How Much Deposit Do I Need to Buy a House? 5%, 10% or 20%

How much deposit do I need to buy a house? The most useful answer is a dollar budget, not a single percentage. Your savings need to bridge the gap between the purchase and the approved loan, cover transaction costs and leave enough money for life after settlement.

Quick answer

How much deposit do I need to buy a house? Start with the purchase price minus the loan you can obtain, then add buying costs and a cash buffer. A 20% deposit can avoid common high-LVR costs, but smaller deposits may be possible. Eligibility, valuation and affordable repayments matter as much as the percentage.

How much deposit do I need to buy a house at my target price?

Start with an approximate property price and work backwards from a realistic loan amount. Moneysmart’s deposit guidance explains that borrowing capacity and buying costs belong in the calculation, not just the amount saved towards the property itself.

A basic planning equation is purchase price plus buying costs plus retained cash buffer, minus loan funds and any separately confirmed assistance available at the required time. The result is the amount of your own cash needed. Check that each component is counted only once.

For example, a hypothetical $700,000 purchase funded by a $630,000 loan leaves a $70,000 price gap. If buying costs are $25,000 and you want to retain $15,000, the cash target becomes $110,000. The costs and buffer are invented allowances, not a state stamp-duty calculation or a recommended emergency-fund amount.

Compare 5%, 10% and 20% on the same property

The table below isolates the deposit percentage. It assumes the lender accepts the $700,000 value and excludes buying costs, LMI and any amount added to the loan.

These are arithmetic scenarios, not offers. A lender may not approve every option, and a support scheme may have separate conditions. If fees or LMI are financed, the final loan and LVR can differ from the simple table.

The gap between 5% and 20% is $105,000 of additional cash towards the price. That same amount reduces the base loan, but gathering it may take time. The right comparison needs to acknowledge both sides without assuming buying sooner or waiting is universally better.

A smaller deposit changes the repayment budget

Using the same hypothetical 6% annual interest rate and 30-year principal-and-interest term, the base loans above produce approximate monthly repayments of $3,987, $3,777 and $3,357 respectively. This standard monthly amortisation example assumes an unchanged rate and no fees, offsets or extra repayments.

The 5% scenario therefore requires about $630 more each month than the 20% scenario under those assumptions. The rate is illustrative, not a current lender quote. Real rates may also differ by LVR, so request pricing for the actual structure rather than assuming all three receive the same rate.

Test a higher rate and an income change as well. Moneysmart’s home-loan selection guide encourages borrowers to consider affordability beyond the initial repayment. A loan that fits only while every expense and income source remains unchanged may leave little room for ordinary setbacks.

Add buying costs before calling the deposit complete

Ask your conveyancer or solicitor for the expected transaction costs and timing. Depending on the purchase, these can include transfer duty, registration, legal work, searches and inspections. State concessions and exemptions can change the amount, but eligibility must be checked rather than assumed.

Also budget for lender fees, moving and any immediate essential work at the property. An inspection may identify expenses that are not part of settlement but still need cash soon afterwards. Keep those separate from optional furnishing upgrades.

Avoid copying another buyer’s total costs from a different state or price bracket. Even two purchases at the same price can have different concessions, property types and financing arrangements. Use a specific written estimate as the purchase becomes more definite.

Understand LMI without treating it as borrower protection

Moneysmart notes that an LVR above 80% may require lenders mortgage insurance. LMI protects the lender if the borrower cannot repay; it is not income protection for the household. Some arrangements can avoid it, but that needs to be confirmed for the proposed loan.

Ask for the actual premium and whether it must be paid in cash or can be added to the balance. If financed, it becomes part of the debt on which interest may be charged. A smaller cash requirement at settlement can therefore come with a larger ongoing loan.

Our lenders mortgage insurance guide covers that cost in more detail. Do not use a generic online estimate as a final settlement figure when the lender has not assessed the transaction.

Valuation risk can create a cash shortfall

The purchase price and lender’s valuation are not guaranteed to match. Suppose a lender is prepared to advance 80% of an assessed $680,000 value on a $700,000 purchase. That is $544,000, leaving $156,000 towards the price before other costs, rather than the $140,000 assumed from 80% of the purchase price.

This example does not predict a valuation outcome. It shows why an apparently complete percentage deposit can become insufficient. Ask the lender how it calculates the relevant value and discuss suitable finance conditions with your legal adviser before committing.

Do not rely on an estate agent’s price view as confirmation of lending. The lender’s assessment of the security and the borrower are separate steps, and either can affect the funds ultimately available.

Keep the contract deposit and settlement funds distinct

The amount payable when contracts are exchanged or an auction is completed is governed by the transaction terms. It is not automatically the same as the total equity contribution the lender expects by settlement.

Ask your conveyancer to map each payment date, including the contract deposit, remaining balance and adjustments. Ask the lender when approved funds will be available. This timing exercise matters even if the overall savings total looks sufficient.

Never assume a grant, family contribution or other assistance arrives before a particular payment deadline. Confirm its availability and documentation. A funding source that arrives after money is due does not solve the immediate shortfall.

Low-deposit support is not automatic approval

Government guarantees, shared-equity arrangements, grants and family assistance work differently. A guarantee is not necessarily cash paid into your account, and shared equity can involve a different ownership structure. Check the official current program and participating lender requirements for any option you are considering.

This guide deliberately does not substitute a generic scheme promise for a lender assessment. Confirm eligibility, property limits, occupancy conditions and the effect on total costs before building assistance into the budget.

If family members are providing a gift, loan or guarantee, describe it accurately to the lender and obtain appropriate independent advice. A repayable family loan is not the same financial commitment as an unconditional gift.

Build a deposit plan you can maintain

Set a target range rather than one number with false precision. Track the price contribution, estimated purchase costs and retained buffer separately. Update the estimate when the target area, property type or loan amount changes.

A regular savings record can help you understand what repayments might feel like, but ownership brings additional costs. Include council rates, insurance, maintenance and any strata expenses in the post-purchase budget. Do not equate current rent with the entire future housing bill.

Use our home-loan borrowing capacity guide to prepare the income and commitments side, and pre-approval guide to understand conditional lending decisions. A calculator result is not a reason to make an unconditional purchase commitment.

Before making an offer

Reconcile the proposed price, lender valuation assumptions, available loan, cash contribution, buying costs and payment dates. Keep a separate amount for the buffer you intend to retain. Ask the lender and legal adviser to explain any mismatch before signing.

The CompareUs Editorial Team reviewed the linked government guidance on 28 September 2026. The examples are general education and do not determine your eligibility or recommend a particular deposit strategy. Obtain current lending and legal advice for the actual purchase.