How much deposit do you really need to buy a home in Australia in 2026

You have probably heard the old rule: you need a 20% deposit to buy a home. That figure is not a law — it is a threshold to avoid Lender’s Mortgage Insurance (LMI). In 2026, with the RBA cash rate at 4.35%, the lowest variable rates hovering around 5.69%, and APRA’s 3% serviceability buffer still in effect, the real deposit you need can be much lower or higher depending on your property, your lender, and the scheme you use.

In this article we break down the actual deposit requirement for buyers in 2026. We cover genuine savings rules, gifted deposit policies, LMI thresholds, and the updated First Home Guarantee (FHBG) which from July 2026 removes the income cap and raises price caps in major cities. Whether you’re a first-home buyer or an investor, understanding these numbers will help you plan your purchase with confidence.

The standard 20% deposit myth and reality

A 20% deposit is not mandatory. It is simply the point at which most lenders waive LMI. If you can put down 20% or more, you avoid paying an insurance premium that protects the lender — not you. However, in 2026, over 40% of home buyers still take out a loan with a deposit below 20%, according to APRA data. Lenders routinely accept deposits as low as 5% under the government’s First Home Guarantee or with a lender’s own low-deposit product.

The real deposit you need depends on three factors:

• your property’s price
• the loan amount relative to value (LVR)
• your serviceability under APRA’s buffer and the 6x debt-to-income (DTI) cap introduced in February 2026

For example, a $750,000 home in Melbourne requires a minimum deposit of $37,500 under the FHBG (5%), but a conventional loan at 90% LVR would need $75,000, plus genuine savings verification. The 20% rule would demand $150,000 — a figure many buyers simply cannot reach without gifts or government help.

How much deposit do you really need? (by loan amount)

Let’s compare deposit amounts for different property values using the most common scenarios in 2026. All figures assume a standard variable rate of 5.69% and a 30-year loan term.

Property $600,000 (typical first home in outer suburbs)

• 5% deposit (FHBG): $30,000 + LMI waived (government scheme)
• 10% deposit with LMI: $60,000 + LMI premium (about $8,000–$12,000, can be capitalised into loan)
• 20% deposit no LMI: $120,000

Property $850,000 (Perth’s FHBG cap)

• 5% deposit: $42,500
• 10% deposit: $85,000
• 20% deposit: $170,000

Property $1,000,000 (Brisbane’s FHBG cap)

• 5% deposit: $50,000
• 10% deposit: $100,000
• 20% deposit: $200,000

Property $1,500,000 (Sydney’s FHBG cap)

• 5% deposit: $75,000
• 10% deposit: $150,000
• 20% deposit: $300,000

Notice that a smaller deposit under a scheme reduces your up-front cash requirement dramatically, but you must meet the scheme eligibility criteria (first-home buyer, no income cap from July 2026, property within the caps). For loans above $1.5 million (Sydney) or for investors, the minimum deposit is typically 20% unless you accept LMI — and few lenders offer LMI for properties over $2 million.

Genuine savings rules: what counts and what doesn’t

Most Australian lenders require proof of “genuine savings” when your deposit is below 20%. This rule ensures the money you are using has been accumulated responsibly — not borrowed from another credit source or obtained through a sudden windfall.

In 2026, the typical genuine savings requirement is 5% of the property price held for at least three months in an account you control. That savings can include:

• · Regular salary deposits into a transaction or savings account
• · Term deposits or managed funds held for three months or more
• · proceeds from selling an asset (e.g., shares, car) if you can show ownership for at least six months
• · Rental bond refunds or tax refunds, provided they appear in statements as lump sums

What does not qualify as genuine savings:

• · Borrowed funds (personal loans, credit card advances)
• · Gifted money from family (see next section — gifts are not savings)
• · Cash held outside a bank account (no bank statement)
• · One-off deposits without a savings history

If you use a government scheme like the FHBG, the 5% genuine savings rule is waived — the scheme only requires you to have the 5% deposit, irrespective of source. However, for any conventional low-deposit loan (e.g., 10% deposit with LMI), you must still show that 5% genuine savings. The remaining 5% can come from a gift.

Gifted deposits: rules and documentation in 2026

A gifted deposit is money given to you by a family member (parent, grandparent, sibling) that you do not have to repay. In 2026, many first-home buyers rely on gifts because the genuine savings rule often prevents them from using cash gifts to satisfy the 5% savings test. The rules are:

• · The gift must be unconditional — no expectation of repayment, no loan agreement.
• · The donor must provide a statutory declaration confirming the gift and stating it is not a loan.
• · The funds must be transferred into your account before you apply for pre‑approval. Lenders want to see the money in your statements for at least three months, though some accept one month if the gift is from an immediate family member.
• · If the gift is intended to cover the genuine savings component, many lenders will still treat it as a deposit but may require you to have saved at least 3% yourself. Policy varies — always check with your broker or lender.

The FHBG and other government schemes do not require genuine savings, so a 100% gifted deposit is acceptable under those programs, provided the donor signs the necessary declaration. However, the property price must be within the scheme’s caps, and you must meet the other eligibility criteria (first-home buyer, Australian citizen or permanent resident, intend to live in the property for at least six months).

LMI thresholds: avoiding LMI with lower deposits

LMI is charged when your deposit is less than 20% of the property value. The premium is typically 2% to 4% of the loan amount, depending on the LVR. For a $600,000 loan at 90% LVR, LMI could be between $12,000 and $24,000 — usually capitalised into the loan, meaning you pay interest on it for 30 years.

In 2026, APRA’s 3% buffer (apply a rate of 8.69% on your loan to test serviceability) makes it harder to pass the income assessment with a high LVR loan, because LMI adds to the loan size and increases monthly repayments. Borrowers with a 10% deposit often find themselves just over the serviceability limit.

Ways to avoid LMI:

• · Save a 20% deposit — the simplest but hardest
• · Use the First Home Guarantee (5% deposit, no LMI) — capped at price limits
• · Use a professional package (some lenders offer LMI waivers for healthcare workers, accountants, engineers) — check with your bank
• · Buy a property under the First Home Owner Grant in some states (e.g., new home) — still requires full LMI if deposit below 20%
• · Use a family guarantee (parents offer their property equity as security, reducing your LVR) — no LMI but requires parental property

Remember, the DTI cap of 6 times income (effective February 2026) also affects high LVR loans. If your income is $100,000, the maximum loan you can get is $600,000 regardless of deposit size, unless you have a strong compensating factor.

Government schemes: First Home Guarantee (5% deposit) and others

The biggest change in 2026 is the First Home Guarantee (FHBG) , formerly the First Home Loan Deposit Scheme. From 1 July 2026, the program has no income cap, meaning any first-home buyer can use it provided they meet other eligibility. The price caps are:

• · Sydney, NSW — $1,500,000
• · Melbourne, VIC — $950,000
• · Brisbane, QLD — $1,000,000
• · Perth, WA — $850,000
• · Adelaide, SA — $750,000
• · Hobart, TAS — $700,000
• · Darwin, NT — $650,000
• · Canberra, ACT — $850,000
• · Regional areas often have lower caps — check Housing Australia.

With a 5% deposit under the FHBG, you avoid LMI and you do not need genuine savings. The government acts as guarantor for the other 15% of the deposit. Places are limited to 35,000 per financial year (unchanged). In 2025–26, these places filled within the first few months, so applying early in the new financial year is critical.

Other schemes:

• Family Home Guarantee — for single parents with dependants, allows a 2% deposit (no LMI). Caps are the same as FHBG.
• First Home Super Saver Scheme — you can withdraw voluntary super contributions up to $50,000 (or $60,000 from 2026‑27? Check ATO) to use as a deposit. This money counts as genuine savings.
• State‑based grants and stamp duty exemptions — e.g., NSW First Home Buyers Assistance Scheme (full stamp duty exemption for properties up to $800k). These reduce the total cash needed at settlement.

Factors that affect deposit requirements beyond the percentage

Even if you have a large deposit, your loan could be declined if your DTI exceeds 6 or if you cannot service the loan at the 8.69% assessable rate (5.69% + 3% buffer). For example, a household earning $120,000 cannot borrow more than $720,000 under the DTI cap. If you want a $900,000 loan on a $1 million property with a 10% deposit ($100,000), your DTI would be 7.5 — too high. You would need a larger deposit to reduce the loan to $720,000 (i.e., a 28% deposit of $280,000).

The RBA cash rate at 4.35% (since November 2023) means variable rates have stayed elevated. Some economists forecast a cut to 4.10% by December 2026, but lenders may or may not pass it on fully. Higher rates reduce borrowing capacity, which in turn pushes buyers toward needing a larger deposit to bring down the loan amount.

Other costs to factor into your cash requirement:

• · Stamp duty (if not exempt) — can be 3% to 5% of property price
• · Legal and conveyancing fees — $1,000 to $2,500
• · Building and pest inspections — $600 to $1,200
• · Lender application fees (some offset accounts have annual fees)
• · Moving and furnishing costs — at least $3,000

A buyer purchasing a $750,000 home with a 10% deposit ($75,000) might need an additional $30,000 for stamp duty (if not exempt) and other costs, bringing the total cash required to around $105,000 upfront.

FAQ

1. Can I buy a home with a 5% deposit in 2026 if I’m not a first‑home buyer?

No. The First Home Guarantee is only for first‑home buyers. Other low‑deposit options for existing homeowners exist (e.g., family guarantee, or some lenders offer 10% LVR with LMI), but a 5% deposit without LMI is exclusive to first‑home buyers under government schemes.

2. How much genuine savings do I need for a $650,000 home with a 10% deposit?

You need to show 5% genuine savings — that is $32,500 held in your account for at least three months. The other 5% can be a gift. If you use the FHBG, you need no genuine savings, only the 5% deposit of $32,500.

3. What happens if the property price is above the FHBG cap for my city?

You cannot use the scheme. You would need a conventional loan, typically requiring at least a 10% deposit (with LMI) or 20% (without LMI). For example, a $1.6 million property in Sydney exceeds the $1.5 million cap, so a buyer needs at least 20% ($320,000) to avoid LMI, or 10% ($160,000) plus LMI.

4. Can I use a gifted deposit for the genuine savings portion if I have saved 3% myself?

Some lenders accept a combination: they want to see at least 3% genuine savings from your own effort, and the remaining can be a gift. However, many lenders still require the full 5% genuine savings. Check with your broker. The FHBG accepts 100% gifts.

5. Does the DTI cap of 6 apply to all lenders in 2026?

APRA’s macro‑prudential guidance strongly recommends lenders cap new lending at a DTI of 6 for owner‑occupiers. Some lenders apply stricter caps (e.g., 5.5), and a few may stretch to 7 for high‑income borrowers with strong credit. The cap applies to the loan amount, not the deposit.

Sources

• Australian Prudential Regulation Authority (APRA) — macro‑prudential measures and serviceability buffer (3%) as at July 2026.
• Reserve Bank of Australia — cash rate target and housing credit data (4.35%).
• Housing Australia — First Home Guarantee eligibility and price caps from 1 July 2026.
• State Revenue Offices (NSW, VIC, QLD, WA) — stamp duty exemptions and first‑home buyer grant thresholds.
• Australian Banking Association — industry guidelines on genuine savings and gifted deposits.

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Related guides

• First Home Guarantee 2026: full eligibility and price caps
• [Can you really buy with a 5% deposit in 2026?](/guides/first