How much do you need for a house deposit?
- See the minimum deposit to buy a house in Australia and how to avoid lender’s mortgage insurance
- Our analysis shows the difference in interest rates for a home loan with a 20% deposit versus 5% deposit
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What’s the minimum deposit required to buy a house in Australia?
Most lenders (including the big four banks) will accept a minimum deposit of 5% of the property’s value if you pay lender’s mortgage insurance (LMI) and have a strong application. This means having a good credit score, a steady income and solid employment history.
You can avoid LMI if you apply through the Home Guarantee Scheme (HGS) with a participating lender or with the help of a guarantor.
In practical terms, you would only need a minimum deposit of $30,000 to buy a $600,000 home and borrow $570,000 from the bank. Your house deposit covers 5% of the price of the property you want to buy, while the home loan covers the rest.
A 5% deposit would give you a home loan with a loan-to-value ratio (LVR) of 95% (with LMI added into the loan), also known as a low-deposit home loan. Some lenders may require a minimum 10% deposit with LMI.
You generally need a deposit of at least 20% of the property’s value to avoid LMI, or put another way a maximum LVR of 80%. Normally, lenders consider loans with an LVR over 80% of the property value to be a higher risk.
There are alternative routes to buying a home, such as rent-to-own homes, which require a smaller up-front amount, but this can end up being a more expensive option for the buyer in the long run due to fees charged.
Deposit amounts required for different property values
This table shows how much you would need for different levels of deposit based on different property values.
Property value | $500,000 |
|---|---|
| 20% deposit (no LMI) | $100,000 |
| 10% deposit (LMI may apply) | $50,000 |
| 5% deposit (LMI may apply) | $25,000 |
Property value | $550,000 |
| 20% deposit (no LMI) | $110,000 |
| 10% deposit (LMI may apply) | $55,000 |
| 5% deposit (LMI may apply) | $27,500 |
Property value | $600,000 |
| 20% deposit (no LMI) | $120,000 |
| 10% deposit (LMI may apply) | $60,000 |
| 5% deposit (LMI may apply) | $30,000 |
Property value | $650,000 |
| 20% deposit (no LMI) | $130,000 |
| 10% deposit (LMI may apply) | $65,000 |
| 5% deposit (LMI may apply) | $32,500 |
Property value | $700,000 |
| 20% deposit (no LMI) | $140,000 |
| 10% deposit (LMI may apply) | $70,000 |
| 5% deposit (LMI may apply) | $35,000 |
Property value | $750,000 |
| 20% deposit (no LMI) | $150,000 |
| 10% deposit (LMI may apply) | $75,000 |
| 5% deposit (LMI may apply) | $37,500 |
Property value | $800,000 |
| 20% deposit (no LMI) | $160,000 |
| 10% deposit (LMI may apply) | $80,000 |
| 5% deposit (LMI may apply) | $40,000 |
Property value | $850,000 |
| 20% deposit (no LMI) | $170,000 |
| 10% deposit (LMI may apply) | $85,000 |
| 5% deposit (LMI may apply) | $42,500 |
Property value | $900,000 |
| 20% deposit (no LMI) | $180,000 |
| 10% deposit (LMI may apply) | $90,000 |
| 5% deposit (LMI may apply) | $45,000 |
Property value | $950,000 |
| 20% deposit (no LMI) | $190,000 |
| 10% deposit (LMI may apply) | $95,000 |
| 5% deposit (LMI may apply) | $47,500 |
Property value | $1,000,000 |
| 20% deposit (no LMI) | $200,000 |
| 10% deposit (LMI may apply) | $100,000 |
| 5% deposit (LMI may apply) | $50,000 |
| Property value | 20% deposit (no LMI) | 10% deposit (LMI may apply) | 5% deposit (LMI may apply) |
|---|---|---|---|
$500,000 | $100,000 | $50,000 | $25,000 |
$550,000 | $110,000 | $55,000 | $27,500 |
$600,000 | $120,000 | $60,000 | $30,000 |
$650,000 | $130,000 | $65,000 | $32,500 |
$700,000 | $140,000 | $70,000 | $35,000 |
$750,000 | $150,000 | $75,000 | $37,500 |
$800,000 | $160,000 | $80,000 | $40,000 |
$850,000 | $170,000 | $85,000 | $42,500 |
$900,000 | $180,000 | $90,000 | $45,000 |
$950,000 | $190,000 | $95,000 | $47,500 |
$1,000,000 | $200,000 | $100,000 | $50,000 |
What’s the average home loan deposit in Australia?
The average first-home buyer in Australia has a deposit of $159,000, according to data from 2023. If we assume that represents a 20% deposit, the corresponding home loan amount would be $636,000. That's considerably higher than the average home loan in Australia for first-home buyers.
Compare interest rates for a home loan with a 20% deposit vs a 5% deposit
Here’s the difference in interest rates for standard owner-occupied home loans with a 20% deposit (80% LVR) and a 5% deposit (95% LVR) from popular lenders in Australia.
Lender | Adelaide Bank SmartSaver |
|---|---|
| 80% LVR | 6.09% p.a. |
| Comparison rate^ | 6.10% p.a. |
| 95% LVR | 7.73% p.a. |
| Comparison rate^ | 7.77% p.a. |
Lender | ING Mortgage Simplifier |
| 80% LVR | 6.14% p.a. |
| Comparison rate^ | 6.17% p.a. |
| 95% LVR | 6.69% p.a. |
| Comparison rate^ | 6.72% p.a. |
Lender | ANZ Simplicity PLUS Home Loan |
| 80% LVR | 6.64% p.a. |
| Comparison rate^ | 6.64% p.a. |
| 95% LVR | 7.64% p.a. |
| Comparison rate^ | 7.64% p.a. |
Lender | Commonwealth Bank Standard Variable Rate Home Loan |
| 80% LVR | 6.69% p.a. |
| Comparison rate^ | 7.06% p.a. |
| 95% LVR | 7.74% p.a. |
| Comparison rate^ | 8.10% p.a. |
| Lender | 80% LVR | Comparison rate^ | 95% LVR | Comparison rate^ |
|---|---|---|---|---|
Adelaide Bank SmartSaver | 6.09% p.a. | 6.10% p.a. | 7.73% p.a. | 7.77% p.a. |
ING Mortgage Simplifier | 6.14% p.a. | 6.17% p.a. | 6.69% p.a. | 6.72% p.a. |
ANZ Simplicity PLUS Home Loan | 6.64% p.a. | 6.64% p.a. | 7.64% p.a. | 7.64% p.a. |
Commonwealth Bank Standard Variable Rate Home Loan | 6.69% p.a. | 7.06% p.a. | 7.74% p.a. | 8.10% p.a. |
How much deposit do you need with a guarantor?
You may be able to buy a home in Australia with little to zero deposit with a guarantor home loan. This means your home loan will be partially secured by a parent or other family member offering up their home equity instead of or in addition to your cash deposit.
Your guarantor must be a homeowner and have enough equity to secure your home loan. A guarantor may secure a portion of your loan — usually 20% to reduce your LVR to 80% (and avoid LMI) or the full loan amount.
How much deposit do you need when using equity to buy another property?
If you’re buying a second property, you may be able to use equity in your existing property as a deposit, meaning you wouldn’t have to put any money down.
The catch is that you need at least 20% usable equity in your home to refinance and avoid paying LMI on a new loan. Usable equity is the equity in your home you can borrow against — usually 80% of the property’s value minus your outstanding debt. The lender will conduct a property appraisal to determine exactly how much usable equity you have.
If you only have 15% usable equity in your home, you’d need to contribute a 5% cash deposit to avoid LMI. The best way to do this is with a ‘cash out’ refinance, which allows you to access your usable equity in cash and then contribute some of your own money to reduce your LVR to 80%, according to Westpac.
How to buy a home with a 5% deposit and pay no LMI
LMI waiver
Some banks and lenders may waive LMI on home loans with a 5% deposit for professionals in certain secure or high-paying industries — commonly legal and medical practitioners, finance and accounting professionals, etc. Banks that offer an LMI waiver for professionals include ANZ, NAB and Westpac.
Government support
The Home Guarantee Scheme (HGS) is available Australia-wide through participating lenders to support eligible first-home buyers and single parents to buy a property with a deposit as little as 2-5%. Housing Australia guarantees up to 15% of the value of a first home and up to 18% for single parents or guardians to avoid the need for LMI.
There are a few different programs available to home buyers through the HGS, including:
- First Home Guarantee (FHBG): For eligible first-home buyers to buy a home with a deposit starting from 5% with no LMI.
- Regional First Home Buyer Guarantee (RFHBG): For eligible first-home buyers to buy a home in a regional area with a deposit starting from 5% with no LMI.
- Family Home Guarantee (FHG): For eligible single parents or single legal guardians of at least one dependent to buy a home with a deposit starting from 2% with no LMI.
Can you use the First Home Owner Grant as part of your home loan deposit?
Lenders generally require a minimum of 5% of the property’s value in genuine savings. Your First Home Owner Grant (FHOG) can contribute to your deposit, but it can’t be the sole source of it, according to mortgage brokers we spoke to. In other words, lenders prefer to see that you've saved money on your own, which shows them you're financially responsible and committed to the purchase.
Some lenders (like Unloan) don't accept FHOG funds as part of your deposit, but being eligible for it may still help you when applying for a loan. According to ANZ, lenders may still factor in the one-time payment when assessing your borrowing capacity, pending grant approval.
What do lenders accept as a deposit and genuine savings?
There are conditions to the kinds of funds lenders will accept as a deposit. As a general rule, lenders will require at least 5% of the loan amount in genuine savings. Money.com.au's home loan expert, Mansour Soltani said lenders will generally check your bank statements to check that your deposit has been accrued over time and sitting in a bank account for at least three months.
“If you’re saving for a house deposit, the first thing you should do is run an analysis on exactly what you’re spending your salary on. I think most people will be surprised how much they spend on small things like a daily coffee or lunch that can add up over time. If you could save even $10 a day, it could add up to $3,500 a year and that’s about 11% of a 5% ($30,000) deposit for a $600,000 home loan. Get serious about cutting your discretionary spending by half.”
Mansour Soltani, Money.com.au's home loan expert
Do lenders accept cash gifts or inheritance as a deposit?
Lenders will generally still accept gifted deposits, usually from parents or family or an inheritance. But they will ask for evidence of where the money came from.
For cash gifts, they may require a gift letter signed by your benefactor(s) stating the funds were given to you as a gift with no strings attached.
For an inheritance, they may require a letter of validation from the executor of the will confirming the amount you’re set to inherit, a copy of the will and a grant probate confirming the will is valid.
When and how to pay your house deposit
The most common way to pay your house deposit is via bank transfer, according to Westpac. The lender will generally add your deposit to your home loan account before you proceed with your property sale.
As for when your deposit needs to be paid, it will depend on how you’re buying the property:
- Private sale: You generally have to pay your deposit in two parts when you buy a home in a private treaty sale, according to Westpac. You pay a smaller holding deposit between $1,000 and $3,000 (negotiable with the real estate agent or buyer) to show that you're serious about the purchase and the remainder of the deposit after you’ve signed the contract of sale to buy your property.
- Auction: If you’re buying a property at auction, you may be required to pay some of your deposit on the day — usually 5-10% of the winning bid.
What is a deposit bond?
If your deposit is tied up in other assets or investments, you may be able to use a deposit bond instead. A deposit bond is an insurance policy that guarantees you will pay a deposit at settlement or by the agreed period stated in the policy document. Not all lenders offer or accept deposit bonds.
Other upfront costs to consider when buying a home
When you’re trying to work out how much you need to save for your deposit, don’t forget to factor in upfront costs and fees, including:
Stamp duty
Stamp duty is a state government tax on property purchases and title transfers. It’s calculated as a percentage of the property’s value, ranging from 3-5%. Stamp duty rates vary depending on:
- Your state or territory
- Whether you’re a first-home buyer
- Whether you’re buying vacant land
- Whether you’re buying an investment property
- The price of the property
Use our stamp duty calculator to estimate your costs. Stamp duty concessions or exemptions apply to eligible first-home buyers in most states.
Mortgage registration fees
Your state or territory government will charge you mortgage registration fees to register your mortgage on a property title. This registers your property as the security on the home loan, allowing future buyers or lenders to check any claims on the home. Mortgage registration fees are payable when the loan is established.
Legal & conveyancing fees
When you buy a home, you’ll usually need to engage a conveyancer or solicitor to handle all the legal paperwork and processes, like transferring the property title to your name, etc. Conveyancing fees can range between $1,200 and $2,400.
Building and pest inspection
It’s always best to conduct a building and pest inspection before you sign the contract to buy your home. This final check (although not mandatory) ensures that the property is structurally sound and has no pest problems like a termite infestation. Building and pest inspections combined can cost between $200 and $1,000, depending on the size of the property and your location.
Moving costs
If you’re buying a home to live in, you may have to hire a removalist which could cost upwards of $1,000 for the service, depending on how much furniture you have, mileage, and if you require additional boxing and wrapping. It’s a good idea to compare quotes from different companies and read online reviews before you hire professionals.
Home insurance
You may be required to take out home insurance as a condition of your home loan agreement. Home insurance is designed to cover the costs of repairing or rebuilding your house if it’s destroyed or damaged by an insured event (e.g. fire, flood, vandalism, etc.). Home insurance can cost between $100 and $300, depending on your level of cover and insurer.
Depending on the local rules in your state and your sale contract, you might become liable for insuring the property before the sale is settled and you actually move in. For example, in Queensland the buyer becomes responsible for the property from 5pm on the day after the contract date.
Home Loans guides and resources
What's the next step on your property journey? Our home loan guides will help you navigate the road ahead, whether you're buying, building or looking to save on an existing loan.
Written by
Senior Finance Writer
Megan Birot
Reviewed by
Home Loans Expert
Mansour Soltani
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