First Home Buyer Deposit Guide

How much deposit do first home buyers really need?

The honest answer is: it depends on the path you want to use, how quickly you want to buy, and how comfortable the repayments feel after settlement. Plenty of first home buyers are told to “just save 20%”, but that is only one path. In practice, most buyers weigh three broad options:

• 5% deposit: fastest way in if you fit the current Australian Government low-deposit rules and the lender and property type line up.
• 10% deposit: a common middle ground when you want more lender choice but are not ready to wait for 20%.
• 20% deposit: usually the cleanest path for lender choice and pricing, and it often avoids LMI without needing a guarantee scheme.

The mistake is treating “deposit” as the whole number. Your actual buying target is usually deposit + buying costs + buffer. If saving to 20% means you buy years later or leaves you cash-poor after settlement, a smaller deposit can be the stronger move if the rest of the plan is sound.

The main deposit paths: 5%, 10% and 20%

Each deposit path changes your loan size, your likely repayments, your lender options and whether LMI or a guarantee scheme becomes relevant.

If you are buying as soon as possible, the 5% path is now much more relevant than it used to be because the Australian Government 5% Deposit Scheme has had its settings expanded from 1 October 2025, including no income caps and no place limits for eligible first home buyers. You still need to fit the property cap, lender and home type rules, but the path is now genuinely mainstream rather than niche.

If you are comparing a smaller deposit with a standard insured loan, pair this page with the LMI guide. If family support is genuinely on the table, compare it with the guarantor guide before assuming cash savings are the only answer.

If you are close to 10% or 15%, the decision is often about whether paying LMI to buy sooner is smarter than waiting another year or two. That is where a broker’s job is not just to “get approval”, but to compare how each path changes your total cost and your cash buffer after settlement.

Where your deposit can come from

Lenders do not just look at the amount of the deposit. They also care about where it came from and how clearly it can be evidenced.

• Savings: the cleanest source because it shows saving behaviour and bank conduct.
• Gifted funds: workable, but usually requires a gift letter and clear bank statement trail.
• FHSS release: can help accelerate the deposit if you have used the First Home Super Saver Scheme.
• Family guarantee: can reduce the cash deposit needed by using a guarantor’s property as extra security.
• Sale proceeds or inheritance: possible, but lenders still want the funds trail to be obvious and seasoned where required.

When buyers run into trouble, it is often because the money moved around between accounts without a clean explanation. Keep the paper trail simple. If funds are gifted, document them clearly. If the money is yours, keep statements showing the build-up. If you are relying on FHSS or a guarantor, line that up before you are emotionally attached to a property.

Deposit is not the whole number: budget for costs and buffer

A deposit target on its own can be misleading. You still need cash for:

• conveyancing / solicitor fees
• building and pest inspections (where relevant)
• valuation or application costs if charged
• moving and connection costs
• insurance and initial property set-up costs
• stamp duty or transfer duty, if applicable in your state

Then you need a buffer. The strongest first home buyer files are not just “approved” - they are comfortable. A small cash buffer after settlement can matter more than the difference between a 10% and 12% deposit. That is especially true if you are buying with a high LVR, moving out of home for the first time, or entering the market during an uncertain rate environment.

Genuine savings, gifts and what lenders look for

Some lenders still care about genuine savings - not just whether you have the money today, but whether you have shown a pattern of saving over time. Rent history can also help show you can manage housing costs, but policy varies by lender.

Gifted deposits are common, but the lender typically wants:

• a signed gift declaration confirming it is not repayable
• bank statements showing where the money came from
• clear visibility of the funds landing in your account

If you are mixing gift money, FHSS money and your own savings, it is even more important to keep the trail clean. A broker can tell you quickly which lenders are relaxed about the mix and which ones are stricter.

Common deposit mistakes first home buyers make

1. Saving to the wrong target. Buyers focus on 20% when the better question is “what path gets me in safely?”
2. Ignoring costs. Deposit-only thinking creates settlement stress.
3. Messy funds trail. Money bouncing between family accounts can slow approval.
4. Waiting too long without comparing scenarios. In some cases paying LMI or using a guarantee scheme is cheaper than waiting another two years.
5. Choosing a property before the deposit strategy is clear. That can create pressure to stretch or waive sensible safeguards.

Deposit planning checklist

• Choose your likely buying window: now, 6 months, or 12+ months.
• Map all cash sources: savings, gifts, FHSS, guarantor support.
• Estimate buying costs, not just the deposit.
• Check whether the 5% pathway is realistic for your likely price range and location.
• Work out whether waiting to avoid LMI is actually worth the delay.
• Keep your bank statements and funds trail clean from now on.

Next steps

1. Estimate your likely purchase price range and timing.
2. Work out the full funds required: deposit + costs + buffer.
3. Run the scheme calculator to see whether a 5% path is realistic.
4. Use the guide if you want the full process map, or speak with a broker through the pillar page if you want your numbers checked properly.