How Much Deposit Do First Home Buyers Need in NSW/VIC?

By Piyush Singh

The short answer is: it depends on your situation, you do not automatically need 20%. Depending on your eligibility, you may be able to buy with as little as 2% or 5% (as of August 2026) deposit, though each path comes with its own trade-offs worth understanding before you commit.

Why 20% Is the Standard Benchmark

You will often hear 20% cited as the deposit you should aim for. The reason is straightforward. When you borrow more than 80% of a property's value, most lenders will require you to pay for LMI (Lenders Mortgage Insurance). This is insurance that protects the lender, not you, if you were to default on the loan. The cost is not a flat fee. It scales with how much you borrow and how high your LVR (Loan-to-Value Ratio) is, and it can add a meaningful sum to your upfront costs or to your loan balance if it is capitalised. So a 20% deposit gets you across the 80% LVR threshold and removes that cost from the equation entirely.

That said, 20% is a high bar, especially in Victoria where property prices in many areas are substantial. The good news is that there are legitimate paths to buying sooner with a smaller deposit.

What If You Only Have a 5% Deposit?

Under the Australian Government's First Home Guarantee, eligible first home buyers can purchase a property with as little as a 5% (as of August 2026) deposit and avoid LMI altogether. The way it works is that the government provides a guarantee that sits behind the loan, effectively covering the gap between your deposit and the 20% threshold from the lender's perspective. Once your loan balance drops below 80% of the property value, that guarantee can be removed.

Places in this scheme are limited and there are eligibility criteria to meet, including income limits and property price caps. I have flagged the specific figures below for you to verify, because these thresholds are updated periodically and the details matter when you are planning around them.

What About Single Parents? The Family Home Guarantee

There is a separate scheme worth knowing about if you are a single parent or legal guardian with dependents. The Family Home Guarantee allows eligible buyers to purchase with as little as a 2% (as of August 2026) deposit, again without paying LMI. Importantly, you do not need to be a first home buyer to access this one. If you previously owned property but no longer do, you may still qualify. It is a meaningful difference from the standard First Home Guarantee, and it often surprises people who assume they have missed the boat.

How Do Lenders Actually Assess Your Deposit?

Having a deposit figure in your bank account is only part of what lenders look at. Most want to see what is called genuine savings, meaning funds you have built up yourself over a period of time, rather than money that arrived in a lump sum from someone else. A gifted deposit from family, for example, is treated differently. It is not automatically disqualifying, but lenders typically want to see that at least some portion of the deposit came from your own consistent saving behaviour.

The standard approach is to check your last three months of bank statements. Lenders are looking for a pattern: regular income going in, a savings balance growing steadily, and no reliance on a sudden transfer to hit the target number just before application. If your deposit was partly or fully gifted, some lenders will want to see that the funds have been sitting in your account for a set period. Others may require a larger deposit overall. It varies, and it is worth understanding your own position clearly before you apply anywhere.

Should You Factor In More Than Just the Deposit?

Yes, and this catches a lot of first home buyers off guard. The deposit is the headline figure, but it is not the only upfront cost. Depending on your situation, you also need to account for:

Stamp duty: Victoria has concessions available for first home buyers, but the amount you pay depends on the purchase price and your circumstances.
Legal and conveyancing fees: You will need a solicitor or conveyancer to handle the legal side of the purchase.
Building and pest inspections: These are optional but generally worth doing before you commit to a purchase.
LMI: If your deposit is below 20% and you are not using a government guarantee scheme, this cost needs to be factored in. It can sometimes be added to the loan balance, but that means you are paying interest on it over the life of the loan.

The practical point here is that your savings goal should be set with all of these costs in mind, not just the deposit figure. What looks like a workable deposit can fall short once the full picture of upfront costs comes into view.

A Real Situation Worth Considering

A client came to me recently after assuming they needed to keep saving for another two years to reach a 20% deposit. When we looked at their actual position, they were eligible for a government guarantee scheme and had genuine savings history that most lenders would accept. The gap between where they were and where they needed to be was much smaller than they had assumed. We also identified that their total upfront costs, including stamp duty and conveyancing, were within reach if we accounted for a first home buyer concession they had not known about.

That kind of clarity is usually what people need first. Not a push to borrow more than they are comfortable with, just an accurate read on what their options actually are.

Where to Start

If you are trying to work out how much you genuinely need to save, the most useful thing you can do is get a clear picture of your current savings history, your income, and the property price range you are looking at. From there, it becomes a practical conversation rather than a guessing game.

I work with first home buyers across NSW/Victoria, including many in and around Manor Lakes, and the question of deposit size is almost always where we start. The right deposit amount for you depends on your eligibility for any applicable scheme, your savings pattern, your borrowing capacity, and what you can realistically manage in repayments once you are in. All of those things can be looked at together before you commit to anything.

If you want to talk through your situation, I am happy to sit down and go through the full picture with you, without the runaround.

About the author

Piyush got into mortgage broking after years of watching lending from the inside, and it changed how he thinks about who actually gets left behind by the process. At AMP Bank, NAB, Humm Group and a handful of other lenders, he built and assessed the very products borrowers apply for - so he knows where applications fall over, and more importantly, why. That experience is what led him to start LoanLens. Too often, he saw good applications get knocked back or downsized simply because a broker didn't know how to present a client's income properly, or didn't have the patience to chase it down with the lender. He built LoanLens to fix that - combining his credit background with a straightforward, client-first process, so people get a clear answer on what they can borrow and why, not just a form to fill in. It's why the tagline is "See your best loan clearly." Most clients don't need anything exotic. They need someone who'll explain what's happening, chase the lender when things go quiet, and find a genuinely competitive rate without disappearing after settlement. That's the standard Piyush holds himself to, whether it's a first home buyer, a family refinancing, or an investor adding to their portfolio. Where things get more involved - self-employed income, equity comp, multiple income streams - he's got the background to make that work too, but it's not a gate clients need to pass through to work with him. Piyush holds an Executive MBA from AGSM (UNSW) and a Certificate IV in Finance and Mortgage Broking, and writes through Purple Circle Financial Services as his aggregator. Based in Melbourne, he works with clients across Australia.

LoanLens Financial Pty Ltd is a member of the MFAA - 969207 and ASIC CRN - 580112, authorised under Purple Circle Financial Services (ACL 486112), and a member of AFCA.