How Much Deposit Do You Actually Need to Buy a House in Australia in 2026?

How Much Deposit Do You Actually Need to Buy a House in Australia in 2026?

Ask ten Australians how much deposit they need to buy a home and nine will say 20%. That number has taken on mythological status in Australian personal finance, repeated so often it has started to feel like a law rather than a guideline.

The reality in 2026 is more nuanced. If you've been sitting on the sidelines feeling like the deposit goalposts keep moving every time you get close, you're not wrong, but you may also be planning for the wrong number. There are now more pathways to buying with less, through government guarantees, shared equity schemes, and super-based savings, than at any point in the history of Australian home ownership.

This guide cuts through the confusion. Here is exactly what deposit you need, what it costs to have less, and the schemes that can help you get there sooner.

TL;DR: The Answer Depends on Your Situation

• The standard benchmark to avoid Lenders Mortgage Insurance is 20% of the purchase price

• The minimum deposit most lenders accept without a guarantor is 5%, but LMI applies

• The First Home Guarantee allows eligible buyers to purchase with 5% deposit and no LMI, with unlimited places and no income caps from October 2025

• The Help to Buy shared equity scheme allows purchase with as little as 2% deposit, with income caps and 10,000 places per year

• The First Home Super Saver Scheme allows up to $50,000 of voluntary super contributions to be withdrawn for a deposit

• Beyond the deposit, buyers also need funds for stamp duty, legal fees, inspections, and a cash buffer

Bottom line: The 20% deposit is the gold standard but not the only path. The right deposit strategy depends on your income, savings position, state, and property price. There is rarely a single correct answer.

Jump to a Section

• The 20% Benchmark: Why It Exists

• What 20% Actually Looks Like in 2026

• Pathway 1: The Standard 20% Deposit

• Pathway 2: The First Home Guarantee (5%, No LMI)

• Pathway 3: Help to Buy (2% Deposit, Shared Equity)

• Pathway 4: The First Home Super Saver Scheme

• The Costs Beyond the Deposit

• How the Schemes Stack — start here if you want the bottom line

• Two First Home Buyer Examples

• Common Mistakes First Home Buyers Make

• FAQ

• Ready to Work Out Your Path to Ownership?

The 20% Benchmark: Why It Exists and What It Costs to Go Below It

The 20% deposit benchmark exists because of Lenders Mortgage Insurance (LMI). When a borrower has less than 20% of the purchase price saved, lenders consider the loan higher risk. They protect themselves by requiring LMI, which is an insurance policy that protects the lender (not you) if you default.

LMI is paid by the borrower as a one-off premium, typically added to the loan balance. The cost is significant and increases as the deposit shrinks.

Indicative LMI costs for a $700,000 property:

LMI costs vary by lender, loan size, and LVR. These figures are indicative only. Always confirm the exact LMI cost with your lender before proceeding.

The 20% benchmark also provides a buffer against negative equity, a reduction in the property's value that leaves the loan balance higher than the home's worth. For buyers at 95% LVR in a falling market, this risk is real and immediate.

What if you've been saving for a 20% deposit that you don't actually need? For buyers who qualify for the First Home Guarantee, the difference between a 5% and a 20% deposit is not the difference between buying and not buying. It's the difference between buying now and buying in five years.

Bottom line: Going below 20% has a real cost, either in LMI premiums or in shared equity obligations. The government schemes below can eliminate or reduce these costs for eligible buyers.

What Does 20% Actually Look Like in 2026?

Before choosing a pathway, it helps to understand what 20% means at current Australian property prices.

Median prices are approximate and subject to market movement. Verify current prices for your specific suburb before planning.

For most Australians in capital cities, saving a full 20% deposit while paying rent takes 5 to 10 years at a typical savings rate. This is precisely why the government schemes exist.

Bottom line: A full 20% deposit in a capital city requires $140,000 to $290,000 in savings. Government schemes reduce this requirement significantly for eligible buyers.

Pathway 1: The Standard 20% Deposit

The traditional approach. Save 20% of the purchase price plus upfront costs, borrow 80%, and pay no LMI.

The traditional approach has real advantages, and real disadvantages at current capital city prices:

Advantages:

• No LMI premium

• Lower loan-to-value ratio reduces lender risk and may attract better interest rates

• Buffer against short-term price falls

• Flexibility to choose any lender on any property

Disadvantages:

• Takes significantly longer to save in high-price markets

• Property prices may rise faster than savings accumulate

• Opportunity cost of capital tied up in savings earning low returns versus entering the market earlier

For buyers with strong savings capacity, parental support, or lower-price properties (particularly in regional areas or outer suburbs), the 20% pathway remains the most straightforward.

Bottom line: The 20% deposit is the cleanest, most flexible pathway. For buyers in Sydney or Brisbane, the timeline required may make alternative pathways worth considering.

Pathway 2: The First Home Guarantee (5% Deposit, No LMI)

Important update: The First Home Guarantee rules changed significantly from 1 October 2025. Income caps have been removed entirely. There is no longer a $125,000 or $200,000 income limit. Place limits have also been removed. There is no longer a 35,000 cap per year. If you were told you didn't qualify before October 2025, check again. The rules are now much broader.

The First Home Guarantee (FHBG), administered by Housing Australia, allows eligible first home buyers to purchase with a 5% deposit without paying LMI. The government guarantees the remaining 15% to the lender.

Key features from 1 October 2025:

• No income caps (previously limited to $125,000 single or $200,000 couple)

• Unlimited places (previously capped at 35,000 per year)

• Open to returning buyers who have not owned property in Australia in the past 10 years

• Property price caps apply and vary by state and region

• Must apply through a participating lender (50+ lenders including all major banks)

Current property price caps include:

Always verify current caps with Housing Australia or your lender before purchasing, as these are reviewed periodically.

What the guarantee saves: on a $700,000 property with a 5% deposit, LMI would normally cost $20,000 to $30,000. The First Home Guarantee eliminates this cost entirely.

What the guarantee does not do: it is not a cash grant. You still borrow 95% of the purchase price, which means higher repayments than a buyer with a 20% deposit. The guarantee simply removes the LMI requirement.

Bottom line: The First Home Guarantee is the most widely accessible scheme in 2026 for first home buyers. No income caps and unlimited places make it available to virtually any eligible buyer within the property price caps.

Pathway 3: Help to Buy (2% Deposit, Shared Equity)

The Help to Buy scheme is a federal shared equity program where the government contributes up to 30% of the purchase price of a new home or 25% of an existing home, reducing your loan size and repayments.

Key features:

• Minimum deposit of 2% of the purchase price

• Government equity contribution is interest-free

• You own the home and live in it; the government shares in capital gains or losses proportionally

• You can buy back the government's share over time through voluntary payments

• Income caps apply: taxable income under $100,000 (single) or $160,000 (joint applicants or single parents)

• 10,000 places per year (40,000 over four years)

• Currently available through Commonwealth Bank and Bank Australia, with more lenders expected

• Must be an Australian citizen (permanent residents are not eligible)

The Help to Buy scheme reduces the loan size significantly. For a $700,000 home with a 25% government contribution:

• Government contributes: $175,000

• Your 2% deposit: $14,000

• Your loan: $511,000 (versus $665,000 with a 5% deposit and no scheme)

• Monthly repayment saving: approximately $900 to $1,100 per month at current rates

The trade-off is that you share the capital gain proportionally when you sell. If the property grows by $200,000 and the government contributed 25%, they are entitled to $50,000 of the gain.

Bottom line: Help to Buy is powerful for lower-to-middle income earners who qualify. The income cap and limited lender panel constrain accessibility, but the repayment reduction is substantial for eligible buyers.

Pathway 4: The First Home Super Saver Scheme (FHSS)

The First Home Super Saver Scheme allows first home buyers to make voluntary super contributions and later withdraw them for a home deposit, with a tax advantage on the way in.

The mechanics are straightforward but the ATO processing time is the detail most buyers miss. How it works:

• Make voluntary concessional or non-concessional contributions to your super fund

• Contributions are taxed at 15% inside super rather than your marginal rate

• You can withdraw up to $50,000 of eligible contributions plus associated earnings

• Apply through the ATO for a release authority, then your fund pays the amount to you or your lender

• The ATO processing time is typically 15 to 25 business days; factor this into your purchase timeline

The tax advantage in practice:

• A contribution of $20,000 by someone in the 37% marginal bracket is taxed at 15% inside super, saving approximately $4,400 compared to saving from after-tax income

• Over two to three years of contributions, the tax saving on $50,000 of contributions could be $10,000 to $16,000

The scheme has specific limitations worth understanding before building your timeline around it:

• It cannot be used for properties already contracted

• Applications require ATO approval before exchange of contracts

• The property must become your principal place of residence

What if you've been saving for a deposit in a bank account when you could have been saving in super, at a lower tax rate, and withdrawn it for exactly this purpose? The FHSS is one of the most underused first home buyer strategies in Australia.

Bottom line: The FHSS produces a genuine tax saving and can meaningfully accelerate deposit savings for buyers in middle and higher tax brackets. The ATO processing time means planning ahead is essential.

The Costs Beyond the Deposit

The deposit is the headline number. These are the costs that catch buyers off guard on settlement day.

Stamp duty is typically the largest additional cost. First home buyer concessions vary significantly by state.

Stamp duty concessions vary significantly by state. This is one of the biggest sources of confusion for first home buyers, as what applies in Queensland is very different from what applies in Victoria. State stamp duty concessions for first home buyers in 2026 include:

• NSW: Full exemption on properties up to $800,000, concession on $800,000 to $1,000,000

• VIC: Full exemption up to $600,000, concession up to $750,000

• QLD: Full concession up to $700,000 under the First Home Concession

• WA: Full exemption up to $430,000, concession up to $530,000

• SA: No specific stamp duty exemption for first home buyers as at 2026

Always verify current thresholds with the relevant state revenue office, as these change.

Bottom line: Most first home buyers need an additional $15,000 to $50,000 beyond the deposit to cover upfront costs, depending on the state and property price. Plan for the total cash required, not just the deposit.

Not sure exactly how much you need to have saved before you can buy? WIAA offers a free 15-min chat to help you work out the total cash you need, deposit, stamp duty, fees, and buffer, for your specific state and purchase price. No cost, no obligation. Call 1800 942 843 or book online.

How the Schemes Stack

This is the section most guides miss. Each scheme above has value on its own, but the real question for first home buyers is how they combine. The answer, for many buyers, is that the schemes are designed to stack, and stacking them is where the biggest upfront cost savings sit.

The schemes are designed to be stackable. A first home buyer in Queensland could access the First Home Guarantee (no LMI), the Queensland First Home Concession (reduced stamp duty), and the FHSS (tax-advantaged deposit savings) simultaneously.

Bottom line: The combination of schemes can reduce upfront costs by $40,000 to $75,000 or more for eligible buyers, depending on the state and purchase price.

Want to know which of these schemes you actually qualify for? Eligibility depends on your income, savings, state, and property price. Book a free 15-min chat with WIAA and we'll tell you exactly where you stand. Phone 1800 942 843 or book online.

Two First Home Buyer Examples

Example 1: Sophie, 28, Buying in Brisbane with the First Home Guarantee

Sophie earns $110,000 as a marketing manager and has saved $60,000. She is targeting a property around $750,000 in a Brisbane suburb within the First Home Guarantee cap.

Her deposit plan:

• 5% deposit on $750,000 = $37,500

• First Home Guarantee eliminates LMI (saving approximately $22,000)

• Queensland First Home Concession reduces stamp duty to approximately $3,500 (versus $28,000 without the concession)

• Total upfront costs including legal fees and inspections: approximately $44,500

• Cash buffer retained: $15,500

Without the First Home Guarantee and stamp duty concession, Sophie would need approximately $87,000 in upfront costs. The schemes reduce this by approximately $42,500, meaning she can buy now rather than saving for another 2 to 3 years.

Example 2: James and Claire, Both 32, Using FHSS Plus First Home Guarantee

James earns $95,000 and Claire earns $85,000. Over three years, both have made voluntary super contributions of $15,000 each through the FHSS, plus their regular savings. They are targeting a $900,000 property in Melbourne within the $950,000 price cap.

Their deposit plan:

• FHSS withdrawal: $30,000 combined (both withdrawing $15,000)

• Additional savings: $45,000

• Total deposit: $75,000 (approximately 8.3% of purchase price)

• First Home Guarantee covers the gap to 20%, eliminating LMI (saving approximately $28,000)

• Victorian stamp duty concession applies on a partial basis given the property price

• Total upfront costs: approximately $90,000 all-in

Without the FHSS tax advantage, James and Claire would have saved approximately $5,000 to $8,000 less over the three years due to higher tax on their savings. Without the First Home Guarantee, they would have paid $28,000 in LMI. The combined benefit is approximately $33,000 to $36,000.

Common Mistakes First Home Buyers Make

Planning only for the deposit and forgetting upfront costs. Stamp duty, legal fees, inspections, and a cash buffer can add $15,000 to $50,000 on top of the deposit. Many buyers arrive at settlement underfunded.

Assuming the First Home Guarantee has income caps or place limits. From 1 October 2025, both restrictions were removed. Many buyers who think they do not qualify actually do. Check your eligibility again if you were previously told no.

Not applying for the FHSS early enough. The ATO processing time is 15 to 25 business days. Applying after exchange of contracts is too late.

Buying above the First Home Guarantee price cap. Buyers who target properties above the cap lose the scheme entirely, even if they meet all other criteria. Know your state's cap before searching.

Confusing the First Home Guarantee with free money. The guarantee eliminates LMI but does not reduce the loan. At 95% LVR, repayments are higher than at 80% LVR. Ensure the loan is genuinely serviceable before committing.

Ignoring Help to Buy because of the income cap. Some buyers close to the threshold restructure their income (through salary sacrifice into super, for example) to fall within the cap. Worth modelling before ruling out.

Not using a mortgage broker for government scheme applications. Scheme applications go through participating lenders, not Housing Australia directly. A mortgage broker who regularly works with these schemes can navigate the process far more efficiently than a first-time applicant going direct.

FAQ

What is the minimum deposit to buy a house in Australia? Most lenders require a minimum of 5% of the purchase price. With the First Home Guarantee, eligible first home buyers can purchase with 5% and avoid LMI. With Help to Buy, the minimum is 2% for eligible applicants. Without any scheme, most lenders will lend at 5% but LMI applies below 20%.

Do I need 20% deposit to buy a home in Australia? No. 20% avoids LMI, but it is not the minimum requirement. Government schemes like the First Home Guarantee and Help to Buy allow eligible buyers to purchase with significantly less. Whether a smaller deposit makes sense depends on your specific situation, the LMI cost, and your cashflow after purchase.

What is the First Home Guarantee and how does it work? The First Home Guarantee allows eligible first home buyers to purchase with a 5% deposit without paying LMI. The government guarantees the remaining 15% to the lender. As of October 2025, there are no income caps and unlimited places. Property price caps apply and vary by state and region.

Can I use my superannuation to buy my first home? Yes, through the First Home Super Saver Scheme. You can make voluntary contributions to your super fund and withdraw up to $50,000 of eligible contributions plus associated earnings for a first home deposit. The tax advantage compared to saving from after-tax income can be $10,000 to $16,000 or more.

Can I use both the First Home Guarantee and the FHSS at the same time? Yes. The First Home Guarantee and FHSS can be used together. You contribute to super through FHSS, withdraw those funds as part of your deposit, and then access the First Home Guarantee to avoid LMI at 5% deposit. This is one of the most effective combinations for buyers in middle tax brackets.

What happens if I buy above the First Home Guarantee price cap? You lose access to the scheme entirely for that purchase, even if you meet all other eligibility criteria. The cap varies by state and whether you're buying in a capital city or regional area. If your target property is close to the cap, talk to a broker about whether there are comparable properties within the cap before committing to a higher-priced property.

What grants are available for first home buyers in Queensland? Queensland first home buyers can access the $15,000 First Home Owner Grant for new builds (verify current eligibility dates with the Queensland Revenue Office), the First Home Concession reducing stamp duty, and the federal First Home Guarantee. Combined, these can reduce upfront costs by $40,000 to $60,000 or more for eligible buyers. Brisbane property prices currently sit within the $1,000,000 state cap for the First Home Guarantee, making most inner-Brisbane and suburban properties eligible. WIAA's Brisbane team regularly helps Queensland first home buyers navigate the combination of these schemes.

Is stamp duty included in the deposit? No. Stamp duty is a separate upfront cost paid at settlement, in addition to the deposit. First home buyer concessions in most states reduce or eliminate stamp duty on properties below specific thresholds. Plan for stamp duty as a separate line item beyond the deposit.

How long does it take to save a deposit in Australia? At current property prices and average savings rates, saving a 20% deposit in Sydney or Brisbane can take 7 to 12 years for a single buyer on average income. Government schemes reduce the required deposit to 2% to 5%, cutting the savings timeline to 2 to 4 years for many buyers.

Ready to Work Out Your Path to Ownership?

The deposit is just the starting point. The real question is which combination of schemes, savings, and structure gets you into your home the fastest, and at the lowest total cost.

Two ways to take the next step:

• Free 15-minute chat: tell us your income, savings, and target property price and we'll map your fastest path to ownership. Call 1800 942 843 or book online.

• Not ready to chat yet? Start by working out your scheme eligibility and total upfront costs. Book online and we'll send you a quick summary of what you're entitled to before the call.

Still asking what if about your first home? Let's work out your fastest path.

WIAA has helped 1,000+ Australians across every stage of their financial journey, from first home buyers to pre-retirees, with offices in Brisbane and Melbourne and virtual advice Australia-wide. AFSL 528250.

General Advice Disclaimer: This information is general in nature and does not take into account your personal financial situation, needs, or objectives. You should consider whether it is appropriate for you and seek personal financial advice before making any decisions. Scheme eligibility criteria, property price caps, and government programs are subject to change. Always verify current rules with Housing Australia, the ATO, and the relevant state revenue office before making decisions. What If Advice is an Authorised Representative under Beryllium Advisers Pty Ltd, AFSL 528250.