"How much do I need to save?" is the first question almost every first home buyer asks us. The honest answer is that it depends less on a magic percentage and more on which path you take to buy.
Here's what each deposit level actually looks like in 2026.
The 20% benchmark
Twenty per cent has long been treated as the target because it's the point where most lenders stop charging Lenders Mortgage Insurance (LMI). Borrow 80% or less of the property's value and you avoid LMI, get access to the widest range of lenders, and often a sharper rate.
On a $750,000 home, 20% is $150,000. Add stamp duty if it applies and other costs, and many people are looking at $160,000 or more in savings. For a couple renting in Sydney, that can take the best part of a decade.
10%: possible, but LMI applies
With a 10% deposit you can borrow 90%. Most lenders will do this, but you'll pay LMI unless you qualify for a waiver (some professions, like doctors, lawyers and accountants, can get LMI waived at certain lenders).
LMI is a one-off premium, usually added to the loan. It rises sharply as the deposit falls and the loan size grows. Ask for an exact quote, because it varies between insurers and lenders.
5%: the 5% Deposit Scheme changed everything
For first home buyers, the Australian Government 5% Deposit Scheme lets you buy with a 5% deposit and no LMI. Since 1 October 2025 there are no income caps and no limit on places. Price caps apply, for example $1,500,000 in Sydney.
On a $750,000 home, 5% is $37,500. That's a very different savings target from $150,000.
Read the full details in our 5% Deposit Scheme guide.
2%: Help to Buy and single parents
Two paths allow a 2% deposit:
- Help to Buy: the government takes an equity share of up to 40% (new homes) or 30% (existing homes). Income caps apply.
- Family Home Guarantee: for eligible single parents and legal guardians, with a 2% deposit and no LMI.
What about no deposit at all?
You can sometimes buy with no cash deposit if a family member guarantees part of your loan using equity in their home. We cover this in our existing guides on guarantor loans and no deposit home loans.
Your deposit isn't your only cost
Whatever deposit you choose, budget for:
- Stamp duty, unless you qualify for an exemption. NSW first home buyers pay none up to $800,000.
- Conveyancing or legal fees, often $1,500 to $3,000
- Building and pest inspection, often $400 to $800
- Loan establishment fees, which vary by lender (many charge nothing)
- Moving costs and immediate repairs
A good rule of thumb is to keep at least a few thousand dollars spare after settlement as a buffer.
Comparing the options side by side
Here's a $750,000 purchase, 30-year loan, example rate 6.49%:
| Deposit | Deposit amount | Loan | Approx. monthly repayment | LMI |
|---|---|---|---|---|
| 20% | $150,000 | $600,000 | $3,788 | None |
| 10% | $75,000 | $675,000 | $4,262 | Yes |
| 5% (5% Deposit Scheme) | $37,500 | $712,500 | $4,499 | None |
The smaller your deposit, the higher your repayments. That's the trade-off. Buying sooner with 5% means paying more each month, but you stop paying rent and start owning years earlier.
Which is right for you?
There's no universal answer, but these questions help:
- Can your income comfortably handle the higher repayments of a smaller deposit? Lenders will test this at a rate about 3% above the actual rate.
- How fast are you saving compared to how fast prices are moving? In 2026 prices in Sydney and Melbourne have actually eased, while Perth and many regional areas have kept rising.
- Are you eligible for a government scheme? If so, waiting for 20% may cost you more in rent than you'd save in interest.
- How secure is your job? A thinner deposit leaves less room for surprises.
What counts as "genuine savings"?
With deposits under 10%, many lenders want to see that at least 5% has been saved by you over three months or more. Gifts, inheritances and lump sums are treated differently between lenders. Rent paid on time for 12 months can count as genuine savings with some lenders. A broker can find one that fits how you saved.
Frequently asked questions
Can I use a gift from my parents as my deposit?
Often yes, with a signed gift letter confirming it doesn't need to be repaid. Some lenders still want part of the deposit to be your own savings.
Do I need to pay stamp duty from my deposit?
Yes, stamp duty is paid in cash at settlement, separately from the deposit, unless you qualify for an exemption.
Is it better to wait for 20%?
Not always. If you qualify for the 5% Deposit Scheme, there's no LMI anyway, so the main difference is a bigger loan.
Want to know the smallest deposit you could buy with? Call Finfident on 0424 545 654. We'll check which schemes you qualify for and show you the numbers for each.
This article is general information only and doesn't take into account your objectives, financial situation or needs. Figures, rates and scheme rules are current as at October 2026 and can change. Finfident Finance Brokers (ABN 94 679 280 801) is Credit Representative 569374 of Outsource Financial Pty Ltd (ACN 131 090 705), Australian Credit Licence 384324.