The short answer
You do not always need 20%. Many lenders accept a 5% to 10% deposit, but borrowing more than 80% of the property's value usually means paying lenders mortgage insurance (LMI). Eligible buyers can avoid LMI with as little as 5% under the Australian Government 5% Deposit Scheme, or with a family guarantor. You also need money for stamp duty and purchase costs.
Why does 20% matter?
At a 20% deposit, the loan is 80% of the property's value (an 80% loan to value ratio, or LVR). Above 80%, most lenders require LMI, a one-off insurance premium that protects the lender, not you. It is usually added to the loan or paid at settlement, and can run into thousands or tens of thousands of dollars depending on the loan size and deposit.
How can I buy with less than 20% and avoid LMI?
The main options are:
- The Australian Government 5% Deposit Scheme: eligible home buyers can purchase with a 5% deposit and no LMI through participating lenders, subject to property price caps
- A guarantor loan: a family member uses equity in their property as extra security
- Professional LMI waivers: some lenders waive LMI for eligible professions such as doctors, lawyers and accountants
What are the 5% Deposit Scheme property price caps?
As at November 2026, the cap is $1.5 million in Sydney and NSW regional centres, and $800,000 elsewhere in NSW. Since 1 October 2025 there have been no income caps or annual limits on places. Caps and rules can change, so check the current figures for your postcode with Housing Australia or your broker before you buy.
What else do I need money for?
Your deposit is not the only upfront cost. Budget for:
- Stamp duty (transfer duty), unless you qualify for a first home buyer exemption or concession
- Conveyancing or legal fees
- Building and pest inspections
- Lender fees and government registration fees
- LMI, if it applies and is not added to the loan
- Moving costs and a buffer for the unexpected
Frequently asked questions
Most lenders want to see genuine savings, often held for at least three months. Some accept gifts from family, or rent paid on time, as part of the deposit. Policies vary by lender.
Sometimes. If prices are rising faster than you can save, buying sooner and paying LMI can work out better than waiting. It depends on your situation, and we can model both.
Sources
Related
General information only. It does not take into account your objectives, financial situation or needs. Lender criteria vary and approval is at the lender's discretion. Homestead is a mortgage broker, not a lender. Last updated 2026-11-04.