The short answer: most lenders require a minimum 10% deposit to approve a home loan, but a 20% deposit avoids Lender’s Mortgage Insurance (LMI) — a significant additional cost that can add tens of thousands of dollars to your purchase.
Here is the full breakdown of how much deposit you need, what LMI costs, and how to plan your purchase strategy.
The Standard Deposit Requirements in Australia
| Deposit Size | LMI Required? | Typical LMI Cost ($600k purchase) | Notes |
|---|---|---|---|
| 5% ($30,000) | Yes | $15,000 to $20,000+ | First home buyer schemes may apply |
| 10% ($60,000) | Yes | $8,000 to $15,000 | Most common entry point |
| 15% ($90,000) | Yes | $3,000 to $8,000 | LMI reduces significantly |
| 20% ($120,000) | No | $0 | Ideal target for most buyers |
What Is LMI (Lender’s Mortgage Insurance)?
LMI is insurance that protects the lender — not you — if you default on your loan. It is charged when your deposit is below 20% of the property value. On a $700,000 purchase with a 10% deposit, LMI can add $12,000 to $18,000 to your costs. This amount is typically capitalised into your loan, meaning you pay interest on it over the full loan term.
First Home Buyer Deposit Schemes
The Australian Government operates several schemes to help first home buyers purchase with a smaller deposit:
- First Home Guarantee: Buy with as little as 5% deposit with no LMI (government guarantees the remaining 15%)
- Regional First Home Buyer Guarantee: Same as above but for regional properties
- Family Home Guarantee: Single parents can buy with 2% deposit with no LMI
- First Home Super Saver Scheme: Save up to $50,000 inside superannuation for a first home deposit
Eligibility conditions, income caps and property price limits apply to all schemes. Check the National Housing Finance and Investment Corporation (NHFIC) website for current eligibility requirements.
Other Costs to Budget For
Your deposit is not your only upfront cost. Buyers typically need to budget for:
- Stamp duty (varies by state — $20,000 to $40,000+ on a $700k purchase in NSW or VIC)
- Legal and conveyancing fees ($1,500 to $3,000)
- Building and pest inspection ($500 to $800)
- Loan application fees ($0 to $600)
- Moving costs ($500 to $5,000)
- Strata report (for apartments, $150 to $400)
How a Property Advisor Helps With Deposit Planning
Many buyers make costly mistakes in the deposit phase — buying before they have enough buffer, triggering LMI unnecessarily, or missing grant eligibility. Collings Property Advisory provides independent property analysis and purchasing strategy to help you enter the market at the right time, with the right structure, and with the right negotiation strategy.
Our buyer advisory service is $4,500 + GST — a fixed fee that includes property assessment, market value analysis, negotiation strategy and contract support.
Frequently Asked Questions
Can I buy with less than a 10% deposit?
Yes, through the First Home Guarantee scheme you can buy with as little as 5% deposit with no LMI if you meet eligibility criteria. Some lenders also offer 95% LVR loans to non-first-home-buyers, but LMI costs are significant.
Is it better to wait until I have a 20% deposit?
It depends on the market. In a rising market, waiting to save a 20% deposit can cost more in capital growth than you save on LMI. In a flat or declining market, waiting may make sense. A property advisor can help you model both scenarios with current suburb data.
What is the minimum deposit for an investment property?
Most lenders require a 10% to 20% deposit for investment properties. The First Home Guarantee does not apply to investment purchases. LMI applies for deposits below 20%.
Get Independent Advice Before You Buy
Deposit planning is one of the most important steps in any property purchase. Getting it wrong costs thousands. Collings Property Advisory provides independent, fixed-fee guidance to help you plan your purchase correctly from the start.
Enquire today at collings.com.au/portal
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