How Much Deposit Do I Actually Need?

The "20% deposit" figure gets quoted so often it can feel like a hard rule. It isn't it's the threshold where Lenders Mortgage Insurance (LMI) stops applying, not the minimum needed to buy.

What a 20% deposit actually buys you

At 80% loan-to-value ratio (LVR) or below, you generally avoid LMI entirely, often access a slightly wider range of lenders and rate offers, and start with more equity buffer from day one.

What happens below 20%

Many lenders on our panel will lend up to 90–95% LVR, meaning a 5–10% deposit can be enough to buy but LMI typically applies on the portion above 80% LVR. LMI protects the lender, not you, and its cost varies significantly by lender, loan size and deposit size, which is exactly the kind of thing worth comparing rather than accepting from the first quote you get.

Costs beyond the deposit itself

Your deposit isn't the only upfront cost. Budget for stamp duty (unless a first home buyer exemption applies in your state), conveyancing and legal fees, building and pest inspections, loan application or valuation fees, and moving costs. Our stamp duty calculator estimates the property-specific costs for your state.

Government support worth checking

Depending on your circumstances and state, you may be eligible for First Home Buyer grants, stamp duty concessions or exemptions, or a government-backed low-deposit scheme that reduces or removes LMI. Eligibility and benefits vary significantly by state and change over time, so it's worth checking current settings for your situation specifically rather than assuming last year's rules still apply.

The realistic way to plan a deposit

Rather than fixating on 20% as a fixed target, it's usually more useful to work out your realistic timeline at different deposit sizes including LMI cost where relevant and compare that against the cost of waiting while property prices and rents keep moving. For many first home buyers, buying sooner with a smaller deposit and LMI works out better than waiting years to avoid it entirely.