The amount of money needed for a home deposit depends on the price of the property, the amount a lender is prepared to lend, the buyer’s upfront purchasing costs, whether lenders mortgage insurance applies, whether any government assistance is available, and whether the buyer wants a safer cash buffer after settlement rather than using every available dollar to get into the property. A useful starting point is that a 20 percent deposit has traditionally been the cleanest benchmark, because it usually means borrowing 80 percent of the property value, but many buyers now enter the market with smaller deposits, especially where lender approval, government support or lenders mortgage insurance makes that possible.
For a property priced at $700,000, a 20 percent deposit is $140,000, a 10 percent deposit is $70,000, and a 5 percent deposit is $35,000, but those figures are only the deposit against the property price, not the full amount of money that may be needed to buy. Upfront costs such as transfer duty, conveyancing, loan fees, inspections, insurance, moving costs, utility connections and settlement adjustments can change the true cash requirement, which means the deposit number alone can give a misleading sense of readiness.
The 20 Percent Deposit Still Matters
A 20 percent deposit remains important because it usually keeps the loan to value ratio at 80 percent, which is the point at which lenders mortgage insurance is often avoided. Lenders mortgage insurance is a cost that generally applies when the amount borrowed exceeds 80 percent of the property value, and it protects the lender rather than the borrower if the loan cannot be repaid.
That does not mean every buyer must have 20 percent before speaking with a lender, because some lenders may accept deposits as low as 5 percent, and eligible buyers may be able to use government backed pathways that reduce or remove lenders mortgage insurance. It does mean that a smaller deposit can change the cost, risk and approval conversation, because the buyer is asking the lender to accept a higher loan to value ratio, which may bring stricter assessment, extra costs or fewer loan options.
A Smaller Deposit Can Work, But It Needs More Care
Buying with 10 percent, 8 percent or 5 percent saved can be possible in some circumstances, but a smaller deposit does not automatically make a property affordable, because the monthly loan, the assessment rate used by the lender and the buyer’s remaining cash position still matter. A buyer with a smaller deposit may be able to reach a contract sooner, but they may also have less equity from day one, a larger loan relative to the property value and less room for property price changes, repair costs or personal income changes.
This is where the deposit question becomes a borrowing question as much as a savings question, because lenders do not only look at how much money has been saved. They also assess income, expenses, employment, existing debts, credit history, savings behaviour and the ability to manage repayments now and in the future.
The 5 Percent Deposit Scheme Changes The Calculation For Eligible Buyers
For eligible buyers, the Australian Government 5 percent Deposit Scheme can allow a first home buyer to buy with a minimum 5 percent deposit, while single parents or legal guardians may be able to buy with a minimum 2 percent deposit. The scheme was expanded from 1 October 2025 with no income caps, no waitlists and no lenders mortgage insurance, although buyers still need to meet eligibility rules, property price caps and lender assessment requirements.
This can make a major difference to the cash needed upfront, because the buyer may not need to save a full 20 percent deposit before entering the market, but it should not be treated as a shortcut around affordability. The buyer is still responsible for the loan, repayments, purchasing costs and ongoing property costs, and if scheme obligations are not met, the guarantee may no longer apply and extra costs may arise.
Help To Buy Is A Different Type Of Low Deposit Pathway
Help To Buy is different from a low deposit guarantee because it is a shared equity scheme, where the Australian Government contributes towards the purchase price rather than simply guaranteeing part of the loan. Under the current scheme, eligible buyers need a minimum 2 percent deposit and a loan from a participating lender, while the government can contribute up to 30 percent for an existing home or 40 percent for a newly built home.
That can reduce both the upfront deposit and the size of the mortgage, but it also means the government holds a share of the home’s value, with that share needing to be dealt with later through repayment, refinancing, sale or another permitted exit pathway. Because the structure affects ownership, future equity and repayment obligations, it is the kind of arrangement that should be understood carefully before a buyer treats the low deposit figure as the whole story.
Your Deposit Is Not The Same As Your Upfront Cash
The deposit is only one part of the money needed to buy, because settlement requires more than the amount being contributed to the purchase price. A buyer may also need transfer duty, legal or conveyancing costs, building and pest inspection costs, loan application or valuation fees, home insurance, moving costs, utility connection costs, council and water adjustments, body corporate adjustments for units or townhouses, and a cash buffer for immediate repairs, furniture, appliances or maintenance.
Transfer duty is a state or territory property transfer tax and is usually paid around settlement, with the amount depending on the property location, value, buyer status and available concessions. First home buyers may be exempt from duty or eligible for a concession in some states and territories, but the rules vary, so the amount should be calculated for the exact property and jurisdiction rather than guessed from a national average.
First Home Grants And Concessions Can Reduce The Cash Needed
First Home Owner Grant rules are set by states and territories, even though the scheme exists nationally, so the grant amount and eligibility rules vary depending on where the buyer is purchasing and what type of property is being bought. Some grants are focused on new homes, some concessions are linked to price thresholds, and some buyers may receive no grant or duty relief at all if the property, price or buyer circumstances do not fit the rules.
Queensland is a useful example of why the exact location matters, because for agreements entered into on or after 9 June 2024, a first home concession can result in no duty payable where the home is valued at $700,000 or under, while different outcomes apply above that threshold. That type of concession can materially change the upfront cash needed, but it should be checked against the current rules and the exact contract price before a buyer relies on it.
The Contract Deposit Can Be A Separate Issue
The word deposit can also create confusion because the deposit written into the contract is not always the same as the total deposit being contributed to the home loan. A contract deposit is the amount paid under the contract after signing, while the home loan deposit is the buyer’s total contribution to the purchase price and costs once the loan and settlement are completed.
In many transactions, the contract deposit may be 5 percent or 10 percent of the purchase price, but the exact amount is negotiable and depends on the contract, the seller’s position, the agent’s process and the buyer’s circumstances. A buyer using a low deposit pathway may need to be especially careful here, because having enough savings for the loan deposit does not always mean they have enough accessible cash to pay a larger contract deposit immediately after signing.
Borrowing Capacity Can Matter More Than The Deposit
A buyer can save a strong deposit and still be unable to buy the property they want if a lender will not approve the required loan. Lenders assess whether the borrower can afford repayments, and Australian prudential settings continue to require a serviceability buffer, with the mortgage serviceability buffer remaining at 3 percentage points following APRA’s July 2025 review.
That means the loan may be assessed at a higher rate than the advertised or actual loan rate, so the buyer’s borrowing capacity can be lower than expected even when the deposit looks healthy. A larger deposit can reduce the required loan and improve the numbers, but it does not replace the lender’s assessment of income, expenses, debts and repayment capacity.
A Practical Way To Think About The Number
A buyer can think about the required cash in four layers: the property deposit, the purchasing costs, any lender related costs such as lenders mortgage insurance, and the post settlement buffer. The safer figure is not simply 5 percent, 10 percent or 20 percent of the purchase price, but the amount that leaves the buyer able to complete settlement, absorb the expected costs and still manage the first months of ownership without being financially stretched from the first day.
For a buyer looking at an $800,000 property, the rough deposit alone could be $160,000 at 20 percent, $80,000 at 10 percent, $40,000 at 5 percent or $16,000 at 2 percent under a pathway that actually permits that level, but the real amount needed could be higher once transfer duty, legal costs, inspections, loan costs and moving costs are added. In some cases, government support may reduce the upfront burden, while in other cases the buyer may need a much larger amount because they do not qualify for concessions, are buying above a price cap, are purchasing as an investor, have a more complex income position or are dealing with a lender that requires a stronger deposit.
The Best Deposit Is Not Always The Smallest Deposit
A low deposit can help a buyer enter the market sooner, especially where prices are rising faster than savings, but the smallest possible deposit is not automatically the best deposit. A larger deposit can reduce the loan size, reduce interest over time, improve the equity position, avoid or reduce lenders mortgage insurance, increase lender choice and leave more room if the property needs repairs, rates rise or personal circumstances change.
The strongest position is usually not just having enough money to get a loan approved, but having enough money to buy without turning settlement day into a financial cliff edge. That means the real question is not only “how much money do I need for the deposit,” but “how much money do I need to buy this property, cover the costs, qualify for the loan and still live safely after settlement.”
Check The Current Rules Before Acting
Because deposit requirements, price caps, lender policies, grants, concessions and government scheme rules can depend on the buyer, the property, the location and the timing of the purchase, buyers should verify their own eligibility, current thresholds and exact upfront costs before acting. A licensed mortgage broker or lender can help clarify borrowing and deposit requirements, a solicitor or conveyancer can help with contract and settlement costs, and the relevant government scheme websites can confirm the current rules for any grant, guarantee or shared equity pathway being considered.
The information in this article is general in nature only and does not take into account your personal objectives, financial position, borrowing capacity, eligibility, tax position or individual needs. It should not be relied on as financial advice, credit advice, legal advice or a recommendation to buy property, borrow money, apply for a particular loan, use a particular government scheme or proceed with any specific property purchase. Deposit requirements, loan approval, lenders mortgage insurance, grants, concessions and government scheme eligibility can vary depending on the buyer, lender, property, location and current rules. Buyers should seek advice from an appropriately licensed mortgage broker, lender, financial adviser, solicitor, conveyancer or relevant government authority before making decisions.
You might also like
Disclaimer: Every effort has been made to ensure the accuracy of the information provided, but we make no guarantees regarding its completeness or reliability. The data is presented for general informational purposes only and does not constitute financial, investment, or legal advice. We are not liable for any errors, omissions, or consequences arising from its use. Users should verify details with relevant sources and seek professional advice where appropriate for the most accurate and up-to-date guidance.
