How much do you actually need saved before you can buy a home? The answer may be less than you think.
One of the biggest myths about buying a home is that you need to have a 20% deposit saved before you can get started. While a 20% deposit can have advantages, it isn’t a requirement for every home buyer.
Depending on your circumstances, you may be able to buy with a much smaller deposit through government schemes, lender policies, LMI waivers, guarantor arrangements or other options. For some buyers, the deposit required could be 10%, 5% or even as little as 2%.
So, if you’ve been waiting until you reach that 20% milestone before speaking to a mortgage broker, it may be worth finding out what’s possible now.
This guide looks at how much deposit you may actually need, the different options available and what to consider when deciding when you’re ready to buy.
What is Lenders Mortgage Insurance?
Lenders Mortgage Insurance, often called LMI, is a one-off insurance premium that may apply when you borrow more than 80% of a property’s value.
The important thing to know is that LMI protects the lender, not you. If you default on your loan and the lender suffers a loss, LMI helps cover the lender’s risk.
Having a 20% deposit is one way to avoid LMI, but it isn’t the only way. Eligible buyers may also be able to avoid LMI through government schemes, participating lender policies, professional waivers or family guarantee arrangements.
So, before assuming you need to keep saving until you reach 20%, it’s worth understanding the options that may be available to you.
Government schemes that could help you buy sooner
Saving a deposit can be one of the biggest hurdles when buying a home, but there are several government schemes that may help eligible buyers get into the property market sooner.
Australian Government 5% Deposit Scheme
The Australian Government 5% Deposit Scheme can help eligible buyers purchase a home with a smaller deposit without paying Lenders Mortgage Insurance (LMI).
Eligible first home buyers may be able to purchase with a deposit from 5%, while eligible single parents or legal guardians may be able to purchase with a deposit from 2%.
The Australian Government guarantees part of the home loan, which can help eligible buyers purchase sooner without needing to save a 20% deposit.
Help to Buy
Help to Buy is a shared equity scheme that may provide another pathway into home ownership for eligible buyers.
You may be able to purchase with a minimum 2% deposit, with the Australian Government contributing up to 30% of the purchase price of an existing home or 40% of a new home.
Income limits, property price caps and other eligibility requirements apply.
First Home Super Saver Scheme
The First Home Super Saver (FHSS) scheme can help eligible first home buyers save for a deposit through their superannuation.
The scheme allows you to make eligible voluntary contributions to your super and later apply to release those contributions, along with associated earnings, to help purchase your first home.
There are limits on how much can be contributed and released under the scheme, and eligibility and withdrawal requirements apply. It’s important to understand these rules before relying on your super savings as part of your deposit.
ACT Home Buyer Concession Scheme
Eligible Canberra buyers may also be able to avoid conveyance duty (stamp duty) through the ACT Home Buyer Concession Scheme.
For property transactions from 1 July 2026, the previous income threshold and property value cap have been removed, meaning eligible buyers pay no conveyance duty regardless of the property’s value.
Other eligibility requirements still apply, including requirements relating to previous property ownership and residency.
Which option could work for you?
These schemes work in different ways, and in some circumstances you may be able to use more than one form of assistance when buying your home.
Before you start house hunting, we can help you understand which options you may be eligible for, how they could affect the deposit you need and which lenders may be suitable for your circumstances.
Other ways to reduce your deposit
Government schemes aren’t the only option.
Some professions may qualify for an LMI waiver
Certain lenders waive Lenders Mortgage Insurance for eligible professionals.
This may include doctors, dentists, pharmacists, veterinarians, accountants, lawyers, engineers and some allied health professionals.
Each lender has different eligibility criteria, which is why lender selection matters.
Guarantor loans
Some buyers receive assistance from parents or close family members who use equity in their own property as additional security.
Rather than giving you cash, a guarantor can help reduce the amount of deposit required and may also help avoid paying LMI.
This option isn’t suitable for everyone, but for the right families it can be an effective way to enter the market sooner.
What do lenders count as a deposit? (hint: it’s not just ‘Genuine Savings’)
Your deposit doesn’t always have to come entirely from savings.
Depending on the lender, your deposit may include:
- savings
- gifted funds from family
- First Home Super Saver Scheme withdrawals
- proceeds from selling assets
- inheritances
- equity from another property.
Some lenders also require what’s known as genuine savings, while others don’t.
Requirements vary considerably between lenders, which is another reason why choosing the right lender matters.
5 practical ways to grow your deposit faster
If you’re still building your savings, a few small changes can make a big difference.
Create a realistic budget
Know where your money is going and give every dollar a purpose.
Automate your savings
Setting up an automatic transfer each payday removes the temptation to spend what’s left over.
Explore the First Home Super Saver Scheme
Eligible first home buyers may be able to use voluntary super contributions towards their home deposit through the First Home Super Saver Scheme.
Talk to your family
Not everyone has access to family support, but if it’s available, a financial gift or guarantor arrangement may help you reach your goal sooner.
Set the right target
Rather than aiming for an arbitrary 20% deposit, work out what you actually need based on your circumstances.
You may be much closer than you think.
Why strategy matters more than your savings account
Many people assume the size of their deposit determines whether they can buy a home.
In reality, it’s only one piece of the puzzle.
- The right lender.
- The right government scheme.
- The right loan structure.
- The right timing.
All of these can have just as much impact as another $20,000 in savings.
One of the most common conversations we have with first home buyers starts with:
“We’re waiting until we’ve saved a 20% deposit.”
After reviewing their situation, many discover they could already be much closer than they realised.
They may qualify for:
- a government guarantee
- an LMI waiver
- a guarantor loan
- gifted funds
- a lender with more flexible deposit requirements.
Sometimes the answer is still to keep saving.
But many buyers are pleasantly surprised to learn there are more options available than they expected.
That’s why our first conversation isn’t about selling you a home loan.
It’s about understanding your goals, exploring what’s available, and helping you understand the different pathways available and which may suit your circumstances.
Start your savings plan with Clarity
Saving for a home deposit isn’t easy, but you may not need as much as you think.
Before spending years trying to reach a 20% deposit, it’s worth understanding what’s actually possible.
We’ll help you explore government schemes, profession-specific benefits, guarantor options and lender policies to build a strategy that’s right for you.
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