The short answer
- A 20% deposit avoids lenders mortgage insurance (LMI) with most lenders, but it isn't a requirement.
- Eligible first home buyers can buy with 5% and no LMI under the First Home Guarantee.
- Help to Buy and the Family Home Guarantee can bring it down to 2% for eligible buyers.
- With a family guarantor, some lenders need little or no deposit.
- Budget for stamp duty and buying costs on top of your deposit. In SA they can be the bigger number.
What "20% deposit" actually means
Lenders compare your loan to the value of the property. This is called the loan-to-value ratio, or LVR. With a 20% deposit you borrow 80% of the value, and most lenders treat that as the line between a standard loan and a higher-risk one.
Borrow more than 80% and most lenders charge lenders mortgage insurance. Despite the name, LMI protects the lender, not you, if the loan isn't repaid and the home sells for less than what's owed. It can usually be paid upfront or added to your loan, and the smaller your deposit, the more it costs.
So 20% isn't a legal minimum. It's the point where you avoid LMI. Plenty of people buy with much less.
Ways to buy with less than 20%
| Option | Minimum deposit | LMI | Good to know |
|---|---|---|---|
| Standard loan with LMI | Often 5% to 10%, depending on the lender | Yes | Open to most buyers who meet the lender's criteria |
| First Home Guarantee | 5% | No | Eligible first home buyers. Price caps of $900,000 in Adelaide and $500,000 in the rest of SA |
| Help to Buy | 2% | No | The government owns up to 40% of a new home or 30% of an existing one. Income and price limits apply, and only some lenders offer it |
| Family Home Guarantee | 2% | No | Eligible single parents and single legal guardians with at least one dependant |
| Family guarantee | Sometimes none | Usually no | A parent or close relative uses equity in their home as extra security |
Sources: Housing Australia (First Home Guarantee), Housing Australia (Family Home Guarantee), MFAA (Help to Buy). More detail in our first home buyer guide and guarantor guide.
The costs on top of your deposit
This is where many buyers get caught out. Your deposit isn't the only money you need on settlement day.
- Stamp duty. Usually the biggest cost. In SA, eligible first home buyers pay no stamp duty on a new home or vacant land, but full duty applies to an established home. Try our stamp duty calculator.
- Legal and conveyancing fees to handle the purchase.
- Building and pest inspections before you commit.
- Government fees to register the transfer and your mortgage.
- Lender fees, if your loan has any.
- LMI, if you borrow more than 80% and don't add it to the loan.
- A buffer for moving costs and anything unexpected.
Example: a $600,000 home with a 5% deposit
An eligible first home buyer using the First Home Guarantee. Same price, very different upfront cost depending on whether the home is established or new.
Established home
| Deposit (5%) | $30,000 |
| Stamp duty | $26,830 |
| Needed upfront, before other costs | $56,830 |
New home
| Deposit (5%) | $30,000 |
| Stamp duty, with first home buyer relief | $0 |
| Needed upfront, before other costs | $30,000 |
May also be eligible for the First Home Owner Grant of up to $15,000.
Example only. Stamp duty uses RevenueSA's general rates and first home buyer relief. Excludes legal, inspection, government and lender fees. Eligibility criteria apply.
What lenders look at besides your deposit
- Genuine savings. Many lenders want to see that at least part of your deposit was saved over time, rather than arriving all at once.
- Gifts from family. Many lenders accept gifted money, usually with a signed letter confirming it doesn't need to be paid back.
- Your ability to repay. Lenders check you could still afford repayments at a rate 3% higher than your actual rate, a buffer set by APRA.
- Your debts and credit history. Car loans, credit cards and buy now, pay later accounts all reduce what you can borrow.
Ways to build your deposit faster
- First Home Super Saver Scheme. Save inside super and later release voluntary contributions of up to $15,000 a year and $50,000 in total. You must request a determination from the ATO before settlement. Source: ATO
- Look at new homes. In SA, stamp duty relief and the First Home Owner Grant can make a new home far cheaper upfront.
- Ask about family help. A gift or a family guarantee can make a big difference, as long as everyone understands what's involved.
- Trim your debts and limits. Lenders count credit card limits even if you don't use them, so closing unused cards can help your borrowing power.
So how much should you have saved?
Work out three numbers: the deposit your loan option needs, your buying costs, and a buffer. Add them up and that's your real target.
For eligible first home buyers, combining the First Home Guarantee with SA's stamp duty relief on new homes can bring the upfront cost down a long way, as the example above shows. Every situation is different though, so it's worth getting your own numbers before you start looking.
Information is general and correct as at October 2026. Scheme rules, price caps and lender policies change, so check the latest before you buy.