How much deposit do you really need to buy your first home in Australia?

In Australia in 2026, the minimum deposit for a first home varies significantly depending on your circumstances. Eligible single parents can buy with just a 2 percent deposit through the Australian Government 5% Deposit Scheme (no Lenders Mortgage Insurance). Eligible first home buyers can access the same scheme with a 5 percent deposit. Standard non-scheme first home loans typically need 10 to 20 percent, with LMI applying below 20 percent. Beyond the deposit itself, first home buyers need to budget for stamp duty, legal fees, inspections, moving costs, and setup expenses, which can add $15,000 to $40,000 depending on state and property. The 20 percent deposit target is no longer the only path, and for many buyers it's not the most efficient one.

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This post is part of the How to buy your first home in Australia: a woman's step-by-step guide. If you want the broader picture, start there.

For decades, the standard advice was to save a 20 percent deposit. That advice is still solid in some situations. But it's no longer the only option, and for many first home buyers, particularly single women and single parents, insisting on 20 percent means waiting years while property prices continue to move.

The 2026 picture is significantly more flexible than the 20 percent story suggests. Here's the honest version of what you actually need.

What are the current deposit options?

2 percent deposit (single parents and legal guardians): Through the Australian Government 5% Deposit Scheme (previously Home Guarantee Scheme, renamed October 2025). No LMI applies. Available to eligible single parents with at least one dependent child. No income caps, no waitlists since October 2025 changes.

5 percent deposit (first home buyers): Through the same scheme, for eligible first home buyers. No LMI applies. No income caps, no waitlists.

10 percent deposit (standard first home loans): Standard first home buyer loans, with LMI applying. LMI can add $10,000 to $30,000+ to your loan (though it's capitalised into the loan rather than paid upfront).

15 percent deposit: Standard loans, still with LMI but at reduced rates.

20 percent deposit: Standard loans with no LMI. Historically the "target" but increasingly one option among several.

Which option suits you depends on your eligibility for the scheme, your ability to save, and how quickly you want to buy.

What actually is Lenders Mortgage Insurance (LMI)?

LMI is insurance that protects the lender (not you) if you default on the loan. It's charged when your deposit is less than 20 percent because the lender takes on more risk with smaller deposits.

The cost varies significantly based on:

• Deposit size (larger deposits = lower LMI)
• Loan amount
• Loan-to-value ratio (LVR)

Rough estimates for a $500,000 home with a $50,000 deposit (10 percent):

• LMI cost: approximately $8,000 to $15,000

Rough estimates for a $500,000 home with a $25,000 deposit (5 percent, not using government scheme):

• LMI cost: approximately $15,000 to $25,000

LMI is usually capitalised into the loan (added to the loan balance) rather than paid upfront. It's tax deductible for investment properties but not for owner-occupied purchases.

For eligible buyers accessing government schemes, LMI is entirely avoided. For buyers not eligible for schemes, LMI is often the cost of not waiting for a larger deposit.

Is the government scheme actually worth it?

For eligible buyers, yes. The math is compelling.

Example: buying a $600,000 first home

Path A: Wait to save 20 percent deposit ($120,000)

• Time to save (at $2,000 per month): approximately 5 years
• Property price after 5 years of typical growth: potentially $700,000 to $800,000
• 20 percent deposit needed on higher price: $140,000 to $160,000
• LMI: $0
• Total waiting time: 5+ years, with property price uncertainty

Path B: Use 5% Deposit Scheme now (5 percent = $30,000)

• Time to save: approximately 15 months
• Property price: $600,000 (buy now)
• LMI: $0 (waived under scheme)
• Loan: $570,000
• Total waiting time: 15 months

Path C: Standard 5% deposit now (without scheme)

• Time to save: approximately 15 months
• Property price: $600,000
• LMI: approximately $15,000 to $25,000 (capitalised)
• Loan: $570,000 + LMI
• Total waiting time: 15 months

For eligible buyers, Path B (scheme) usually produces the best outcome. Path A (waiting to save 20 percent) often means paying more for the same property after years of growth. Path C makes sense for buyers not eligible for the scheme.

What other costs do I need to budget for?

The deposit is not the whole cost. First home buyers also need to budget for:

Stamp duty: Varies significantly by state and property price. Most states offer first home buyer concessions, sometimes eliminating stamp duty entirely for eligible buyers below specific price caps. In NSW, first home buyers under $800,000 typically pay zero stamp duty. In Victoria, similar concessions apply below specific caps. Check your state's revenue office for current rules.

Legal and conveyancing fees: Typically $1,500 to $3,000, depending on complexity and state.

Building and pest inspections: $500 to $1,000. Non-negotiable in my view; a $600 inspection can save $60,000 in unexpected repair bills.

Loan application and settlement fees: Vary by lender, typically $300 to $800.

Moving costs: $500 to $3,000 depending on distance and volume.

Insurance from settlement day: Building insurance is required from the day the contract goes unconditional. Cost varies with property value and location.

Utility connections and setup: $200 to $500 for connections. Additional costs for any minor repairs or furniture you'll need.

Total additional costs (beyond the deposit): typically $5,000 to $25,000+, depending heavily on state and stamp duty situation.

For a first home buyer with a 5 percent deposit on a $600,000 property, expect to need $30,000 deposit plus another $10,000 to $25,000 in additional costs, so around $40,000 to $55,000 total.

Can I include LMI or costs in the loan?

Yes, in most cases. Lenders will typically let you:

• Capitalise LMI into the loan (add it to the loan balance rather than paying upfront)
• Include some costs in the loan through cashout arrangements

But there are limits:

• The total loan-to-value ratio (LVR) still has a cap, usually 95 percent for standard first home loans (with LMI)
• Government schemes have specific rules on how they interact with LMI (usually you don't pay LMI at all under the scheme, so this doesn't apply)
• Cashout for buying costs is often limited by lender policy

A mortgage broker can walk you through exactly what your target lender allows.

What about the First Home Super Saver Scheme?

The First Home Super Saver Scheme (FHSSS) allows you to make voluntary contributions to your super and later withdraw them (with earnings) to help fund your first home deposit.

The basics:

• Voluntary contributions of up to $15,000 per year, up to $50,000 total, can be withdrawn
• Contributions receive concessional tax treatment (taxed at 15% in super rather than your marginal rate)
• Withdrawals include the contributions plus deemed earnings

For higher-income earners, the tax benefit is significant. For lower-income earners, the benefit is smaller.

There are rules about eligibility, timing, and how the withdrawal works. The ATO's page is the definitive source. Talk to your accountant or financial adviser about whether this suits your specific tax position.

Frequently asked questions

Can I buy a house with a 5 percent deposit in Australia?

Yes. Eligible first home buyers can access the Australian Government 5% Deposit Scheme with a 5 percent deposit and no Lenders Mortgage Insurance. Eligible single parents can access the same scheme with just a 2 percent deposit. Standard first home loans (without the scheme) may also be available with 5 percent deposits, though LMI applies.

Do I need a 20 percent deposit to avoid LMI?

Yes, if you're using a standard home loan without government scheme support. If you qualify for the Australian Government 5% Deposit Scheme, LMI is waived and you don't need a 20 percent deposit to avoid it.

Can I use a gift from family as part of my deposit?

Yes. Most lenders will accept gifted funds from family members as part of a deposit, though they typically want a signed statutory declaration or gift letter confirming the funds are a gift, not a loan. Some lenders also want to see the money in your account for a period (usually 3 months) before it's counted as "genuine savings". A broker can advise on what your target lender requires.

What if I don't have enough for stamp duty on top of the deposit?

Several options. Check whether your state offers first home buyer stamp duty concessions that would reduce or eliminate the cost. Consider whether you qualify for the government 5% Deposit Scheme (which doesn't affect stamp duty but may free up more cash for it). Some buyers can capitalise a portion of costs into the loan, though this depends on lender policy and LVR limits. A broker and conveyancer together can walk you through your specific state's rules.

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This article is general information only and does not constitute financial, legal or tax advice. Please speak to a licensed financial adviser, solicitor and your accountant about your specific circumstances.

Rielle Berglund is a mortgage broker and the founder of Matilda Tree Finance. She works with Australian women navigating major financial transitions, including separation, divorce, terminal illness and bereavement. She is also the creator of Runa, a free financial literacy app built for exactly this stage of life.

Book a confidential conversation with Rielle at matildatreefinance.com.au or start with Runa, free, at runaapp.com.au.

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You may also find these helpful

• How to buy your first home in Australia: a woman's step-by-step guide
• First home buyer schemes in Australia: a plain-language guide for 2026
• The seven costs first home buyers forget to budget for
• Saving that deposit as a Single Parent

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Sources and references

• Australian Government 5% Deposit Scheme: firsthomebuyers.gov.au
• ASIC Moneysmart on home loans: moneysmart.gov.au/home-loans
• Australian Taxation Office on First Home Super Saver Scheme: ato.gov.au

This article also draws on Rielle Berglund's professional experience as a mortgage broker.