How Much Deposit Do I Need for a Home Loan? The Honest, Number-Filled Answer

Updated October 2026 · Written with Victorian buyers in mind.

The house deposit has become Australia's national sport: everyone has an opinion, nobody has enough avocado toast money, and the finish line moves every spring. Let's cut through it with real numbers, the rules lenders use, and a savings checklist.

The short answer

Most lenders want at least 5% of the property's value, and 20% is the benchmark to avoid Lenders Mortgage Insurance (LMI). Government help can change the maths: eligible first home buyers can buy with 5% and no LMI under the First Home Guarantee. MoneySmart (ASIC's consumer site) says the same thing: some lenders accept as little as 5%, while a bigger deposit can help you avoid LMI and shows lenders you can save.

What different deposits look like

For a $700,000 home (deposit only, before any extra costs):

• 5%: $35,000. Loan $665,000. LMI normally applies, unless you use the First Home Guarantee.
• 10%: $70,000. Loan $630,000. LMI usually applies but costs less.
• 15%: $105,000. Loan $595,000. Smaller LMI, or none with some lenders and professional packages.
• 20%: $140,000. Loan $560,000. No LMI, and typically better rates and more lender choice.

A lender's loan-to-value ratio (LVR) is the loan divided by the property value. Below 80% LVR you're generally LMI-free; above 90% your options narrow and rates often rise.

Genuine savings: the bit people miss

Lenders don't just want a number, they want to see you saved it. This is called genuine savings: money you have accumulated in your own name over time. Typically lenders look for around 5% of the purchase price, held for roughly three months. Under the First Home Guarantee, 5% genuine savings is the standard. Things that usually count: regular savings from your income, term deposits, a long-held share portfolio, and sometimes proof of rent paid on time. Things that often don't count by themselves: cash gifts, one-off windfalls or loans, though a gift can often top up your deposit once you've met the genuine savings test. Different lenders have different rules, so ask early.

The deposit isn't the whole bill

Your deposit sits next to stamp duty (unless exempt), conveyancing, lender fees, inspections, moving costs and LMI if applicable. Many Victorian guides suggest allowing roughly 5–10% of the purchase price on top of the deposit for these costs. We've covered these in our settlement-day blog.

Ways to get in sooner

• First Home Guarantee: 5% deposit, no LMI, for eligible first home buyers under the price cap ($950,000 in Melbourne, Geelong and regional centres; $650,000 elsewhere in Victoria).
• Family guarantor: a family member uses the equity in their property to support your loan, which can reduce or remove the need for LMI. It's a big commitment for them, so everyone needs independent advice.
• First Home Super Saver Scheme (FHSS): lets you save for a first home inside super with concessional tax treatment. Check the ATO website for the current rules and limits.
• State help: Victoria's stamp duty exemption/concession for first homes up to $750,000 and the $10,000 First Home Owner Grant for eligible new homes up to $750,000.
• Lower-priced areas or property types: a unit or regional property can bring the deposit target down considerably.
• Lenders who discount LMI for certain professions (doctors, lawyers, accountants, etc.) at higher LVRs.

Checklist: building your deposit

• Set a target price range and calculate 5%, 10% and 20% of it
• Add 5–10% for buying costs to your savings target
• Open a separate savings account and automate transfers on payday
• Keep three months of clean statements showing regular savings
• Don't mix gifts or irregular deposits into your savings pile without telling your broker
• Cut or cap credit card limits and BNPL before applying
• Check eligibility for the First Home Guarantee, FHOG, stamp duty relief and FHSS
• Speak to a broker before you hit your target, since policy may let you buy sooner than you think
• Keep an emergency buffer that is not part of your deposit

Is a 5% deposit a bad idea?

Not necessarily, but it has trade-offs. You borrow more, pay more interest over the life of the loan, and have less cushion if prices fall or rates rise. Waiting to save 20% can also cost you if prices rise faster than you save. This is a personal decision with no universal answer, which is why a broker or adviser who looks at your numbers is worth the conversation.

A light-hearted reality check

Saving a deposit while paying Melbourne rent is basically a game of financial limbo: how low can your expenses go? Go gently on yourself. Skip the thought of giving up coffee entirely (nobody wants a first home buyer without caffeine), and focus on automating the savings you can actually sustain.

Official links

• MoneySmart, saving for a house deposit: https://moneysmart.gov.au/saving/save-for-a-house-deposit
• MoneySmart, lenders mortgage insurance: https://moneysmart.gov.au/glossary/lenders-mortgage-insurance-lmi
• Housing Australia, First Home Guarantee: https://www.housingaustralia.gov.au/first-home-guarantee-faqs
• State Revenue Office Victoria: https://www.sro.vic.gov.au/fhog
• ATO, First Home Super Saver Scheme: https://www.ato.gov.au

Disclosure and Disclaimer

This article is general information only and is not financial, credit, legal, tax or investment advice. It does not consider your objectives, financial situation or needs. Examples are illustrations, not quotes, and government schemes, lender policies and legislation change often. Please do your own research and obtain independent advice from a licensed financial adviser, mortgage broker, accountant and conveyancer or solicitor before making any decision. Loan approvals are subject to lender criteria. To the maximum extent permitted by law, our business, its directors, employees and brokers accept no liability for any loss or damage arising from reliance on this article.