How Much Deposit Do You Need to Buy a House in Australia?

Taking part in the Great Australian Dream of home ownership begins with putting together your deposit. With home loan commitments reaching new record levels in Australia, first-time buyers are becoming more well-informed about the whole process.

One of the most asked questions by prospective Australian home buyers is how much deposit do I need to save in order to buy a house? While this amount can vary depending on your desired property, it’s crucial to understand what a deposit actually entails.

Whether you’re just researching the market or preparing for your first loan, this article has everything you need to know about home loan deposits.

We’ll take a look at the average deposit amounts, whether bigger deposits are better and how government lending schemes are helping first-time buyers.

Home Loan Deposit Amount Guideline

Every person’s home loan is going to be different based on their needs and expectations. Deposits in Australia can range from 5% to 20% of the property value. As part of your home loan, your deposit will cover a certain percentage of the property’s purchase price and the lender covers the rest.

So, the more savings you have to put towards your budget, the smaller your loan will be. With a larger budget, you’ll pay less interest and vice versa.

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

How Much Deposit Do I Need Before Approaching A Bank?

Being financially ready to approach your bank or financial institution will depend on a number of factors, including employment history, credit score and potential property budget.

The point of a deposit is to prove to your home loan lender that you’re able to manage home loan repayments. The lender is going to look at your recent payslips and credit rating which is based on your history of borrowing and repaying.

On average, before approaching your lender, aim for a deposit of 20% to showcase your record of saving. This will allow you to avoid any extra costs being placed on your home loan. This is also referred to as your “Borrowing Power”, which calculates how much you can borrow from your lender based on net income, living expenses, loan commitments and credit card limits.

To find out how much you can borrow today based on your financial situation, use our Borrowing Power Calculator.

How Much Deposit Do I Need To Buy a House in Australia

Examples of Deposit Amounts

To give you a better idea of how much deposit you’ll need, we’ve calculated different deposit percentages based on the average house prices across Australia.

Property Area

Average Property Price

20% Deposit

30% Deposit


















Take a look at your desired location and think about how it will inform your deposit plans.

With a deposit amount in mind, you can begin to calculate the cost of your monthly home loan repayments. Try our Mortgage Repayment Calculator and feel more confident that you can repay your loan.

Keep in mind, if you deposit less than 20% you may have to pay LMI.

Lenders Mortgage Insurance (LMI)

Lenders Mortgage Insurance (LMI) is usually applied to home loans that have a deposit of less than 20%. It refers to a type of insurance on the loan that protects the bank against any losses if a situation arises that means the borrower can’t repay the loan amount.

For example, a house worth $600,000 with a 10% deposit will have the bank lending you $540,000. If you have only paid $60,000 during this loan period, and then your financial situation suddenly changes leaving you unable to pay the loan, the bank will be facing $490,000 in losses.

Even in the rare scenario of seizing a house which might mean the bank sells the house for $460,000, they’ll still be $20,000 out of pocket. There is also the interest rate on top of that which the bank will also be losing out on.

Therefore, LMI is paid by the borrower either in upfront costs or as part of the loan. This will be paid when your home loan is settled. Here are a few things to remember about LMI:

  • LMI only needs to be paid if your deposit is less than 20%.
  • LMI is a form of financial protection for the lender, not the borrower.
  • You won’t arrange the LMI yourself. This will be part of the home loan process and the lender will calculate it for you.
  • You can save paying LMI by having a bigger deposit.

How Much Is Lenders Mortgage Insurance?

This is going to depend on the size of your deposit, the type of loan you take out, and the lender you choose. Your best source of information will be a trusted and experienced mortgage broker.

Brokers available at Odin can show you how to calculate the LMI for your specific circumstances. With appropriate professional advice ready when you need it, we can walk you through all the lending criteria involved in your future home loan.

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

Are Expats Better Off Saving For A Bigger Deposit?

As a first-time buyer, it’s always good to have the future in mind. Those first-time buyers that save as much as possible and acquire a bigger deposit will experience more benefits when applying for a home loan. With a larger deposit, first-time buyers can:

  • Begin to negotiate a lower interest rate: With a larger deposit, the lender sees you as a less risky client, increasing your bargaining power.
  • Benefit from more loan options: Having a larger deposit opens up your options and lets you find a better deal. For example, you can lower your interest payments with an offset account.
  • Borrow less money: The bigger your deposit is, the less money you will have to borrow from the bank, which means there will be less interest on the life of the loan.
  • Avoid paying LMI: As soon as your deposit is over 20%, you know you can avoid paying LMI.

Tips For Expats To Save A Larger Deposit

Now you know all the advantages of a larger deposit, it’s useful to know some of the most common ways Australians increase their borrowing capacity.

Develop A Savings Plan

Don’t try to save without a plan! When thinking about your deposit, you need to create a realistic and precise savings plan. Set personal objectives you can work towards every month.

Simply, calculate how much you need to save over a period of time to reach your deposit goal, and then work out the budget you have every month for living expenses. Put all your details into our Australian Mortgage Calculator and start building your deposit balance today.

Deposit Regularly

When you have a savings plan in place, be prepared to deposit regularly on a set date every month. Rather than having to remind yourself, set up a monthly direct debit that automatically transfers money from your income account to your savings account.

With this all set up, you’ll be naturally saving money every month without having to personally transfer it.

Avoid Unnecessary Expenses

When developing your savings plan, try to also work out a weekly budget for expenses. This will allow you to cut back on anything you don’t feel is necessary, boosting your savings potential.

Think whether you need to eat out every week or whether your gym membership is actually worth it!

Look At High-Interest Savings Accounts

Australians that think seriously about their deposit savings have a high-interest savings account set up to increase their finances every month.

Take a look at online savings accounts that include a higher interest rate and minimal fees.

Are There Any Other Costs of Buying a Home?

Along with your deposit and the LMI, you may face other costs and legal fees. These will include:

  • Stamp duty: A tax charged by Australian states on property transactions. Use our Stamp Duty Calculator to calculate the costs in your desired area.
  • Conveyancing and title changes: You will need to pay a legal team to formally transfer your name and details onto your newly purchased property.
  • Pest and building inspection: A charge may be applied for a professional to inspect the property for any issues such as structural damage or termite infestation.
  • Building insurance: This is an extra cost that will cover your home against any damage caused by fire, explosion, or floods etc.

Use Government First Home Buyer Schemes

The Australian government has many state-funded schemes that are now allowing first-time buyers to get their home loans quicker. Certain territories offer a range of grants that support your financial journey.

  • First Home Owner Grant (FHOG): The first home owner grant is a one-off payment to help first-time buyers purchase or build a new property. This grant can offer $10,000 towards your deposit
  • First Home Loan Deposit Scheme (FHLDS): The FHLDS is actually a scheme that allows first-time buyers to place a deposit of less than 20% and avoid paying LMI. Buyers are only required to pay 5% of the deposit and the FHLDS will contribute the other 15%
How Much Deposit Do You Need to Buy a House in Australia?

Find the Right Home Loan Today!

So, you now know exactly what you need to start saving for your deposit, and how much you’ll need to secure that dream house.

Do you think you’ve saved enough to afford your ideal property? If so, then let’s chat about it today with a free online assessment. Maybe you just want to find out how much deposit you’ll need for your first home. Well, we’re here to help you today.

Speak with one of our specialists at a day and time that suits you, and help to secure your place on the Great Australian Dream!

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

Frequently Asked Questions

If you’re looking to purchase a property with a $10,000 deposit, this will be possible with the First Home Owners Grant (FHOG) and the First Home Loan Deposit Scheme (FHLDS). The FHLDS, for example, will cover 15% of your deposit when you pay 5%, without having to pay LMI.

If you want to buy a $300,000 house you should aim for a 20% deposit which would be $60,000. A lower deposit of 10% ($30,000) or 5% ($15,000) will require you to pay a LMI to show you can repay the loan. The FHLDS allows first-home buyers to use a 5% deposit without paying LMI.

If you’re looking to buy a house worth $500,000, then the average deposit percentage of 20% will cost you $100,000. If you don’t have this and want a lower percentage then 10% and 5% deposits will come with a catch of paying LMI.

$40,000 at 20% will equal a total property value of $200,000. This is more unlikely and you may need to consider either saving more for the deposit or having a 10% or 5% deposit. However, if you have a deposit lower than 20% you will need to pay LMI.

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10 Best Tips for Australian Expats to Maximise Borrowing Power & Approval Success