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). In practical terms, you would need a minimum deposit of $30,000 to buy a $600,000 home and borrow $570,000 from the bank.
Here’s an overview of the common house deposit amounts and when they typically apply:
- 20% deposit: You generally need a deposit of at least 20% of the property’s value to avoid LMI if you don’t otherwise qualify for an exemption. This means a maximum loan-to-value ratio (LVR) of 80%. Lenders usually consider loans with an LVR over 80% of the property value to be a higher risk.
- 10% deposit: Some lenders may require a minimum 10% deposit with LMI. You’ll need a strong application for this type of loan, which means having a good credit score, a steady income and solid employment history.
- 5% deposit: A 5% deposit is the minimum for a lot of lenders in most situations (with LMI added to your loan). It’s also the minimum deposit needed for the more widely available government schemes, such as the First Home Guarantee (FHBG) and the Regional First Home Buyer Guarantee (RFHBG). These schemes allow you to buy a home with a 5% deposit and avoid LMI.
- 2% minimum deposit: If you qualify, you may be able to buy a home with as little as a 2% deposit through the Family Home Guarantee (FHG), and avoid paying LMI. However, this scheme is only available to single parents who meet specific eligibility criteria.
- 0% deposit: It is possible to buy a property using the equity in your home without needing a deposit. Existing homeowners often access their equity for various reasons, such as purchasing a second home or an investment property.
You can avoid lender’s mortgage insurance by getting a home loan through the Home Guarantee Scheme (HGS) with a participating lender or by using a guarantor. Another option is rent-to-own homes, which typically require a smaller upfront amount, but this can end up being more expensive in the long run due to the additional 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 | $600,000 |
20% deposit (no LMI) | $120,000 |
10% deposit (LMI may apply) | $60,000 |
5% deposit (LMI may apply) | $30,000 |
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 | $800,000 |
20% deposit (no LMI) | $160,000 |
10% deposit (LMI may apply) | $80,000 |
5% deposit (LMI may apply) | $40,000 |
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 | $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 |
$600,000 | $120,000 | $60,000 | $30,000 |
$700,000 | $140,000 | $70,000 | $35,000 |
$800,000 | $160,000 | $80,000 | $40,000 |
$900,000 | $180,000 | $90,000 | $45,000 |
$1,000,000 | $200,000 | $100,000 | $50,000 |
The bigger your deposit, the lower your LVR and the less you have to borrow. A larger deposit shows lenders you have a proven savings history and can mean you get a better interest rate on your home loan.
What’s the average home loan deposit in Australia?
The average first-home buyer in Australia has a deposit of $131,500, according to Money.com.au’s latest Mortgage Insights report. This deposit amount is based on the average owner-occupier loan for first-home buyers of $526,000 and a 20% deposit.
However, the average doesn’t necessarily reflect how much many first home buyers have actually saved up, with many buying a property with less than a 20% deposit.
The latest ANZ CoreLogic Housing Affordability Report found it would take 10.6 years to save for a 20% deposit for the median value home. It also states that 50.6% of the median household income would be needed to service a mortgage.
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 | ING Mortgage Simplifier |
|---|---|
Interest rate at 80% LVR | 6.14% p.a. |
Comparison rate^ | 6.17% p.a. |
Interest rate at 95% LVR | 6.69% p.a. |
Comparison rate^ | 6.72% p.a. |
Lender | Adelaide Bank SmartFit |
Interest rate at 80% LVR | 6.24% p.a. |
Comparison rate^ | 6.41% p.a. |
Interest rate at 95% LVR | 7.88% p.a. |
Comparison rate^ | 8.03% p.a. |
Lender | Commonwealth Bank Standard Variable Rate Home Loan |
Interest rate at 80% LVR | 6.49% p.a. |
Comparison rate^ | 6.87% p.a. |
Interest rate at 95% LVR | 7.74% p.a. |
Comparison rate^ | 8.10% p.a. |
Lender | ANZ Simplicity PLUS Home Loan |
Interest rate at 80% LVR | 6.54% p.a. |
Comparison rate^ | 6.54% p.a. |
Interest rate at 95% LVR | 7.64% p.a. |
Comparison rate^ | 7.64% p.a. |
| Lender | Interest rate at 80% LVR | Comparison rate^ | Interest rate at 95% LVR | Comparison rate^ |
|---|---|---|---|---|
ING Mortgage Simplifier | 6.14% p.a. | 6.17% p.a. | 6.69% p.a. | 6.72% p.a. |
Adelaide Bank SmartFit | 6.24% p.a. | 6.41% p.a. | 7.88% p.a. | 8.03% p.a. |
Commonwealth Bank Standard Variable Rate Home Loan | 6.49% p.a. | 6.87% p.a. | 7.74% p.a. | 8.10% p.a. |
ANZ Simplicity PLUS Home Loan | 6.54% p.a. | 6.54% p.a. | 7.64% p.a. | 7.64% 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. With this option, a parent or family member can use their home equity to help secure your loan, either 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.
Keep in mind that if your guarantor’s mortgage is with a different lender, they will need approval from that lender to add a second mortgagee (your lender) to the title of their property.
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
These include:
1
First Home Guarantee (FHBG)
For eligible first-home buyers to buy a home with a deposit starting from 5% with no LMI. There are 35,000 places available for the 2024-25 financial year.
2
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. There are 10,000 places available for the 2024-25 financial year.
3
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. There are 5,000 places available for the 2024-25 financial year.
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'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.
Mansour Soltani , Money.com.au's Home Loans Expert
“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 Loans 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.
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 relevant home loan fees.
Other upfront costs to consider when buying a home
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 and 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 $1,000 and $3,000 a year, 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.
