If you’re a first-home buyer in Australia, one of the most important questions you’ll face early on is: What is the minimum deposit for a home loan? It’s a simple question, but the answer can vary depending on your lender, financial situation, and whether you’re using government schemes or grants. Generally, the more you save, the stronger your application looks—and the more flexibility you’ll have when negotiating with lenders.
When it comes to buying your first home, your deposit plays a far bigger role than you might realise. It’s not just about showing the bank you can save—it directly influences how much you can borrow, what type of loan you qualify for, and even how much interest you’ll pay over time. In short, the size of your deposit can either open doors or close them.
In this guide, we’ll walk you through everything you need to know about the minimum deposit for a home loan in Australia, how it affects your loan options, and how a mortgage broker in Brisbane can help you get into your first home sooner.
What Is A Home Loan Deposit?
A home loan deposit is the upfront amount of money you contribute toward the purchase of a property. Think of it as your stake in the home—it shows the bank you’re financially committed and have “skin in the game.” The remainder of the property’s price is covered by your home loan. For example, if you’re buying a $600,000 home and you’ve saved a $60,000 deposit, the lender would typically provide the remaining $540,000 through a mortgage.
Typical Minimum Deposit For A Home Loan - 5% to 20%
In Australia, your deposit typically needs to be between 5% and 20% of the property’s purchase price. The minimum deposit for a home loan is generally 5%, but hitting 20% offers significant advantages.
A 5% deposit might be enough to get you started, especially if you’re using government schemes like the First Home Guarantee. However, the closer you get to a 20% deposit, the more options you’ll have—and the fewer extra costs you’ll face. For example:
- On a $600,000 home:
- 5% deposit = $30,000
- 10% deposit = $60,000
- 20% deposit = $120,000
Why Deposit Size Matters
The size of your deposit affects almost everything about your home loan. Lenders assess risk based on how much of your own money you’re contributing. A smaller deposit means the bank is covering a larger portion of the purchase, which makes them more cautious. As a result, you might face stricter lending conditions, higher interest rates, or the need to pay for Lenders Mortgage Insurance (LMI).
Understanding Lenders Mortgage Insurance (LMI)
If your deposit is less than 20%, most lenders will require you to pay Lenders Mortgage Insurance. LMI protects the lender (not you) in case you can’t make your repayments. It can cost thousands—anywhere from $5,000 to over $20,000—depending on the loan size and how far under the 20% threshold your deposit falls. Unfortunately, this fee doesn’t add any value to your property—it’s purely a safety net for the lender.
That’s why many buyers aim to save at least 20%—to avoid LMI altogether. If that’s not realistic for you right now, don’t stress. There are still ways to get into the market sooner with a smaller deposit, especially if you work with an experienced mortgage broker who understands how to structure your loan and take advantage of available support.
Your Deposit Is the Foundation
At the end of the day, your deposit lays the foundation for your entire home-buying journey. It influences your borrowing power, your monthly repayments, and your overall financial flexibility. The more you save, the more control you have over your finances. In the next section, we’ll look closely at what lenders really mean when they talk about the minimum deposit for home loan approval—and how to know if you’re ready to take the next step.
How Different Deposits Affect Your Loan Options
It’s important to understand how different deposit levels impact your loan options and long-term costs.
Standard Home Loans – 20% Deposit
For most standard home loans, lenders prefer a 20% deposit. This is considered the “gold standard” because it reduces the lender’s risk and usually means you can avoid paying Lenders Mortgage Insurance (LMI). A 20% deposit also gives you greater borrowing power, access to better interest rates, and a stronger negotiating position. If you’ve saved a 20% deposit, lenders are more likely to view your application favourably—and you’re less likely to hit any unexpected roadblocks during the approval process.
Low Deposit Loans – 5% to 10%
Can you get a home loan with less than 20%? Absolutely. Many lenders offer low-deposit loans starting at just 5% to 10%, especially for first-home buyers. While these loans can help you get into the property market sooner, there are trade-offs. You’ll most likely need to pay LMI, which can add thousands of dollars to your upfront or ongoing costs. Some lenders may also charge slightly higher interest rates to offset the additional risk of a smaller deposit. That said, a low deposit loan can be a great option if you’ve got a stable income, a good credit history, and want to take advantage of rising property prices.
Government Schemes – As Low As 2%
If you’re a first-home buyer, you may be eligible for government assistance programs like the First Home Guarantee, which allows you to buy a home with as little as a 2% deposit—and with no LMI. These schemes are designed to help Australians enter the property market sooner, especially in areas where saving a 20% deposit can be a long and difficult process. Keep in mind that these programs have strict eligibility criteria, including income caps, property price limits, and first-home buyer status.
Choosing the Right Option for You
There’s no one-size-fits-all answer when it comes to your deposit. The minimum deposit for home loan will depend on your personal circumstances, goals, and how soon you want to buy. Whether you’re aiming for 20%, working with 5%, or leveraging a government scheme, the key is to understand how each option affects your costs, your repayments, and your long-term financial health. In the next section, we’ll explore how your deposit directly impacts your borrowing power—and what that means for your home-buying journey.
Real Deposit Amounts Based On Property Price
Here’s a clear breakdown of real deposit amounts based on common Australian property prices. This will help you visualise how much you might need to save depending on the deposit percentage you’re aiming for.
Property Price | 5% Deposit | 10% Deposit | 20% Deposit |
$150,000 | $7,500 | $15,000 | $30,000 |
$300,000 | $15,000 | $30,000 | $60,000 |
$500,000 | $25,000 | $50,000 | $100,000 |
$750,000 | $37,500 | $75,000 | $150,000 |
$1,000,000 | $50,000 | $100,000 | $200,000 |
Deposit And Lenders Mortgage Insurance (LMI)
As a first-home buyer, you’ve probably come across the term Lenders Mortgage Insurance, or LMI, while researching your loan options. But what exactly is it—and how does it affect your deposit and borrowing power?
In simple terms, LMI is an insurance policy that protects the lender—not you—if you can’t make your loan repayments. It’s typically required when your deposit is less than 20% of the property’s purchase price. In other words, if you’re not meeting the standard minimum deposit for home loan approval (usually 20%), lenders see your loan as higher risk. To offset that risk, they charge you LMI.
How Much Does LMI Cost?
The cost of LMI varies depending on several factors, including the loan amount, the size of your deposit, and the lender you choose. It’s not a flat fee—LMI is calculated as a percentage of the loan and can range from a few thousand to over $20,000. For instance:
- A 5% deposit on a $600,000 property could attract an LMI premium of around $21,000.
- A 10% deposit on the same property might reduce that to $11,000.
Some lenders allow you to add the LMI premium to your home loan (this is called “capitalising” LMI), while others require you to pay it upfront. Either way, it increases your overall borrowing costs.
How LMI Impacts Your Borrowing and Repayments
Paying LMI affects your loan in two main ways. First, it increases the total amount you borrow. If you capitalise the LMI into your loan, your repayments will be slightly higher, and you’ll pay more interest over the life of the loan. Second, it can stretch your budget, especially if you’re already working with a tight deposit.
That said, there’s a silver lining—LMI can help you get into the market sooner. And in a rising property market, that early entry could be worth far more than the cost of the insurance itself.
Pros and Cons of Paying LMI
Let’s look at the pros and cons of paying LMI:
Pros:
- Get into the market sooner, even with a smaller deposit.
- Start building equity earlier if property values increase.
- Take advantage of current low interest rates or favourable buying conditions.
Cons:
- Adds thousands to your upfront or total loan costs.
- Doesn’t protect you as the borrower—only the lender.
- May affect your long-term borrowing power and increase repayments.
If you’re struggling to reach a 20% deposit, don’t panic. Paying LMI might actually be a strategic move—especially if you’re confident in your income stability and want to avoid missing out on buying while prices rise. The key is to run the numbers carefully and understand how LMI fits into your overall loan structure.
How To Save For A Minimum Deposit For Mortgage Faster
Saving for a home deposit can feel overwhelming—especially when you’re juggling everyday expenses and rising property prices. But the good news is, with the right strategies and support, you can fast-track your savings and get into your first home sooner than you might think. Whether you’re aiming for 5%, 10%, or the ideal minimum deposit for home loan of 20%, every dollar counts. Here’s how to make your money work harder.
1. Smart Budgeting Strategies
The first step is to create a clear, realistic budget that prioritises your deposit goal. Track your income and expenses using budgeting apps or spreadsheets, and identify areas where you can cut back—subscriptions, takeaway meals, or impulse shopping can quietly eat into your savings. Set a monthly savings target and automate deposits into a dedicated savings account. The more consistent you are, the faster your deposit will grow.
Try using the 50/30/20 rule as a starting point:
- 50% for needs (bills, groceries, transport)
- 30% for wants (entertainment, dining out)
- 20% straight into savings (your deposit fund)
Adjust these percentages based on your priorities and income.
2. Tap Into Government Savings Programs
The Australian Government’s First Home Super Saver Scheme (FHSSS) is a fantastic tool for first-home buyers looking to boost their deposit. Under the FHSSS, you can make voluntary contributions to your superannuation fund—up to $15,000 per year and $50,000 in total—and then withdraw these funds (plus earnings) to put towards your deposit.
Because super contributions are taxed at just 15% (lower than most people’s income tax rate), the Scheme helps you save faster and more tax-effectively.
3. High-Interest Savings Accounts vs. Offset Accounts
Where you store your savings matters, too. A high-interest savings account can grow your deposit steadily with minimal risk. Look for an account with a competitive interest rate, no monthly fees, and bonuses for regular contributions.
Alternatively, if you already have a home loan (or plan to access one with family support), an offset account might be more beneficial. Offset accounts reduce the interest charged on your loan by offsetting your balance against the loan amount. Some people save their deposit in an offset account linked to a family member’s mortgage to maximise interest savings while keeping funds accessible.
4. Boost income
Think about ways to increase your income—could you take on freelance work, weekend shifts, or sell unused items online? Even small boosts to your monthly earnings can make a noticeable difference over time.
Saving for a deposit is a journey—but with discipline, smart tools, and expert support, you can take control of the process.
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 to learn that there are several other upfront costs involved in purchasing a property. If you’re not prepared, these extras can catch you off guard and eat into your deposit. Let’s break down the key expenses you need to budget for—so you can step into your first home with confidence, not chaos.
Expense #1 - Stamp Duty (and First-Home Buyer Concessions)
Stamp duty is a government tax based on the purchase price of your property. It’s one of the biggest upfront costs—and it can run into the tens of thousands of dollars. The good news? In most Australian states and territories, first-home buyers may be eligible for concessions or exemptions, especially if you’re purchasing below a certain price threshold.
For example, in Queensland, first-home buyers pay no stamp duty when buying a new or substantially renovated home. If you are buying an established home, the value must not exceed $800,000. These concessions can save you thousands and make it much easier to get into the market. A mortgage broker in Brisbane can help you calculate exactly how much stamp duty you’ll pay—and whether you qualify for any discounts.
Expense #2 - Legal and Conveyancing Fees
When you buy a home, you’ll need a solicitor or conveyancer to handle the legal side of the transaction. They’ll review your contract, manage the property transfer, conduct title searches, and ensure everything is above board. Expect to pay between $800 and $2,000, depending on the complexity of your purchase.
This step is essential—not just a formality. A good conveyancer protects your interests and prevents costly legal mistakes down the track.
Expense #3 - Building and Pest Inspections
Before committing to a property, it’s wise to arrange a building and pest inspection—especially if you’re buying an older home or a house rather than a unit. These reports check for structural issues, water damage, termites, or other hidden problems.
Inspections typically cost $400 to $800 and are well worth the investment. They can give you negotiating power or even save you from buying a property that turns into a financial burden.
Expense #4 - Loan Application and Bank Fees
When applying for a home loan, be aware of potential application fees, valuation fees, and settlement charges. These vary between lenders but can range from $300 to over $ 1,000 in total.
Some lenders offer fee waivers or specials for first-home buyers—your mortgage broker can help you compare options and find a lender with minimal upfront costs.
Expense #5 - Moving Costs and Set-Up Expenses
Don’t forget the practical costs of moving into your new home. These might include:
- Removalist fees or van hire
- Utility connection charges (electricity, internet, water)
- New furniture or appliances
- Cleaning services
Set aside $1,000 to $3,000 depending on how far you’re moving and how much you need to buy or do.
Planning for these extra costs alongside your minimum deposit for home loan will give you a smoother and more secure buying experience. You don’t want to stretch yourself too thin or be caught short after settlement. In the next section, we’ll show you how working with a mortgage broker can simplify the process—making the journey to homeownership far less stressful.
Read more: 16 Hidden Costs Of Buying A Home
Government Grants & Support For Buyers With Minimum Deposit
The government offers several grants and support programs designed specifically to help first-home buyers with a minimum deposit. These initiatives can significantly reduce the upfront costs and make the dream of homeownership more achievable. Here’s a detailed look at the key programs you should know about.
The First Home Owner Grant (FHOG) is a one-off payment designed to help first-time buyers with the costs of purchasing or building a new home. The amount you can receive varies by state and territory—for example, in Queensland, the grant is $30,000 for new homes valued up to $750,000. Other states have similar programs with slightly different amounts and eligibility rules.
To qualify, you generally need to be an Australian citizen or permanent resident, and the home must be your principal place of residence. The FHOG is a great way to boost your savings and reduce the minimum deposit for a home loan you need upfront.
The Help to Buy Scheme is a shared equity program that allows eligible first-home buyers to purchase a home with just a 2% deposit. The government contributes up to 18% of the purchase price (varies by state), and you pay the remaining 80% via your home loan.
The benefit? You avoid paying Lenders Mortgage Insurance (LMI) while entering the market with a much smaller deposit. But remember, this Scheme is designed for low to moderate-income earners and has strict eligibility criteria, including price caps and income limits. Shared equity means the government owns a percentage of your property until you repay the loan, which can affect your future finances.
Previously known as the First Home Loan Deposit Scheme, the First Home Guarantee lets you buy a home with just a 5% deposit without needing to pay LMI. This federal government initiative helps eligible first-home buyers bypass the traditional 20% deposit hurdle.
To apply, you must meet income caps and property price limits, and you need to be an Australian citizen over 18. The Scheme is popular because it reduces upfront costs and makes homeownership more accessible, especially in competitive markets.
The First Home Super Saver Scheme helps you save for your deposit inside your superannuation fund. You can make voluntary contributions of up to $15,000 per year, with a total cap of $50,000, which you can later withdraw to put towards your deposit.
Because super contributions are taxed at a lower rate than your regular income, this Scheme allows your savings to grow faster. It’s a tax-effective way to build your deposit and complements other government grants and loans.
Navigating these government grants and support programs can be tricky, but they can significantly reduce your deposit requirements and help you avoid extra costs like LMI.
Risks Of A Small Deposit
Buying a home with a small deposit might seem like the fastest way to get into the market, but it’s important to understand the risks involved. While low-deposit loans and government schemes make homeownership more accessible, having a smaller deposit can impact your financial journey in several ways. Knowing these risks helps you make smarter decisions and prepare for the challenges ahead.
Risk #1 - Higher Interest Rates
Lenders often charge higher interest rates for borrowers with smaller deposits. That’s because your loan is considered higher risk when you have less equity in the property. Over the life of your loan, even a slightly higher interest rate can add thousands of dollars in extra repayments. This means your monthly mortgage payments could be more expensive than if you’d saved a larger deposit.
Risk #2 - More Years in Negative Equity
With a small deposit, you’re more likely to spend longer in negative equity—when your home’s value is less than your outstanding loan balance. This situation can happen if property prices fall or if you borrow close to the maximum amount. Being in negative equity restricts your ability to refinance, sell, or access additional credit, which can limit your financial flexibility.
Risk #3 - Risk of Mortgage Stress
Mortgage stress occurs when your repayments become difficult to manage, often because your loan repayments consume too much of your income. A small deposit combined with higher interest rates and potentially larger repayments increases this risk. Unexpected events, such as job loss or rising living costs, can make keeping up with repayments even tougher.
Tips to Mitigate Risks
To protect yourself when buying with a small deposit, consider these strategies:
- Get Pre-Approval: Knowing your borrowing limit and repayment obligations upfront helps you avoid overstretching your finances.
- Choose a Fixed Interest Rate: Locking in a fixed rate can provide stability and protect you from rising interest rates in the short term.
- Maintain an Emergency Fund: Having savings set aside for unexpected expenses or changes in income will give you peace of mind.
- Work with a Mortgage Broker: A broker can find lenders offering competitive rates for low-deposit loans and guide you toward manageable loan structures.
Minimum Deposit For Home Loan - Frequently Asked Questions (FAQ)
What is the minimum deposit for a home loan in Australia?
The minimum deposit in Australia is usually 5% of the property value, though many lenders prefer 20% to avoid LMI. If you qualify for government schemes like the First Home Guarantee, you may need as little as 5% without paying LMI. The actual amount required depends on the lender and your financial situation. A larger deposit generally improves your chances of approval and lowers your long-term costs.
Can I buy a house with a 10% deposit in Australia?
Yes, many lenders accept a 10% deposit. However, if your deposit is under 20%, you’ll likely need to pay Lenders Mortgage Insurance. Your borrowing capacity and credit history will also play a key role in getting approved. A 10% deposit strikes a balance between affordability and avoiding very high LMI costs.
Can I buy a house with a 5% deposit in Australia?
Yes, you can buy a house with a 5% deposit under certain lender policies or through the First Home Guarantee scheme. However, you will usually be required to pay Lenders Mortgage Insurance unless eligible for government exemptions. Your credit score, income, and expenses will be closely assessed. Make sure you budget for other upfront costs in addition to the deposit.
How much deposit do you need for a $300,000 house in Australia?
For a 20% deposit, you’d need $60,000 for a $300,000 house. A 10% deposit would require $30,000, while a 5% deposit would mean $15,000. If you go below 20%, you may also need to pay for LMI. The exact deposit amount may vary depending on lender requirements and available grants.
How much money do I need to buy a house in Australia?
Aside from the deposit (5% to 20%), you’ll need to cover stamp duty, legal fees, inspections, and loan setup costs. On average, additional buying costs can add 4–6% of the property value. That means for a $500,000 home, total upfront costs might reach $30,000–$40,000. Government grants and exemptions can reduce this burden for first-home buyers.
How much deposit do I need for a $150,000 house?
A 20% deposit would be $30,000, a 10% deposit is $15,000, and a 5% deposit is $7,500. Keep in mind, smaller deposits increase the chance of paying LMI. Additional costs, such as stamp duty and legal fees, may still apply. First-home buyer schemes may help reduce the deposit requirement or eliminate LMI.
Can you buy a house without a deposit in Australia?
Buying a house without a deposit is extremely rare and typically only possible if you have a guarantor. Some lenders allow a family member to use the equity in their property to secure your loan. However, these loans carry risks for both you and your guarantor. Most buyers still need to pay upfront costs even if the deposit is waived.
What is the smallest mortgage you can get?
There’s no universal minimum, but most lenders set a minimum loan size—usually around $100,000 to $150,000. Very small loans are less profitable for lenders and may come with stricter requirements. Some credit unions and niche lenders might allow smaller loans. Approval depends on your income, deposit, and the property’s value.
What is the deposit for a first home in Australia?
For first-home buyers, deposits typically range from 5% to 20%. Government schemes like the First Home Guarantee allow eligible buyers to purchase with just 5% and no LMI. Some state grants and concessions can also reduce the upfront cost. It’s important to factor in extra costs beyond just the deposit.
What is the 2% deposit home loan scheme in Australia?
The Help to Buy Scheme allows eligible Australians to purchase a home with just a 2% deposit, with the government contributing up to 40% of the purchase price. It’s a shared equity arrangement, meaning the government owns a portion of the home. This reduces borrowing costs but limits full ownership. Availability is limited and subject to income and property price caps.
Can you have two mortgages?
Yes, it is legal and possible to have more than one mortgage, such as when buying a second home or investment property. However, lenders will assess your income and existing debt to ensure you can service both loans. You may face higher interest rates and stricter approval criteria. Consider speaking to a broker if you’re thinking of taking on a second mortgage.
What is the easiest home loan to get?
The easiest home loans to get are typically low-deposit loans supported by government schemes, like the First Home Guarantee. These loans are tailored for first-time buyers with steady income but limited savings. Lenders offering flexible credit checks or working with mortgage brokers may also improve your approval odds. Your financial profile and documentation will still need to meet lending criteria.
Can I buy a house with a $10,000 deposit in Australia?
It may be possible in regional or lower-cost areas if the property price is low and you’re eligible for a 5% deposit loan. For example, a $200,000 house would require $10,000 for a 5% deposit. You’ll also need to budget for stamp duty and fees. First-home buyer schemes may help reduce upfront costs and increase your purchasing power.
What is the help to buy housing Scheme In Australia?
Help to Buy is a federal shared equity scheme where the government contributes up to 40% of the property price for new homes (or 30% for existing homes). Buyers only need a 2% deposit, making it more accessible. The government retains a proportional share in the property until you buy it out. It’s designed to help low- and middle-income earners enter the property market.
What is the first home buyers grant in Australia?
The First Home Owner Grant (FHOG) is a one-time government payment to help first-home buyers with new builds. The amount varies by state (e.g., $10,000–$15,000) and only applies to newly built or substantially renovated homes. Eligibility rules vary, including property value caps. It’s a valuable boost when used alongside other deposit-saving strategies.
Final Thoughts: What's The Best Deposit Strategy For You?
When it comes to your minimum deposit for home loan, there isn’t a one-size-fits-all answer. Your best strategy depends on your personal financial situation, goals, and how soon you want to enter the property market. Whether you’re aiming for a traditional 20% deposit to avoid Lenders Mortgage Insurance, considering low deposit options like government schemes, or exploring guarantor loans, each path has pros and cons to weigh.
Saving for a larger deposit often means lower repayments and better interest rates over the life of your loan, but low deposit schemes can help you get into your home sooner. Remember, other costs like stamp duty, legal fees, and moving expenses also need to be factored into your budget.
To make the process smoother and more tailored to your needs, getting pre-approval early on can clarify your borrowing power and help you shop for homes within your budget confidently. More importantly, speaking with a trusted mortgage broker can unlock options you might not have considered, including lenders specialising in first-home buyers and low deposit loans.
We also recommend using deposit calculators and budgeting tools to map out your savings journey and understand what deposit size works best for you.
Next Steps And Getting Your Home Loan Approved
At Hunter Galloway, we provide personalised guidance and resources to help you achieve your homeownership goals faster and smarter.
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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