How much deposit do I need for a home loan? It is the first question most buyers ask, and the honest answer is that it depends on the price, the lender, whether you qualify for a government scheme and whether family can help. Most people assume they need 20% before a lender will look at them. That number gets repeated so often it starts to feel like a rule. It isn’t. It’s a benchmark lenders use to decide whether you need Lenders Mortgage Insurance, not a hard requirement to buy a home.
This guide explains how the deposit side of a home loan actually works in NSW, with a focus on buying in the Sutherland Shire: the 20%, 10%, 5% and 2% options, stamp duty for first home buyers, family help, genuine savings, the costs on top of the deposit and two worked examples.
The Short Answer: How Much Deposit Do I Need?
So, how much deposit do I need in practice? Here is how the common deposit sizes line up. Each one is a percentage of the purchase price, and your loan still has to pass the lender’s assessment of your income and expenses.
- 20% deposit: the loan is 80% of the value, so Lenders Mortgage Insurance (LMI) generally does not apply.
- 10% deposit: widely accepted, but LMI usually applies. The premium can often be added to the loan.
- 5% deposit: possible with LMI at some lenders, or with no LMI through the Australian Government First Home Guarantee if you are eligible.
- 2% deposit: only through specific government schemes, such as the single parent stream of the 5% Deposit Scheme or Help to Buy.
- Little or no cash deposit: sometimes possible with a family guarantee, although you will still usually need money for costs.
On top of the deposit, budget for upfront costs such as stamp duty, legal fees and inspections. We cover those further down.
Where the 20% Figure Comes From
Lenders measure your deposit against the Loan to Value Ratio, or LVR. This is simply the loan amount as a percentage of the property’s value. If you borrow $720,000 against a $900,000 property, your LVR sits at 80%, and your deposit covers the remaining 20%.
Lenders treat 80% LVR as a comfort threshold. Below that line, you carry less risk for them, so they lend without extra insurance. Above it, they usually ask you to cover the gap through Lenders Mortgage Insurance. In other words, the threshold doesn’t decide whether you can buy a home. Instead, it decides whether LMI applies and how a lender prices your loan.
How Long Does It Take to Save a Deposit?
Saving the full 20% takes years in most capital cities. Domain’s analysis assumed a couple aged 25–34 buying an entry-level property with a 20% deposit. It found the time needed rose in all eight capitals for houses during 2025, and in six for units, because rising entry-level prices outweighed the benefit of three interest rate cuts.
| Capital city | Entry-level house | Entry-level unit |
| Sydney | 7 years 7 months | 4 years 5 months |
| Melbourne | 5 years 3 months | 3 years 4 months |
| Brisbane | 6 years 3 months | 4 years 11 months |
| Adelaide | 5 years 7 months | about 4 years |
| Perth | 5 years 4 months | 3 years 10 months |
| Hobart | about 5 years | 3 years 10 months |
| Canberra | 5 years 1 month | 2 years 10 months |
| Darwin | about 4 years | 2 years 7 months |
Sydney is the toughest market by a wide margin, and many Sutherland Shire homes sit well above entry-level Sydney prices, so a 20% deposit here can take longer again. That is why many first buyers don’t wait for 20%. The options below, from LMI to the government’s 5% and 2% schemes and family guarantees, can cut years off the timeline. Our savings planner calculator shows how long your own target could take.
Borrowing Above 80% LVR With LMI
LMI lets you borrow more than 80% of a property’s value without saving the full 20% deposit yourself. The insurance protects the lender if you default and the sale of the property doesn’t cover the outstanding loan. It doesn’t protect you, but it can open the door to home ownership years earlier than waiting to save a full deposit.
Many lenders allow LVRs up to 90% or 95% with LMI, depending on the lender, your income and the type of property. The premium is either added to your loan or paid upfront, and it rises with your LVR and loan size because the lender is taking on more risk. We don’t quote premiums here because they vary by insurer, lender and loan, so ask for a figure for your own scenario.
Some borrowers avoid LMI on principle, assuming it’s dead money. For many first home buyers, though, the alternative is years of extra rent while they keep saving. Running the numbers properly, including both the LMI cost and the cost of waiting, usually settles the question quickly.
5% and 2% Deposits: The Government Schemes
The Australian Government 5% Deposit Scheme (formerly the Home Guarantee Scheme) is administered by Housing Australia. According to the official First Home Buyers website, changes from 1 October 2025 mean no income caps, unlimited places, no waitlist and no LMI for eligible buyers.
First Home Guarantee: 5% Deposit, No LMI
Eligible first home buyers can buy with a minimum 5% deposit while the government guarantees the lender against the gap up to 20%, so no LMI is charged. The official eligibility criteria include:
- Australian citizen or permanent resident, at least 18 years old.
- A first home buyer, or you have not owned property or land in Australia in the last 10 years.
- You will live in the home as an owner-occupier, with a principal and interest loan from a Participating Lender.
- You apply on your own or jointly with one other person.
- The price, and the lender’s valuation, are at or below the price cap for the location.
The published price cap for Sydney and NSW regional centres is $1,500,000, and $800,000 for the rest of NSW. The Sutherland Shire falls within the Sydney cap, but always confirm the cap for the exact postcode with the postcode search tool. After pre-approval under the scheme, you have 90 days to sign a contract. You must still meet the lender’s own credit policy. Read more in our First Home Guarantee guide.
Single Parents: 2% Deposit
The same scheme lets eligible single parents and single legal guardians of dependent children buy with a minimum 2% deposit and no LMI. It uses the same price caps, and you must apply on your own.
Help to Buy: 2% Deposit With Shared Equity
The Help to Buy scheme works differently. The government contributes up to 30% of the price of an existing home (up to 40% for a new home) and takes a matching equity share. You need a 2% deposit, there are 10,000 places a year, and income limits apply ($103,000 for individuals, $165,000 for joint applicants and single parents, as published at the time of writing). The NSW capital city price cap for Help to Buy is $1,300,000.
NSW Stamp Duty for First Home Buyers
Stamp duty (transfer duty) can be the biggest cost after the deposit, so it changes the answer to “how much deposit do I need?” Under the NSW First Home Buyers Assistance Scheme (contracts from 1 July 2023), as published by Revenue NSW:
- New or existing homes valued up to $800,000: full exemption from transfer duty.
- Homes valued above $800,000 and less than $1,000,000: a concessional rate.
- Vacant land up to $350,000: exemption, with a concession from $350,000 to less than $450,000.
You also need to move in within 12 months of settlement and live there for at least 12 continuous months, among other criteria. Above $1,000,000, full transfer duty applies, which is common for Shire houses. Use our stamp duty calculator to estimate the amount for your price.
Family Guarantees and Gifted Deposits
A family guarantee, sometimes called a guarantor loan, can remove the deposit requirement in many cases. Instead of you contributing a large cash deposit, a family member, usually a parent, offers equity in their own property as additional security for your loan. As a result, the lender looks at both properties together, which can bring your effective LVR back under 80% and often avoid LMI.
The guarantor isn’t handing over cash, and most lenders allow the guarantee to be released later once you’ve built enough equity. However, it is a serious commitment, since their property sits on the line alongside yours. Talk through the structure, the exit plan and the risks with your broker and your family, and the guarantor should get independent legal advice.
A cash gift from family is the other common route. Lenders generally want the gift to be non-repayable and confirmed in writing, and they will want to see where the money came from. Some lenders will still ask for a portion of genuine savings on top of a gift, particularly at higher LVRs.
Genuine Savings: What Lenders Want to See
Genuine savings are funds you have built up or held over time, often for around three months or more, which shows the lender you can manage regular repayments. Many lenders ask for them when you borrow above 80% or 85%, and rules differ on whether rent history, gifts or a lump sum count. Our genuine savings guide explains the details, and the savings planner calculator shows how long it may take to reach your target.
LMI Waivers and Alternatives
Some lenders waive LMI for people in certain professions, even above 80% LVR. These waivers typically cover medical professionals and some other recognised occupations. Eligibility, the LVR cap and the professions covered all vary by lender, so check before assuming LMI is unavoidable. See our medical professional home loans page for one example.
A handful of lenders also skip traditional LMI and charge a risk fee, or use their own loan structure instead. These can cost less upfront, but the saving can show up elsewhere in the rate or fees, so compare the full cost rather than the headline fee.
Upfront Costs on Top of Your Deposit
When you ask how much deposit do I need, the real answer includes these costs as well. Add them to your savings target. Moneysmart has a useful checklist on the costs of buying a home.
- Transfer duty, unless you qualify for the NSW first home buyer exemption.
- Conveyancing or legal fees.
- Building and pest inspections, plus a strata report if you are buying a unit or townhouse.
- Government fees to register the transfer and the mortgage.
- Lender fees, such as application or valuation fees, where they apply.
- LMI, if it applies and you do not add it to the loan.
- Building insurance from the date the property becomes your risk, and moving costs.
Worked Examples for Sutherland Shire Buyers
For context, published estimates put the Sutherland Shire median house price between about $1.9 million and $2.1 million in early 2026 (DiJones, HTAG and Picki), while units and suburbs such as Engadine and Kirrawee sit lower. The prices below are round numbers for illustration only. They ignore LMI premiums and costs, and every loan still has to pass a lender’s assessment.
Example 1: An $800,000 Unit, First Home Buyer
- 20% deposit: $160,000 saved, loan of $640,000, no LMI.
- 10% deposit: $80,000 saved, loan of $720,000, LMI usually applies.
- 5% with the First Home Guarantee: $40,000 saved, loan of $760,000, no LMI if eligible.
- Stamp duty: an eligible first home buyer pays no transfer duty at $800,000 under the NSW scheme.
Example 2: A $1,500,000 House, First Home Buyer
- 20% deposit: $300,000 saved, loan of $1,200,000, no LMI.
- 5% with the First Home Guarantee: $75,000 saved, loan of $1,425,000. This price sits exactly at the NSW cap, so the valuation must also come in at or below $1,500,000.
- Family guarantee: depending on the guarantor’s equity, the cash deposit could be much smaller.
- Stamp duty: above $1,000,000 there is no first home buyer exemption or concession, so full transfer duty must be funded as well.
The second example shows why the question for Shire houses is often borrowing power, not only the deposit. A $1.4 million loan needs a strong income, so check your borrowing power alongside your savings.
How Much Deposit Do I Need in the Sutherland Shire?
In practice, the answer changes by suburb and property type. First buyers often start with units in Sutherland, Kirrawee or Miranda, or look further west and south towards Menai and Engadine. Our local pages cover each area:
Start with our Sutherland Shire mortgage broker page, or see First Home Loans for how we help first buyers from pre-approval to settlement. We also help buyers across Australia by phone and video.
Choosing the Right Path
Every option here solves the same problem in a different way. A 20% deposit avoids LMI but takes longest to save. Borrowing above 80% with LMI gets you in sooner, at a cost that’s often smaller than people expect. A family guarantee can remove most of the cash deposit, provided a family member is willing and able. Meanwhile, a waiver or a government scheme can remove LMI altogether for eligible buyers.
The right path depends on your savings, income, family situation and eligibility, and the maths changes from lender to lender. Ingram Financial compares dozens of lenders and can run each scenario side by side, including LMI, guarantor structures, waiver eligibility and scheme price caps, so you can see the real difference before you commit.
How Much Deposit Do I Need? FAQs
Deposit Basics
Many lenders accept a 5% deposit with LMI, and eligible first home buyers can use a 5% deposit with no LMI through the First Home Guarantee. Eligible single parents and Help to Buy applicants can start from 2%. You will usually need extra funds for costs.
No. A 20% deposit is the point where LMI generally stops applying, not a minimum. Many buyers purchase with 5% or 10% and either pay LMI or use a scheme or family guarantee.
It is based on the lower of the purchase price and the lender’s valuation. If the valuation comes in under the price, your deposit covers a smaller share and your LVR goes up.
Government Schemes and Stamp Duty
The published cap for Sydney and NSW regional centres is $1,500,000, and $800,000 for the rest of NSW. Check the exact postcode with the Housing Australia search tool before you buy.
No. From 1 October 2025 the scheme has no income caps and unlimited places. Help to Buy is different and does have income limits.
Eligible first home buyers pay no transfer duty on homes valued up to $800,000 and a concessional rate between $800,000 and $1,000,000, under the NSW First Home Buyers Assistance Scheme. Above $1,000,000 full duty applies.
Family Help and Savings
Yes. They can gift money, which lenders usually want confirmed in writing, or offer equity in their home as a family guarantee. Each option carries different risks, so the guarantor should get independent advice.
Sometimes. Many lenders ask for genuine savings when you borrow above 80% or 85%, even if part of the deposit is a gift. Policies vary, so we match you to a lender whose rules suit your situation.
It depends on the price and whether you pay stamp duty. Allow for legal fees, inspections, registration fees and any lender fees, and keep a buffer for moving in.
Still asking how much deposit do I need for the property you have in mind? Book a free chat and we will run the numbers across lenders and schemes for you.
The information on this page is general in nature and does not take into account your objectives, financial situation or needs. Lending criteria, fees and charges apply. Consider whether it is appropriate for you and speak to us for advice specific to your situation. Eligibility criteria apply to government schemes.
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