- Saving for a house deposit is challenging, often requiring years of disciplined planning, but a 20% deposit helps avoid costly lenders mortgage insurance.
- Median dwelling values across Australia show that even a 5% deposit can amount to tens of thousands of dollars, making affordability a major hurdle for first home buyers.
- Alternatives such using a guarantor provide creative ways to enter the property market without a full deposit.
So, you’ve decided to become a homeowner. No more grubby share houses, disagreements with the landlord, tolerating your housemates’ mess or their questionable design choices. Congratulations!
But saving up for a house deposit is no easy feat, as it often requires years of disciplined saving and careful financial planning. Achieving this milestone not only reduces the size of the loan you’ll need but also helps you avoid costly mortgage insurance.
We've put together a guide on how to save up for a house deposit that includes no mention of smashed avocado (except for that one. Sorry).
How much deposit do you need for a house?
You normally need to put down a deposit that is equal to at least 5% of the value of the home to buy a house. For traditional banks, that's usually the smallest deposit they will entertain, though many lenders will require significantly more than that.
We've probably all heard that a 20% deposit (20% of the value of the property) is the sweet spot. That's because a 20% deposit usually means you won't be hit with the cost of lenders mortgage insurance (LMI).
LMI is a one-off payment that covers the mortgage lender against any loss that may occur in the event the borrower is unable to make their loan repayments (a default on the loan). If a borrower defaults on their mortgage, the lender can recover what is owed to them by repossessing the property the home loan is tied to. But if the value of the property has fallen, the lender can suffer a loss. This is the risk LMI covers.
Read more: What is lenders mortgage insurance?
Lenders typically exempt borrowers from having to pay LMI if the deposit is at least 20% of the property's value or sale price. That's because a 20% deposit is usually considered to be a big enough buffer to protect lenders from a drop in the value of the property, which gives them a strong chance of recouping the amount that's owed to them if the borrower defaults on the loan. Also, lenders may perceive borrowers who have deposits over 20% to be more responsible, thus less likely to default on the loan.
How much is Lenders Mortgage Insurance?
LMI can be very expensive. For example, if you buy a $500,000 home with a 5% deposit ($25,000), you'll face an estimated LMI cost of $21,423.
However, there can be times when it may be worth paying for LMI. If property values rise over the time it takes you to come up with a 20% deposit, you'd pay more on the purchase price than you would have if you'd snapped up a house back when you only had a 5% deposit. Because prices have risen, what would have been a healthy 20% deposit when you started saving may now only be worth 15%.
You can calculate your estimated LMI to help you choose a home loan that is the right fit using Savings.com.au's LMI calculator.
Stamp duty considerations
There are other costs to factor into the deposit, such as stamp duty. Stamp duty is the tax on the sale of the property and covers the costs of changing the title of the property and ownership details.
See also: What does stamp duty cost in each state of Australia?
If you're a first home buyer, there are stamp duty discounts available in most states and territories. Depending on the purchase price of the property and which state you're buying in, you may even be exempt from stamp duty.
How long does it take to save for a house deposit?
How long it takes to save up for a house deposit depends on a number of factors:
- Your income
- Your expenses
- Where you want to buy
Depending on where you live in Australia, saving for a house deposit can take anywhere from a few years to nearly a decade. However, this doesn't take into account rising house prices, which is one of the biggest challenges facing first home buyers.
According to AMP data released in November 2025, it now takes almost 11 years to save for a house deposit, with computations based on saving 15% of the average wage.
The table below shows the median dwelling value across the capitals and nationally in June 2026. It also provides the required deposit amounts at both 5% (minimum) and 20% (ideal to avoid LMI).
| Location | Median Value | 5% Deposit | 20% Deposit |
|---|---|---|---|
| Sydney | $1,282,020 | $64,101 | $256,404 |
| Melbourne | $812,621 | $40,631 | $162,524 |
| Brisbane | $1,126,149 | $56,307 | $225,230 |
| Adelaide | $950,703 | $47,535 | $190,141 |
| Perth | $1,050,354 | $52,518 | $210,071 |
| Hobart | $752,398 | $37,620 | $150,480 |
| Darwin | $634,368 | $31,718 | $126,874 |
| Canberra | $890,555 | $44,528 | $178,111 |
| Combined capitals | $1,030,973 | $51,549 | $206,195 |
| Combined regional | $771,365 | $38,568 | $154,273 |
| National | $941,864 | $47,093 | $188,373 |
Source: Cotality 2026
What can I use as a deposit?
Now that you have a clearer idea of how much you’ll need to save and the timeframe to reach that goal, the next step is understanding what resources you can actually draw on. Beyond your regular savings, are there other funds or support you can access? Let’s explore some options.
Can I use my super as a deposit?
The short answer to this one is: not exactly.
While you can't really raid your superannuation fund for a house deposit, you can leverage your super through the First Home Super Saver Scheme (FHSSS).
Under the scheme, first home savers can make voluntary concessional (taxed at a discounted rate of 15%) and non-concessional (already taxed at your marginal rate) contributions into their super funds, which can be withdrawn later for a house deposit.
Can I use my inheritance or a gift as a deposit?
When it comes to taking out a home loan, many lenders prefer to see what are called 'genuine savings' or money that you have saved yourself over a period of time, usually between three to six months. This can demonstrate your ability to manage money and could indicate you'll be a responsible borrower. However, you can have gifts or inheritances approved as genuine savings if you have a letter from the gift giver/executor in some situations.
The amount of money will also need to meet certain requirements to avoid the genuine savings rule. Most lenders will require a 20% deposit to avoid the genuine savings rule. Very few lenders will accept a 10% deposit without requiring confirmation of genuine savings.
The same rule applies to inheritance money. An inheritance can be used as a house deposit, but you'll need a 10-20% deposit to bypass the genuine savings rule.
Can I use the First Home Owners Grant as a deposit?
If you're a first home buyer and you're accessing the First Home Owners Grant (FHOG), you can technically use this to form part of your deposit if you're buying or building a new home.
As the name suggests, these state and territory government grants act as an incentive for first-home buyers to purchase their first property. The amount of financial assistance varies between states, which means you'll need to research what applies to where you're purchasing.
One condition many of the states have in common is that the grants only apply to the purchase of newly built homes, or properties that have never been occupied before - or the construction of a new property by the first-time buyer.
The FHOG alone often isn't enough to make up a full house deposit. At the time of writing, the maximum grant available is $30,000 in Tasmania and Queensland. In other states, it's between $10,000 and $15,000.
Can I get a 100% mortgage?
Since the Global Financial Crisis, true 100% home loans are a thing of the past. The only real way to borrow 100% of the property's value these days is with the help of a guarantor, which some lenders allow. We'll talk more about using a guarantor later.
Savings.com.au's two cents
Saving for a house deposit is hard work - and far more difficult if you're on one income or renting while you're trying to save. Sadly, data shows it's as tough as it's ever been, given home values have been outstripping income growth for some years now. But it's not impossible.
If you're serious about saving for a deposit, there are ways to get there sooner if you're willing to sacrifice. If a bigger deposit is out of your reach, there are options for you.
Let's be optimistic. Once you've got your house deposit saved and you've found a house you want to buy, here's what to do with it next.
How do I save the money for a deposit?
This is where the hard work begins. To save for a home deposit, these are the three main steps to take:
1. Look at what you're spending
Tracking your spending is key when you've got big savings goals to kick, like a house deposit.
Tallying your income against your expenses, credit repayments, and savings can help you understand the areas where you can cut back in order to save more money. Saving a minimum of 20% of a property's value while still making regular rental and bill payments can be a challenge, but knowing where your money is going and working out where you can cut corners is a good place to start.
Once you know where all your money is going, you should have a pretty good idea of how much extra money you have each month to devote to your savings instead, and what expenditures you can offload to free up even more money.
Double down on debt
If you have any credit card, buy now pay later, or personal loan debt, you'll want to eliminate this before you approach a lender.
Devoting funds elsewhere when you're trying to save up for a house deposit may seem counterintuitive, but it can be important. Any debt you carry will decrease your borrowing capacity when you apply for a home loan. Lenders may also be less willing to give you a home loan if you have too many debts.
Keep in mind, the interest you're paying on your debt is eating into your ability to save for a house deposit because it's compounding (growing bigger over time). The sooner you can attack your debts, the sooner you'll have more money to devote to your savings goal instead.
2. Make a budget
In most cases, a good budget should be realistic and have wiggle room. But when you have a pretty substantial savings goal, your budget will need to be more aggressive if you want to meet that goal quickly. This means you'll have to cut non-essential spending and be prepared to live frugally while you save.
The real trick here is to be brutally honest with yourself about how you spend your money. If you pretend you don't buy a bottle of wine every Friday night and omit that from your budget to make yourself feel better, you're lying to yourself to the tune of about $1,040 bucks a year.
3. Maximise your savings
As soon as your pay hits your bank account, you want to immediately siphon off the largest possible chunk you can afford into an untouchable high-interest savings account.
To save for a deposit faster, there are a few options you may want to consider:
- Cut housing costs – Rent is often the biggest expense, so consider moving back home, sharing with flatmates, or downgrading to a cheaper rental. Each option can free up significant cash to boost your savings.
- Boost your income – Ask for a raise if you’ve been performing well, or explore side hustles to grow your savings faster.
- Cut streaming services – Keep one favourite and cancel the rest, redirecting the savings straight into your deposit fund.
- Use high-interest savings – Store funds in a high-interest account and automate transfers so saving happens without effort.
- Consider investing – Explore shares or property funds (like REITs) for potentially higher returns, but weigh the risks carefully.
- Sell unused items – Declutter and earn extra cash by selling belongings online.
- Use public transport – Swap car costs for cheaper commuting; selling your car could add thousands to your deposit.
- Bank bonus money – Direct tax refunds, pay rises, or bonuses straight into savings to avoid lifestyle creep.
What help is available?
When you're saving for a house deposit, the road ahead can look very long. But there's help available.
- First Home Owner Grants – One-off payments offered by states and territories, usually applied directly to your home loan at settlement.
- First Home Super Saver Scheme – Allows voluntary concessional (taxed at 15%) and non-concessional contributions into super, which can later be withdrawn for a deposit. Technical changes from September 2024 improve flexibility.
- Keystart (WA) – Government-backed low-deposit loans (as little as 2%) for eligible Western Australians, including options for regional buyers, single parents, Indigenous Australians, and those on disability pensions.
- HomeStart (SA) – Low-deposit loans (as little as 2%) for South Australians, with no LMI and options like shared equity, lower interest rates, or repayment-free periods.
- Stamp Duty Concessions – Discounts or exemptions on property transfer tax for first home buyers, depending on the purchase price and state/territory rules.
Can I buy a house with no deposit?
If you've read this far and are ready to throw in the towel, don't give up on your dreams of home ownership just yet. There are other ways into the property market, it may just mean getting a little more creative.
Rentvesting
Rentvesting is the practice of living in a rental property at the same time as renting out an investment property you own. Rentvesters typically rent property in the area they want to live in (but can't afford to buy) and buy property where they can afford (but don't want to live) and rent it out as an investment property.
You'll still have to save for a deposit, but it could be significantly smaller.
The idea behind rentvesting is that you can use your investment to generate cash flow, and eventually sell your property for a capital gain. If your capital gain is strong enough, you may be able to use that as the deposit for the property you really want to live in. Let's consider the case study below:
Case Study: Maria
Maria lives in Sydney where she rents an apartment for $350 a week with one other flatmate. She wants to buy an $850,000 unit and needs to save a 20% deposit of $170,000 - a pretty daunting amount of money to come up with.
She thinks about investing in Hobart where prices are considerably lower. The median unit price in Hobart is a much more affordable $520,000. For a 20% deposit, Maria needs to save $104,000, while a 5% deposit is a much more manageable $26,000. Saving $26,000 is a lot less scary than saving $170,000.
Buying in Hobart allows Maria to enter the property market at a more affordable level, although rentvestors should always do their sums first. Rental income from the Hobart unit may not cover Maria's investor loan (which generally attracts a higher interest rate than an owner occupier loan). Although Maria may receive some tax benefit from negative gearing on the Hobart unit, she must still ensure she is able to service the loan and continue to pay rent in Sydney.
Guarantor
Using a guarantor is akin to being approved for a no deposit home loan where your parents or another immediate family member offers the equity in their property to secure the loan. Essentially, this means that instead of paying a deposit, your family member signs a contract stating they'll be responsible for your home loan if you default on it.
If you have someone in your life (typically your parents) willing to be your guarantor, you can potentially avoid a deposit altogether. You may even be able to avoid paying LMI completely as the size of the deposit is determined by the equity your family member is putting up.
Obviously, this option is one thatshould not be entered into lightly - for either party. If you default on the loan, your parents are the ones who'll pay for it. If they've put their home up as security for your loan, they could lose their house if you default. However, once you've made enough repayments to cover the amount they've guaranteed, they will be released from the contract. This may take some years, however.
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
