What is the minimum deposit needed for pre-approval in Australia?

This is one of the first questions almost every buyer asks, and the honest answer is that there is no single magic number. The minimum deposit depends on whether you are prepared to pay Lenders Mortgage Insurance, and whether you are eligible for one of the government guarantee schemes. Once you understand those two levers, the picture becomes clear.

The 20 per cent benchmark, and why it matters

The figure you will hear most often is 20 per cent. The reason is not that lenders refuse anything less, but that a 20 per cent deposit means you are borrowing 80 per cent of the property value, a measure lenders call the loan to value ratio. At that level, lenders generally do not require Lenders Mortgage Insurance. So 20 per cent is the point at which the loan is considered lower risk, not a hard minimum.

You can usually buy with far less than 20 per cent

In practice, many lenders will lend with a much smaller deposit, in some cases as little as 5 per cent, which means borrowing up to 95 per cent of the value. The catch is that once you are borrowing more than 80 per cent, the lender will usually require Lenders Mortgage Insurance. So a smaller deposit is possible, it just comes with that extra cost unless a government scheme removes it.

What Lenders Mortgage Insurance actually is

Lenders Mortgage Insurance, or LMI, is insurance that protects the lender, not you, if a loan with a smaller deposit goes bad. You pay for it, but it covers the lender. It can often be added to the loan rather than paid upfront, which spreads the cost but means you pay interest on it over time. The trade off of a smaller deposit is essentially this: you get into the market sooner, but you carry the cost of LMI unless you qualify for a scheme that waives it.

The First Home Guarantee: a 5 per cent deposit with no LMI

This is where eligible first home buyers get a real advantage. Under the First Home Guarantee, you can buy with as little as a 5 per cent deposit and pay no LMI, because the government guarantees the gap up to 20 per cent for your lender. You still own 100 per cent of your home, and the government holds no stake in it. The guarantee simply lets the lender treat your loan as if you had a 20 per cent deposit.

This scheme was expanded significantly from the first of October 2025 and is now also known as the Australian Government 5 per cent Deposit Scheme. The previous income limits were removed, the cap on the number of places was removed, and the property price caps were increased. Because the price caps vary by location and are updated from time to time, you should check the current caps and eligibility directly with Housing Australia rather than rely on older figures.

The Family Home Guarantee: a 2 per cent deposit

There is a separate stream for eligible single parents and single legal guardians, called the Family Home Guarantee, which allows a deposit as low as 2 per cent, again without LMI. The eligibility rules are specific, so if this might apply to you it is worth confirming the current criteria with Housing Australia or talking it through with a broker.

Stamp duty is a separate, state based concession

It is easy to lump stamp duty in with the deposit schemes, but they are different things run by different levels of government. The deposit guarantees above are federal. Stamp duty, and any first home buyer concession on it, is set by your state. In South Australia, for example, there are first home buyer concessions on eligible new homes, but the rules and any value limits are set by the state and change over time. For your own situation, the current position should be confirmed with RevenueSA. The key point is that a stamp duty concession is not automatically part of the deposit schemes, even though both can apply to the same purchase.

The deposit is not the only cash you need

Whatever your deposit, it is not the whole of the money you need to have ready. Buying a home involves other costs, such as conveyancing or legal work, building and pest inspections, and various government fees. Some of these are reduced for first home buyers, but they still need to be planned for. So when you think about your minimum, think about the deposit plus a reasonable allowance for these additional costs, rather than the deposit alone.

What the right minimum is for you

The smallest deposit you can technically use is not always the one you should use. A larger deposit can mean no LMI, more choice of lender, and a smaller loan. A smaller deposit, helped by a scheme, can mean getting into the market years sooner. Which is right depends on your goals, your eligibility, and how the numbers stack up for you specifically. A broker can map these options against your situation so you can see the real trade offs rather than guessing.