The right deposit is not the biggest one you can scrape together
Most people back into their deposit target. They save what they can, and when it hits a round number, they start looking. That approach ignores the trade-offs covered in this lesson: the cost of lenders mortgage insurance, the availability of government schemes, the role of family help, and the of waiting.
- The median Australian dwelling sits above $800,000, meaning a 20% deposit requires roughly $160,000 in savings .
- National dwelling values rose 8.6% in 2025 alone, so the target keeps moving while you save .
- 14% of recent first home buyers had zero savings left after buying, and 33% had less than $10,000 remaining .
A deliberate deposit target weighs four things: how much lenders mortgage insurance you will pay (or avoid), how long it will take to save, what happens to property prices while you save, and what government schemes you qualify for.
The deposit decision is a trade-off, not a formula
Here is what a $700,000 property looks like at four deposit levels. The loan amount, estimated LMI, and total interest paid assume a 6.2% interest rate over 30 years .
5% deposit | 10% deposit | 15% deposit | 20% deposit | |
|---|---|---|---|---|
Deposit amount | $35,000 | $70,000 | $105,000 | $140,000 |
Loan amount | $665,000 | $630,000 | $595,000 | $560,000 |
Estimated LMI | $31,800 | $13,200 | $5,500 | $0 |
Monthly repayment | ~$4,070 | ~$3,860 | ~$3,640 | ~$3,430 |
Total interest (30 yrs) | ~$799,000 | ~$757,000 | ~$715,000 | ~$673,000 |
Govt scheme eligible | Yes (5% Deposit Scheme) | No LMI with scheme | Not applicable | Not applicable |
LMI estimates based on typical insurer rates for owner-occupier purchases . Your actual LMI will vary by lender and insurer.
Three factors decide your number
1. LMI cost vs. time cost. Lenders mortgage insurance is a real expense. On a $700,000 property, the difference between a 5% and 10% deposit is roughly $18,600 in LMI savings . But saving that extra $35,000 at $2,000 per month takes about 17 months. If property prices rise 5% in that time, the property is now worth $735,000 and you have lost $35,000 in equity you would have gained by buying earlier. If your expected LMI saving is less than the expected price growth during the time it takes to save the difference, buying sooner is cheaper. In a flat or falling market, waiting costs you less.
2. Government schemes change the maths. Since October 2025, the Australian Government has been open to all first home buyers with no income cap and no cap on places . If you qualify, a 5% deposit gets you into a property with no LMI at all. Before the scheme existed at this scale, buying with 5% meant paying $25,000 to $48,000 in LMI on a typical property . Now it means paying $0. If you are a first home buyer (or have not owned property in the past 10 years), a 5% deposit with the government guarantee is worth serious consideration.
3. Your buffer after purchase. The Finder First Home Buyer Report 2025 found that 14% of recent first home buyers had no savings left after buying, and 33% had less than $10,000 remaining . Almost half (47%) paid more than they budgeted .
Your deposit target should leave you with at least 3 months of mortgage repayments in a , plus enough to cover moving costs, immediate repairs, and the first round of council rates and insurance. Draining every dollar into your deposit is a risk, not a strategy.
A framework, not a formula
Use this framework to narrow your target.
Start at 5% if:
- You are eligible for the Australian Government (first home buyer or no property ownership in the past 10 years).
- Your income comfortably supports repayments on 95% of the purchase price, tested at a 2-percentage-point buffer.
- You will retain a cash buffer of at least 3 months of repayments after settlement.
Target 10% if:
- You are not eligible for the 5% Deposit Scheme.
- You want to reduce LMI (roughly $18,000 less than a 5% deposit on a $700,000 property) .
- Your local market is growing moderately and you do not want to wait another 1-2 years.
Target 15-20% if:
- You are not a first home buyer and cannot access the government scheme.
- Your local market is flat or falling, meaning waiting does not cost you equity.
- You want the lowest possible monthly repayments and total interest.
- You have family assistance or existing equity that makes a larger deposit achievable without years of additional saving.
The number that matters is not the deposit
Your deposit target is not actually about the deposit. It is about the total upfront cost: deposit plus stamp duty plus conveyancing plus building inspections plus moving costs. On a $700,000 property, these additional costs typically add $25,000 to $40,000 on top of your deposit (less if you qualify for stamp duty concessions as a first home buyer).
Set your savings target as deposit plus buying costs plus buffer, not deposit alone.