Saving for a home deposit is one of the biggest challenges for first home buyers — but the good news is, you may not need as much as you think. Many Australians still believe they must save a 20% deposit, but this isn’t true for most buyers today.
In this guide, we break down exactly how much deposit you really need in 2025, plus options that can help you buy sooner.
What Is a Home Loan Deposit?
A home deposit is the upfront amount you contribute towards buying a property.
The bank lends you the remaining percentage as your home loan.
For example:
If you’re buying a $700,000 property and have a 10% deposit, you contribute $70,000 and the bank lends you the other $630,000.
1. Do You Really Need a 20% Deposit?
No — not anymore.
While a 20% deposit helps you avoid LMI (Lenders Mortgage Insurance), many lenders now accept much smaller deposits, especially for first home buyers.
2. Minimum Deposit You Need in Australia (2025)
✔ 5% Deposit — Most Common
Many lenders approve first home buyers with as little as 5% deposit.
For a $650,000 home:
A 5% deposit = $32,500
✔ 2% Deposit — Under Government Schemes
Some government guarantee programs allow eligible buyers to purchase with just a 2% deposit.
✔ 0–2% Deposit — Family Guarantee Options
Some lenders allow you to buy with no deposit if a parent provides equity as security.
3. What About Lenders Mortgage Insurance (LMI)?
If your deposit is under 20%, most lenders will charge LMI.
LMI protects the bank, not the borrower — but in some cases:
- LMI can be capitalised into the loan (added on top)
- Some lenders offer LMI discounts
- Some lenders offer LMI waivers for certain professions
(nurses, teachers, doctors, accountants, engineers, etc.)
A mortgage broker can tell you:
- If you need LMI
- How much it will cost
- If you can avoid it
4. How Government Schemes Can Reduce Your Deposit
In 2025, eligible first home buyers can access:
First Home Guarantee
Buy with 5% deposit, no LMI.
Regional First Home Buyer Support
Designed for regional buyers with 5% deposit.
Family Home Guarantee
Single parents: 2% deposit, no LMI.
First Home Owner Grant (FHOG)
$10,000–$15,000+ depending on your state — for new builds or newly built homes.
These schemes can save you tens of thousands of dollars and reduce the time needed to save your deposit.
5. How Much Should You Personally Save?
Here’s a general guide based on your goals:
| Your Deposit | Good For | Notes |
|---|---|---|
| 2% | Single parents / gov schemes | Very fast entry into market |
| 5% | Most first home buyers | Most common, flexible |
| 10% | Lower repayments | Less LMI, more banks |
| 20% | Best long-term savings | No LMI, better interest rates |
A broker can calculate what you qualify for based on your:
- Income
- Savings
- Credit score
- Existing debts
- Location
- Gov scheme eligibility
Final Thoughts
The idea that you must have a 20% deposit is outdated. Most first home buyers in Australia purchase with 5–10%, and many buy even sooner through government schemes.
If you’re unsure where you stand or how close you are to buying, we can help assess your options and calculate how much deposit you truly need.
📞 Need Help Understanding Your Deposit Options?
Kickstart Finance Group
📱 0422 905 666
📧 info@kickstartfinancegroup.com.au
🌐 www.kickstartfinancegroup.com.au