How much deposit do I need to buy a house in Australia?
If you’re thinking about buying a home in Australia, you might be asking yourself, “How much do I actually need for a deposit?”
The quick answer is that you’ll need 5% to 10% of the property’s value, but it’s not that simple. To avoid extra costs like Lenders Mortgage Insurance (LMI), a 20% deposit is ideal. You’ll also need to budget for upfront costs such as Stamp Duty and legal fees, which many buyers forget.
This guide explains how much money you’ll need in your account to buy a home in 2026.
The Minimum vs. The Ideal Deposit
Australian lenders usually group deposits into two main types:
1. The minimum deposit (5% - 10%)
You can buy a home with only a 5% deposit, but there are some conditions:
- Lenders Mortgage Insurance (LMI): You will likely have to pay LMI, a one-off insurance premium that protects the lender (not you) if you default. This can cost between $10,000 and $30,000, depending on the loan size.
- Stricter Scrutiny: Lenders will scrutinise your spending habits and employment stability.
2. The ideal deposit (20%+)
A 20% deposit (plus extra costs) is considered ideal because:
- No LMI: You save tens of thousands of dollars immediately.
- Better Interest Rates: Many lenders offer lower interest rates to borrowers with a Loan-to-Value Ratio (LVR) below 80%.
- Instant Equity: You immediately own a larger share of your home.
Many buyers save up 5% and feel prepared, but then discover they don’t have enough for Stamp Duty.
Stamp Duty is a state tax on property purchases. It’s separate from your deposit and usually can’t be added to your loan, so you need to pay it upfront.
Real World Example: Total Cash Required
Based on purchasing an established home valued at $1,000,000.
Note: These figures are estimates. First Home Buyers may be eligible for Stamp Duty exemptions or concessions depending on the state and purchase price.
What are “Genuine Savings”?
Having the money in your account isn’t always enough. Lenders want to know how you got it.
Most banks require proof of “Genuine Savings.” This generally means:
- You have held the 5% deposit in your bank account for at least 3 months.
- OR, you can show regular, consistent deposits (savings habits) over that period.
What is NOT Genuine Savings?
- A cash gift was deposited into your account yesterday.
- Proceeds from selling a car or personal item (unless held for 3 months).
- A personal loan from a friend.
Tip: If your parents are giving you money (sometimes called the “Bank of Mum and Dad”), you’ll need a Statutory Declaration to confirm it’s a gift, not a loan.
Can I Buy with No Deposit? (0% Options)
Although 100% home loans are rare now, there is one main exception: the Guarantor Loan.
If your parents own a property in Australia and have equity, they can be a guarantor for your loan. Their property is used as security for your deposit.
- Benefit: You can borrow up to 100% of the property price + costs.
- Benefit: You pay $0 LMI even with no deposit.
- Risk: If you default, your parents’ home is at risk.
Read more about how to get zero deposit loans.
Ready to calculate your numbers?
Knowing your deposit amount is the first step. The next step is finding out how much the banks will actually lend you.
Frequently Asked Questions (FAQ)
You can’t take out your regular Super balance. But under the First Home Super Saver (FHSS) scheme, you can make extra contributions to your Super and then withdraw those (plus any earnings) to use as a deposit. This is a tax-effective way to save.
