The short answer: it depends on what you're buying and which path you take. The traditional benchmark is 20% of the purchase price, but there are several legitimate ways to buy with a smaller deposit. Here's what you need to know before you start (or keep) saving.

The 20% Rule: Why It Exists

Lenders use 20% as their standard threshold because it protects them if property values fall. If you borrow more than 80% of a property's value, you're required to pay Lenders Mortgage Insurance (LMI). LMI protects the lender, not you, and the cost can run into thousands or tens of thousands of dollars depending on the loan size.

On a $700,000 property, a 20% deposit is $140,000. That's a significant amount, and it's one of the main reasons many first home buyers feel locked out of the market.

You Don't Always Need 20%

Most lenders will accept a 10% deposit, or sometimes as low as 5%, though below 20% you'll typically pay LMI on top of your loan costs.

There's also an important exception: the Australian Government's First Home Guarantee scheme. This allows eligible first home buyers to purchase with a 5% deposit and no LMI. The government acts as a guarantor for the remaining portion of the deposit, removing the insurance requirement entirely.

As of October 2025, the First Home Guarantee scheme was updated: there are no longer income caps or waitlists, which opens it up to far more buyers than before. If you're a first home buyer and you haven't looked into this scheme, it's worth checking your eligibility.

What Deposit Do You Actually Need in 2026?

According to Domain's 2026 First Home Buyer Report, the average deposit being saved in Australia is around $173,000. That figure is highest in New South Wales (over $206,000 on average) and lowest in the Northern Territory (around $99,000).

The same report found it can take up to eight years for a first home buyer to save a deposit at current income and property price levels. That figure highlights just how important government schemes and lower-deposit options have become.

Don't Forget the Purchase Costs

Your deposit is just one part of what you need to have ready. On top of your deposit, you'll need to account for buying costs, which typically add another 3% to 5% of the purchase price. These include:

  • Stamp duty (varies significantly by state)
  • Conveyancing or solicitor fees
  • Building and pest inspections
  • Loan application or establishment fees
  • Moving costs

Some states offer stamp duty exemptions or concessions for first home buyers, which can make a meaningful difference to your upfront costs. The rules vary by state, so it's worth checking what's available where you're buying.

A Realistic Picture of What You Need

If you're buying a $600,000 property:

  • 20% deposit: $120,000, plus ~$20,000 to $30,000 in purchase costs
  • 5% deposit with First Home Guarantee: $30,000, plus purchase costs (and no LMI)
  • 10% deposit: $60,000, plus LMI and purchase costs

The right path depends on your savings, timeline, income, and the state you're buying in. There's no single answer that works for everyone.

What to Do Next

Before you set a savings target, it helps to understand what you can actually borrow and which deposit options are available to you. Borrowing capacity depends on your income, expenses, existing debts, and the lender's criteria, and it varies more than most people expect.

At Swish, we work through this with first home buyers from the start: what you can borrow, what schemes you may be eligible for, and what a realistic deposit target looks like for the type of property you want to buy. No jargon, no pressure, just a clear picture of where you stand.

Book a free call with Swish and we'll help you figure out what you actually need to get started.