How Much Deposit Do You Need to Buy Property in Australia?

When you purchase a property, the purchase price is generally made up of two parts: the amount you borrow (the loan) and the amount you contribute from your own funds (the deposit).

The deposit is paid to the vendor's solicitor or conveyancer at or before settlement, and is applied toward the purchase price. It is not a separate cost on top of the purchase price — it is a portion of it.

The deposit amount is usually expressed as a percentage of the purchase price. For example, a 20% deposit on a $600,000 property would be $120,000, with the remaining $480,000 borrowed from a lender.

Deposit requirements vary between lenders, loan products and individual borrower circumstances. There is no single universal deposit requirement that applies to all buyers.

Loan-to-Value Ratio (LVR) is the loan amount expressed as a percentage of the lender's assessed value of the property. Lenders use LVR as a measure of lending risk.

Example: You purchase a property for $800,000 and borrow $640,000. Your LVR is ($640,000 ÷ $800,000) × 100 = 80%.

An LVR of 80% means the loan represents 80% of the property's value, and your deposit represents the remaining 20%. Many lenders treat 80% LVR as a threshold above which additional requirements — such as LMI — may apply. However, lender policies differ and you should confirm requirements with your lender.

Note that some lenders use a valuation figure rather than the purchase price when calculating LVR. If the lender's valuation is lower than the purchase price, a higher deposit may be required to achieve the same LVR.

Lenders Mortgage Insurance (LMI) is a one-off insurance premium that many lenders require when the LVR exceeds 80%. It is designed to protect the lender in the event that a borrower defaults and the property is sold for less than the outstanding loan amount.

The LMI premium is calculated based on the loan amount and the LVR. It can be a significant cost and is typically either added to the loan (capitalised) or paid as an upfront lump sum, depending on the lender.

Not all lenders require LMI at the same LVR threshold. Some specialist lenders or loan products may have different LMI requirements. Whether LMI is required, and how much it costs, should be confirmed with your lender or a licensed mortgage broker.

• LMI protects the lender, not you as the borrower.
• LMI does not reduce your loan obligation if your property is sold for less than the outstanding balance.
• The LMI premium is not a deposit — it is an additional cost.
• LMI costs vary by lender, insurer, loan amount and LVR.
• Capitalising LMI into your loan increases your total loan balance and the interest you pay over the loan term.

A common misconception is that saving for the deposit is all that is required before purchasing. In practice, buyers typically need additional funds to cover costs payable at or before settlement.

The specific costs and amounts will vary depending on the state or territory, the lender, the property type, the purchase price and the buyer's individual circumstances. The following are examples of costs that may apply — this is not a complete list and not all costs will apply in every situation.

The above is general information only. Always confirm expected costs with your conveyancer, lender and the relevant state or territory authority. We do not display stamp duty, grant or concession figures as these change frequently.

The deposit required to purchase a property is not fixed. It is influenced by a range of factors, including:

• Lender policies: Different lenders have different minimum deposit requirements and LVR thresholds for various loan products. What one lender accepts may differ from another.
• Loan product type: Owner-occupier and investment loans may have different LVR limits. Low-documentation loan products may have stricter deposit requirements.
• Property type and location: Some lenders apply lower maximum LVRs to certain property types (such as high-density apartments, properties in regional areas or properties above a certain value), which may increase the effective deposit required.
• Borrower credit history: A lender may require a larger deposit or apply stricter conditions for borrowers with adverse credit history.
• Genuine savings requirements: Some lenders require that a proportion of the deposit be demonstrably saved by the borrower over a defined period, rather than received as a gift or windfall.
• First home buyer schemes: Various government schemes may affect the effective deposit required for eligible first home buyers. Eligibility criteria and availability change. Always verify current information with the relevant government authority.
• Lender valuation: If the lender's valuation of the property is lower than the purchase price, the LVR is calculated on the lower figure, which may increase the effective deposit required.