How much deposit do you need for a house?

A home, whether it’s a house or an apartment, is probably one of the most expensive purchases you’ll ever make. Most people need to take out a home loan (sometimes called a mortgage) to buy a property, and for that you’ll generally need a deposit.

A deposit is the money you need to pay upfront for a property. It’s often expressed as a percentage of the property’s purchase price or value, and will likely need to be paid out of your own genuine savings.

Before you can work out how much deposit you need – or if the savings you already have will be enough – it may be a good idea to work out how much you can afford to borrow. Then it’s a matter of working out how much of a deposit you would need to save to get a home loan for a property in your desired location.

How much deposit do you need for a home loan?

Lenders generally prefer you pay 20% of a property’s purchase price as a deposit. But some home loan offers may allow you to purchase a property with a deposit of 10% or even 5% of the property’s value.

There are also fees and other upfront costs associated with buying a home, varying between lenders and locations, which may need to be paid out of your savings. This could affect how much money you have available for a deposit.

Keep in mind that paying a deposit of less than 20% means you may also have to pay Lender’s Mortgage Insurance (LMI), either upfront from your savings, or capitalised into your home loan – meaning you pay it off over time, with interest, which could seriously affect your loan’s total cost.

Why the 20% threshold?

A deposit of 20% is the industry standard in Australia as it gives a Loan to Value Ratio (LVR) of 80%. A smaller deposit means a higher LVR, which in turn means a higher financial risk for a lender if the borrower defaults on their repayments.

Borrowers with a larger deposit (20% or more) can often secure a lower home loan rate, and having a higher initial deposit is one factor that may help reduce your risk of mortgage stress. Purchasing a property with a small deposit and a high loan-to-value ratio (LVR) can also put you at risk of negative equity.

Keep in mind that banks and mortgage lenders may charge LMI on a case by case basis. In some cases and buying circumstances, you may still need to pay LMI even if you have a deposit of 20% or more, depending on the lender’s policies.

What is Lenders Mortgage Insurance (LMI)?

LMI is an insurance policy designed to protect the lender (not you) if you default on your repayments. LMI does not protect your own finances if you lose your job or otherwise can’t keep up with the loan repayments – for that, you’ll need to consider taking out mortgage protection insurance.

But there are some ways you may be able to get your LMI reduced or even waived altogether; so it could be a good idea to shop around and negotiate with several potential lenders. You can compare home loans with Canstar.

You may not have to pay LMI if you’re eligible for government support schemes, such as the First Home Guarantee Scheme (formerly the First Home Loan Deposit Scheme (FHLDS) or Family Home Guarantee. You may also not be required to pay LMI if you apply for a home loan with a guarantor. Some lenders also offer LMI discounts.

Some lenders, such as Bankwest, Westpac and St.George, have online tools that can help you work out any potential LMI amount. Canstar also has various home loan calculators that you may find helpful.

For first home buyers, we’ve crunched the numbers to produce a general guide on how much LMI you could be required to pay, depending on how much deposit you have saved:

How much can you borrow for a home loan?

The maximum amount a bank may be willing to lend you will be affected by how much you earn, save and spend. Additionally, some personal factors can also have an influence – for example, if you or your partner have a poor credit rating, then a lender may view your joint home loan application less favourably.

You can use Canstar’s Home Loan Borrowing Calculator to help work out how much you might be able to borrow. Keep in mind that the actual figure may vary depending on, for example, your chosen lender.

Take this hypothetical example:

The Australian Bureau of Statistics says average weekly earnings for adults in November 2024 were about $1975.80, or about $100,000 a year.

Rounding this weekly earning up to an even $2000, a single person with average annual expenses would potentially borrow up to $682,000 for a loan at 3% over 30 years, according to Canstar’s Home Loan Borrowing Calculator. The same person who has two children would potentially be able to borrow up to $574,000.

But these figures are based on average Australian annual expenses for a household and don’t take into account any extra payments you may have, such as for a car loan or credit card. They are also based on interest rates which can change over the period of your home loan.

Once you get an idea of how much you can realistically afford to borrow, without getting into mortgage stress, then you can work out how much you need for a deposit.

First home buyers: How much will I need as a deposit and for LMI?

Know how much you want to spend on your property? We cover how much money you’ll need for a deposit and LMI.

The calculations from St.George Bank’s LMI premium calculator do not include other loan costs that may also need to be paid up front; such as stamp duty, home loan application fees and conveyancing costs. We haven’t included those costs because they can vary significantly depending on the borrower’s personal circumstances. It could be a good idea to seek independent financial advice.

Deposit & LMI for $300,000 property in NSW*

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Deposit & LMI for $600,000 property in NSW

Deposit & LMI for $800,000 property in NSW

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Source: Quotes taken from St. George Bank Stamp Duty and LMI calculator, correct as at 16 May 2025. Premiums listed are for first home buyers (owner-occupiers) borrowing with a loan term of up to 30 years and excluding stamp duty. *Government fees that make up a portion of the LMI may vary state to state. 

But remember, these figures are only a guide. If you are a first home buyer and are considering applying for a home loan with a low deposit, keep in mind that the total initial costs you outlay in securing a property, including your deposit and any LMI that’s payable, are only a small part of your overall long-term costs.

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How can I avoid paying LMI?

Lenders Mortgage Insurance (LMI) varies from lender to lender, and there are ways you may be able to negotiate a better deal. Having a reasonable deposit, taking advantage of government grants and considering if your job could help you to reduce or waive the LMI that might be payable on your home loan are some suggestions you may like to consider.

1. Have enough deposit for a home loan

The easiest way to avoid paying any LMI is to have enough deposit saved so it’s less likely that a lender need to take out the insurance. The minimum deposit that is generally required to avoid paying LMI is 20% of the property’s value, but this can vary from lender to lender and with certain loan products.

2. Take advantage of government schemes and grants

If this is the first home you are hoping to buy but you only have a 5% deposit, you may be eligible for the Australian Government’s First Home Guarantee Scheme (formerly FHLDS). This won’t give you any extra money, but for those borrowers who have as little as 5% of genuine savings as a deposit, the scheme will guarantee the remainder (up to 15%) needed to meet any lenders’ criteria for not requiring any LMI.

There are strict eligibility criteria, a limited number of places and a limited number of lenders taking part in the scheme.

As a first time buyer, you may also be eligible for a First Home Owner Grant. This scheme was introduced in July 2000 to help offset the impact of GST on buying your first home. It’s a national scheme but run by each state and territory, and could give you money towards your deposit that might help offset or even cancel out any LMI costs.

3. Consider if your job could help reduce your home deposit costs

What job you do may entitle you to some waiver of LMI fees. Some lenders may offer to waive LMI for eligible medical, accounting and legal professionals in order to secure them as customers.

How much deposit do you need with a guarantor?

A guarantor is someone who is able to help you partially secure a home loan if you do not have the required deposit. They can do this by offering the equity in their own home as collateral, potentially in addition to your own cash deposit. The guarantor must be a homeowner and can help you to avoid LMI by providing a 20% or above deposit in total.

What do lenders accept as a deposit and genuine savings?

Generally, lenders will request at least 5% of your deposit being genuine savings – in other words, money earned fro your job. They will typically want to check your bank statements to help confirm this.

Do you need a large or small deposit for a home loan?

The question of how much deposit you need comes down to whether you can save enough to avoid paying any LMI, or if you want to jump in the property market early with a deposit and pay the extra fees (if you have to).

But having a big deposit could potentially help you negotiate a better deal on the interest rate. The lower the deposit, the larger the loan, and that means higher monthly repayments. You could also end up paying more in the long term.

For example, let’s use our Home Loan Calculator to show the amount you could end up paying if you were buying a $500,000 property with a deposit of 5% compared to 20%. This assumes you take out a principal and interest loan over 30 years at 3% and doesn’t take any other costs into account, nor any changes in interest rate or inflation over the time of the loan.

The impact of a large vs small deposit on a $500,000 home in NSW

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Source: LMI figures are based on St. George Bank calculations, *except the 20% which assumes a lender does not require LMI. Monthly and final repayment figures are based on Canstar’s home loan calculator on 3% interest rate and over 30 years giving the amount of principal and interest repaid.

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