless you qualify for a 2026 concession) and legal fees. To make the process smoother, we recommend getting a pre-approval early. This clarifies your exact borrowing power so you can shop with confidence, knowing exactly where your limit lies.
Ready to find your floor?
Use our Deposit Calculator to map out your savings journey, or book a free assessment with our team to see which government schemes you can use to buy your first home sooner.
Next Steps And Getting Your Home Loan Approved
At Hunter Galloway, we specialize in taking the “hard” out of home loans. As Brisbane’s top-rated brokers, we have access to over 30 lenders and intimately understand the 2026 credit policies that banks won’t tell you about. We’ll help you navigate the grants, calculate your LVR, and find the specific lender that fits your unique situation.
Unlike other mortgage brokers who are one-person operations, we have an entire team of experts dedicated to helping make your home loan journey as simple as possible. If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.
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