Find out how much deposit you need to buy a house in Australia in 2026. Compare 5%, 10% and 20% deposits, LMI costs, government schemes and real examples.
Let's cut straight to it. The "standard" deposit to buy a house in Australia is 20% of the purchase price. But here's the thing — you don't actually need 20% to get into the property market in 2026. Plenty of Aussies are buying homes right now with far less.
Here's how the three main deposit levels stack up:
This is the magic number that avoids Lenders Mortgage Insurance (LMI) entirely. On a $700,000 property, that's $140,000 in savings. For Melbourne's median house price of around $983,000, you're looking at roughly $196,600. That's a hefty chunk of change, and let's be honest — saving that much while paying Melbourne rent feels like running on a treadmill sometimes.
The upside? You'll borrow less, pay less interest over the life of your loan, and have lower monthly repayments. Banks also tend to offer you their sharpest rates when you've got 20% skin in the game.
A solid middle ground. On a $700,000 home, that's $70,000 — half of what you'd need for 20%. You will cop LMI (more on that shortly), but it gets you into the market years earlier. Many lenders are comfortable at this level, and there are decent rate options available.
The minimum most lenders will accept. On a $700,000 property, that's just $35,000. The trade-off is higher LMI costs and a bigger mortgage, but combined with government schemes (which we'll cover in Section 3), a 5% deposit can be a legitimate path to homeownership.
Your deposit isn't the only cash you'll need at settlement. Budget for:
A good rule of thumb: budget an extra 3–5% of the purchase price on top of your deposit for these additional costs. So if you're buying a $700,000 home with a 10% deposit, you'd want around $91,000–$105,000 in total savings.
LMI is probably the most misunderstood cost in the home-buying process. Here's the straight story: Lenders Mortgage Insurance protects the bank, not you. It kicks in whenever you borrow more than 80% of a property's value (meaning your deposit is less than 20%). The bank makes you pay for it, but it's there to cover their risk if you default.
Sounds rough, right? But it's actually what makes low-deposit lending possible. Without LMI, banks simply wouldn't lend to borrowers with less than 20% deposit.
LMI typically ranges from 1% to 5% of your loan amount, depending on your Loan-to-Value Ratio (LVR) and the size of your loan. The less deposit you have and the bigger the loan, the more LMI costs. Here are some real-world examples based on 2026 figures:
As you can see, the jump from a 10% deposit to a 5% deposit roughly doubles your LMI bill. That's a significant consideration.
Most borrowers add LMI to their home loan (called capitalisation). So instead of paying $15,000 upfront, you roll it into your mortgage and pay it off over 25–30 years. The catch is you'll also pay interest on that LMI amount — so a $15,000 LMI premium might cost you closer to $25,000 over the full loan term.
Some lenders do let you pay LMI upfront at settlement, which saves you interest in the long run. It's worth weighing up both options.
Look, nobody loves paying LMI. But here's a reality check: if Melbourne property prices grow at even a conservative 4–5% a year, a $700,000 home could be worth $735,000 in just 12 months. That $28,000–$35,000 in growth can easily outstrip a $15,000 LMI premium. Sometimes getting into the market earlier — even with LMI — is a better financial move than waiting years to save 20%.
Of course, that maths doesn't work for everyone. That's exactly why it's worth sitting down with a broker who can model both scenarios for your specific situation. At Brokio, we run the numbers so you can make the call with confidence, not guesswork.
The Australian Government and Victorian State Government have rolled out several schemes that make it significantly easier to buy a home with a smaller deposit. Here's what's available in 2026:
This is the big one. Under the First Home Guarantee, eligible first home buyers can purchase a property with just a 5% deposit and pay zero LMI. The government essentially acts as your guarantor for the remaining 15%, meaning the bank treats you as if you've got a 20% deposit.
From 1 October 2025, the scheme was expanded with some seriously generous changes:
For buyers in the western suburbs of Melbourne — places like Williams Landing and Point Cook — this is a game-changer. With a median house price around $879,000 in Williams Landing, the $950,000 cap means most properties in the area are now eligible.
Launched in late 2025, the Help to Buy scheme is a shared equity program where the government co-purchases your home with you. You bring as little as a 2% deposit, and the government contributes:
No LMI is payable. The government's share is essentially a silent co-ownership — no repayments required on their portion. When you sell (or can afford to), you buy the government out at the then-current market value.
Eligibility requirements:
For someone buying a $700,000 home, the government could chip in up to $210,000. You'd only need a mortgage of around $476,000 plus your $14,000 deposit. That dramatically reduces your repayments.
Victoria offers a $10,000 grant for first home buyers purchasing or building a new home valued at up to $750,000. This won't help with established homes, but if you're looking at a new build or house-and-land package in Melbourne's growth corridors, it's essentially $10,000 added straight to your deposit.
First home buyers in Victoria get a full stamp duty exemption on properties valued up to $600,000 and a sliding concession on properties between $600,001 and $750,000. On a $600,000 property, that's a saving of around $31,000. These concessions apply to both new and established homes.
If you've got parents or close family members who own property, a guarantor home loan could be your fastest path into the market — potentially with zero deposit and zero LMI.
A guarantor home loan lets a family member (usually a parent) offer a portion of their property's equity as additional security for your mortgage. They're not giving you cash and they're not going on the loan — they're simply allowing the bank to use a slice of their home equity as a safety net.
Here's a typical setup:
Some borrowers even go in with no cash deposit at all, with the guarantor covering the full 20%. Though most brokers (us included) recommend contributing at least some savings to keep your loan balance manageable.
It's not all sunshine. Your guarantor needs to understand what they're signing up for:
That said, guarantor loans are extremely common in Australia and, when structured properly, the risk is manageable. The guarantee is typically limited to a specific dollar amount (not the whole loan), and most guarantors are released within 3–5 years as the borrower builds equity.
Let's say Sarah and Tom want to buy a townhouse in Point Cook for $650,000. They've saved $32,500 (5%). Without a guarantor, they'd pay roughly $12,000–$16,000 in LMI. Instead, Tom's parents guarantee $97,500 using equity from their home. The bank treats the loan as 80% LVR — no LMI, competitive rate, and Sarah and Tom are in their new home years earlier than expected.
At Brokio, we structure guarantor loans regularly for families in Melbourne's western suburbs. We handle the paperwork, coordinate with the guarantor's bank (if different from yours), and make sure everyone understands exactly what they're agreeing to. If you're curious whether this option could work for your family, get in touch with us — it's a free, no-obligation chat.
Theory is great, but let's look at real numbers for the kinds of properties people are actually buying around Melbourne in 2026. We'll break down what you'd need at each deposit level, including estimated LMI and additional costs.
First home buyer? You'd likely pay zero stamp duty (under $600,000 threshold) and could receive the $10,000 FHOG if it's a new build.
Stamp duty on a $750,000 established home in VIC would normally be around $40,000, but first home buyers get a partial concession that could reduce it significantly.
The difference between the cheapest and most expensive path into a $750,000 home is roughly $100,000–$120,000 in upfront cash. That's potentially 5–8 years of saving for many households. Understanding your options isn't just useful — it can literally change when (or if) you become a homeowner.
These examples are ballpark figures — your exact costs will depend on your lender, your LVR, your first home buyer status, and the specific property. That's why getting personalised advice from a broker who knows the Melbourne market makes a real difference.
You might be wondering — can't I just go straight to my bank? Of course you can. But here's what a mortgage broker brings to the table that your bank simply can't.
Your bank will offer you their products at their rates. A mortgage broker compares options across dozens of lenders — major banks, second-tier lenders, credit unions, and specialist lenders. Different lenders have different risk appetites, different LMI providers, and different rate structures. A broker finds the best fit for your situation.
With the First Home Guarantee, Help to Buy, the FHOG, stamp duty concessions, and various state-specific programs, the landscape is genuinely complex. Not every lender participates in every scheme, and the eligibility criteria differ. A broker who works with these schemes daily can tell you in minutes what you qualify for — and which combination of schemes stacks the most savings.
There's more to a home loan than the interest rate. Should you capitalise your LMI or pay it upfront? Is a guarantor structure the right call? Would you be better off with a fixed rate, variable rate, or split? What about offset accounts and redraw facilities? These decisions can save (or cost) you tens of thousands of dollars over the life of your loan.
Applying for a home loan involves mountains of paperwork — payslips, bank statements, tax returns, statutory declarations, and more. A broker prepares your application, checks it for completeness, and submits it to the lender on your behalf. If the bank comes back with questions (and they will), your broker handles it. You focus on finding your dream home.
Here's the kicker: mortgage brokers in Australia are typically paid by the lender, not by you. Our service is free to you as the borrower. There's genuinely no downside to getting expert advice before making the biggest financial decision of your life.
At Brokio, we specialise in helping first home buyers and growing families across Melbourne's western suburbs — Williams Landing, Point Cook, Werribee, Truganina, and beyond. Maulik and the team have helped hundreds of buyers get into their homes sooner than they thought possible.
Whether you've got 2% saved or 20%, we'll map out every option, run the numbers, and find you the sharpest deal across 30+ lenders. No jargon, no pressure — just straight-up advice from a local broker who gets it.
Book a free consultation with Brokio today and let's figure out how to get you into your home sooner.
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