Mortgage Minimum Deposit: How Much Do You Need for a Mortgage?

20% is the standard mortgage deposit minimum needed for getting a mortgage in Australia.

Buying a home in Australia is an exciting but complex journey. One of the biggest questions we get from most of the homebuyers is, "How much of deposit do I need for a mortgage?”

Understanding how much you need to have as a deposit is important. It helps you figure out if you already have the required deposit amount or make plans to save up so you can get your home loan as soon as possible.

However, this minimum deposit amount can vary based on lender and other hidden factors. In favourable circumstances, this even means you would only require a lower deposit amount for your mortgage.

This article outlines the typical deposit requirements, government initiatives, and various options to make your homeownership dream a reality—even if you don’t have the full 20% deposit saved.

Mortgage Deposit Minimum Explained

Mortgage deposit is the downpayment or the amount of money borrowers are required to put in upfront when getting a mortgage.

It’s calculated as a certain percentage of the total property value. The remaining amount is what comes out as the loan-to-value ratio (LVR) of your mortgage.

Why Banks Need a Home Loan Deposit

Lenders need it for various reasons.

One, it helps to reduce the lender’s risk to an extent.

Two, it helps them measure how risky you are as a borrower. That means the more deposit amount you have, the less risky you are.

And finally, knowing the minimum deposit percentage you’re able to afford helps the lender to personalise your interest rate. The higher your deposit percentage, the lower your mortgage interest rate is.

How Much of a Deposit Do I Need for a Mortgage?

The standard deposit percentage across Australia is 20%.

However, this can vary from 0-20% depending on your lender and other borrower-specific schemes that allow lenders to get a mortgage at a lower minimum deposit.

More on these schemes below.

Before we get there, we just want to ask: Are you currently looking for a mortgage? 

If yes, we’ll help you secure the right one that suits your needs. With over 30 top lending partners in Australia, we’re one of the best mortgage brokers you can rely on for an unbiased, personalised mortgage broking service.

Get in touch with us today. No brokerage fee or commission—it’s entirely FREE!

What if You Don’t Have the Minimum Mortgage Deposit?

Luckily, there are various schemes provided by the lenders and the government of Australia to help out borrowers without the standard deposit amount saved up.

With any of these options, you won’t have to put in the entire 20% deposit. 

Keep in mind that the information provided here is general in nature and does not constitute financial advice. Kindly consult a financial adviser or mortgage broker for personalised advice specific to your situation.

Let’s explore the options then.

Home Guarantee Schemes (HGS)

The Home Guarantee Scheme (HGS) is an Australian government initiative that aims to help eligible Australians buy a home sooner. There are three types of guarantees that come under this scheme:

• First Home Guarantee (FHBG): Supports eligible Australians buying their first home get a mortgage with a deposit as low as 5%.

• Regional First Home Buyer Guarantee (RFHBG): Supports eligible Australians buy a home sooner in a specific regional area. Deposit gets as low as 5%.

• Family Home Guarantee (FHG): Supports eligible Australian parents or legal guardians of at least one dependent to buy a home sooner. Deposit gets as low as 2%.

First Home Owner Grant (FHOG)

The First Home Owner Grant (FHOG) is another initiative by the Australian government to help first homebuyers buy their home
soon.

It offers a one-off grant to Australian citizens that satisfy the eligibility criteria. Keep in mind that the eligibility criteria may vary depending on the state or territory, so make sure to check the respective state’s or territory’s official government website to see if you qualify:

• Australian Capital Territory

• New South Wales

• Northern Territory

• Queensland

• South Australia

• Tasmania

• Victoria

• Western Australia

LMI

Paying Lender’s Mortgage Insurance (LMI) is the most common solution to most homebuyers when they don’t have the standard deposit amount available.

LMI is a kind of insurance YOU pay FOR the lender in cases where your deposit is less than 20%. It’s an insurance scheme that backs the lender to work with a risky borrower.

However, you are responsible for paying the LMI premiums. You can either add these premiums to your mortgage or pay them upfront.

Keep in mind that if you add the premium to your loan, you’ll be paying interest on it over the life of the loan. So, it’s important to do your cost-benefit analysis to see if adding LMI premiums to your mortgage is worth it over paying the standard deposit rate.

LMI Waiver Schemes

If your deposit is less than 20% and you do plan to proceed by paying for an LMI, it’s worth checking about any LMI waiver option with the lender.

There are options for LMI waivers for teachers and other professionals in Australia. It’s a good way to get your mortgage without the standard 20% deposit while still not having to pay for LMI.

Home Loan Guarantor

If you don’t meet the minimum deposit requirement for your mortgage, you can bring in a close family member or friend to act as a guarantor. This way, you can secure the home loan by using the property or savings of your guarantor.

Cash Gift

Your parents or family members can help you meet the mortgage minimum deposit with a gifted deposit. This is a sum of money they’re gifting you without the intention of asking it back.

No Deposit Mortgages

You can get a mortgage with no deposit in Australia with a guarantor or by using your equity in another property.

Although they’re not very common (and come with a list of disadvantages), it is an option available for consideration.

Factors Affecting the Mortgage Deposit Minimum

While the standard deposit is 20%, your lender will personalise your deposit rate depending on these basic factors:

• Property Value: Higher property values require larger deposits.

• Credit Score: A better credit score means a lower deposit rate.

• Lender Policies: Minimum requirements vary among lenders in Australia.

These are only the basic factors that affect the minimum deposit rate. On top of these, the schemes and plans we covered in the previous section are also influencing factors.

Other Upfront Costs

The minimum deposit on your mortgage is only one of the initial costs. You also have other costs to consider:

• Stamp duty can significantly increase your upfront costs depending on the cost of your property, state, or territory. Consult your mortgage broker to see if you qualify for any concessions.

• Legal costs associated with paying a solicitor to help you arrange legal documents during settlement.

• Mortgage registration fees charged by your state or territory. 

To make sure you get the most accurate estimates of costs that are applicable to your unique home loan requirements, we advise you to consult with your lender or legal advisor.

Compare rates from multiple lenders

Let our home loan experts secure the most suitable deal for you

I want to refinanceI want to buy a home