The 20% rule isn't the whole story. Here's how deposits, LMI and government schemes really work — and how to buy sooner without overpaying.
“You need a 20% deposit” is the rule most people grow up hearing. It's not wrong — a 20% deposit avoids Lenders Mortgage Insurance and gives you a stronger position — but it's far from the only way in.
What a deposit is really made of
Your deposit is the cash you contribute towards the purchase. But the deposit isn't the only cash you need at settlement — stamp duty, legal fees, inspections and loan setup costs all sit on top. Our Buying Costs calculator adds these up so there are no surprises.
Buying with less than 20%
Plenty of lenders will lend with a 10% — or even 5% — deposit. The trade-off is Lenders Mortgage Insurance (LMI): a one-off premium that protects the lender (not you) if the loan can't be repaid. It's usually a percentage of the loan and can often be added to the loan rather than paid upfront.
- 5% deposit: possible with many lenders, higher LMI.
- 10–15% deposit: lower LMI, more lender choice.
- 20% deposit: no LMI, the strongest position.
Government schemes can change the maths
Schemes like the government's 5% Deposit Scheme let eligible buyers purchase with a small deposit and no LMI, and state first-home concessions can wipe out or reduce stamp duty. Eligibility and caps change, so it's worth checking what's current for your situation.
So, how much do you need?
The honest answer: it depends on your goals, the property, and which lenders and schemes you qualify for. That's exactly the sort of thing a quick conversation can sort out — often the path in is closer than people expect.
