How Much Deposit Do I Really Need To Buy A Home?

One of the biggest myths in property is:

You need a 20% deposit before you can buy.

While 20% can be a great goal, it's not always necessary.

Many Australians enter the property market with significantly less.

The key is understanding what's possible and what costs need to be considered beyond the deposit itself.

Why Do People Talk About 20%?

A 20% deposit generally means borrowing 80% of a property's value.

This is often referred to as an 80% Loan to Value Ratio (LVR).

One of the advantages of reaching this level is that many borrowers can avoid Lenders Mortgage Insurance (LMI).

However, waiting years to save a full 20% isn't always the right strategy for every buyer.

Often, yes.

Many lenders are prepared to lend above 80% LVR, subject to their lending criteria.

A 10% deposit may allow you to enter the market sooner while continuing to build equity through home ownership.

The trade-off is that LMI may apply.

Potentially.

Some eligible borrowers may be able to purchase with a smaller deposit through certain government-supported schemes or lender policies.

Every situation is different, so eligibility and lender requirements need to be assessed individually.

This is where many buyers get caught out.

The deposit is just one component.

Other costs may include:

It's important to understand the total funds required, not just the deposit.

Usually not.

Perhaps the most common mistake I see is buyers using every available dollar to maximise their deposit.

Owning a home comes with unexpected expenses.

Maintaining a savings buffer after settlement can provide flexibility and peace of mind.

Some lenders allow family gifts to form part of the contribution towards a purchase.

Policies differ between lenders and documentation requirements vary.

Seeking advice early can help avoid unnecessary surprises.

Rather than focusing on an arbitrary number, I encourage clients to think about:

The best deposit isn't always the biggest deposit.

It's the one that allows you to buy comfortably while maintaining financial flexibility.

Buying a property is about much more than simply reaching a 20% deposit.

The goal is to understand your options, build a realistic budget and create a strategy that supports your long-term goals.

For some buyers that may be 20%.

For others it could be 10%.

And for some, it may even be less.

The right answer depends on your circumstances, not someone else's.