We’re often told we need a 20% deposit to buy a home — but that’s not the full story.
Yes, 20% is ideal — but it’s not always necessary. And waiting until you’ve saved that much could mean missing out on getting into the market sooner.
So, let’s break it down — what do you really need?
The 20% Rule — and Why It Exists
Lenders love a 20% deposit. It reduces their risk, means you avoid paying Lenders Mortgage Insurance (LMI), and can help secure a better interest rate.
On a $700,000 property, that’s $140,000 — a big ask for most people.
But here’s the good news: you don’t always need 20% to buy a home.
Buying With Less Than 20%
Most lenders will accept deposits as low as 5–10%, depending on your situation.
What’s the catch?
- You may need to pay Lenders Mortgage Insurance (LMI), which protects the lender if you default — not you
- You may have stricter borrowing conditions
- You’ll need to show strong income and a good credit history
But for many people — especially first-home buyers — getting into the market sooner with a smaller deposit can make more financial sense than waiting years to save a bigger one.
Government Support May Help
You might be eligible for schemes like:
- First Home Guarantee (formerly FHLDS): Buy with as little as 5% without paying LMI
- Family Home Guarantee: For single parents with just 2% deposit
- First Home Super Saver Scheme: Use super contributions to help fund your deposit
A good broker can help you check your eligibility and access these opportunities.
What’s Considered a Genuine Deposit?
Some lenders want to see that you’ve saved the deposit yourself (usually over 3+ months).
This shows financial discipline.
But others will accept:
- Gifts from family
- Inheritance
- Sale of assets
- Equity from another property
Each lender is different — which is why advice is so important.
Don’t Forget About Buying Costs
In addition to your deposit, factor in:
- Stamp duty
- Legal fees
- Building and pest inspections
- Loan setup fees
- Moving costs
Your deposit gets you in the door — but your full budget needs to cover the whole process.
Final Word
Waiting until you have 20% might be the right move for some — but for others, it just means watching prices climb while you save.
Don’t assume the dream is out of reach.
Money is a tool — and the right advice can show you how to use it well, even with a smaller deposit.