Deposits & Lenders Mortgage Insurance
The deposit is the cash you put toward the property. The rest comes from the loan. How much you need depends on how much risk the lender is willing to take.
Deposit Tiers
| Deposit | LVR | LMI Required? | What It Means |
|---|---|---|---|
| 20%+ | 80% or less | No | Best rates, widest lender choice, no LMI cost |
| 10-19% | 81-90% | Yes (moderate) | Good rates but LMI adds $3,000-$15,000 depending on loan size |
| 5-9% | 91-95% | Yes (significant) | LMI can be $15,000-$40,000+. Fewer lenders will go this high |
| 2-5% | 95-98% | Depends on scheme | Only possible via government guarantees (First Home Guarantee) |
What Is LMI?
Lenders Mortgage Insurance protects the lender (not you) if you default. It's a one-off premium charged when your deposit is less than 20%. Here's the kicker, you pay for it, but it protects them.
$700,000 property, first home buyer:
20% deposit ($140,000) → LMI: $0
15% deposit ($105,000) → LMI: ~$4,800
10% deposit ($70,000) → LMI: ~$12,600
5% deposit ($35,000) → LMI: ~$28,500
LMI is usually added to your loan, so you don't pay it upfront, but you do pay interest on it for the life of the loan. That $12,600 LMI at 10% deposit could cost you ~$24,000 over 30 years when interest is included.
How to Avoid LMI
- Save a 20% deposit, the simplest way
- Guarantor loan, a parent guarantees a portion using their property's equity. You can buy with 5% or even $0 deposit and pay no LMI
- First Home Guarantee, government guarantees your loan so you only need 5% (or 2% for single parents). No LMI. Limited spots each year
- Certain professions, some lenders waive LMI for doctors, lawyers, accountants and other professionals at up to 90% LVR
Should you wait for 20%? Not always. If property prices are rising 5-10% per year, waiting 2 years to save an extra $50,000 might cost you more in price growth than the LMI would have cost. Run the numbers, sometimes paying LMI and buying sooner is the financially better move.
Government Grants & Schemes
Australia has several schemes to help first home buyers. What you're eligible for depends on your state and the property price. Select your state below:
New South Wales
| First Home Owner Grant (FHOG) | $10,000 for new homes up to $600,000 |
| Stamp Duty Exemption | Full exemption on existing homes up to $800,000. Concession $800,001-$1,000,000 |
| First Home Buyer Choice (abolished) | Previously allowed annual property tax instead of stamp duty, now replaced with the above thresholds |
| Shared Equity | NSW government contributes up to 40% (new) or 30% (existing) of purchase price. You buy the rest. |
Sarah buys a $750,000 existing apartment in Sydney. As a first home buyer, she pays $0 stamp duty (under $800k threshold). She uses the First Home Guarantee with a 5% deposit ($37,500) and avoids LMI. Total cash needed: ~$47,000 including legals and inspections.
Victoria
| FHOG | $10,000 for new homes up to $750,000 |
| Stamp Duty Exemption | Full exemption up to $600,000. Concession $600,001-$750,000 |
| Victorian Homebuyer Fund | Government co-purchases up to 25% of the property (reducing your loan). Must have 5% deposit minimum |
Jake buys a $580,000 unit in Melbourne. Full stamp duty exemption (under $600k). FHOG doesn't apply (existing home). With 10% deposit ($58,000), his LMI is ~$5,800. Total cash: ~$68,000.
Queensland
| FHOG | $30,000 for new homes up to $750,000 (increased from $15k in 2024) |
| Stamp Duty Concession | Concession for homes up to $700,000 (sliding scale). Full exemption up to $500,000 for FHBs |
| Regional Bonus | Additional $15,000 for regional QLD purchases (new builds only) |
Mia buys a new $480,000 townhouse in Logan. She gets the $30,000 FHOG + full stamp duty exemption. With 5% deposit ($24,000) + the $30,000 grant effectively boosting her deposit, she has a very strong position. Total out-of-pocket: ~$29,000.
Western Australia
| FHOG | $10,000 for new homes up to $750,000 |
| Stamp Duty | First home buyers: concession for properties up to $530,000. Reduced rates on properties up to $400,000 |
| Keystart Loans | WA government low-deposit home loan scheme. 2% deposit, no LMI. Income limits apply |
South Australia
| FHOG | $15,000 for new homes up to $650,000 |
| Stamp Duty | No stamp duty exemption for FHBs on existing homes. Standard rates apply. Exemption on new homes up to $650,000 |
Tasmania
| FHOG | $30,000 for new homes (no price cap) |
| Stamp Duty | 50% concession for FHBs on established homes up to $400,000 |
ACT
| FHOG | No FHOG currently offered in ACT |
| Stamp Duty | Full exemption for FHBs on properties up to $1,000,000 (income thresholds apply: $160k single, $227k couple) |
Northern Territory
| FHOG | $10,000 for new homes. Additional HomeGrown Territory grant of $10,000 for buying/building in NT |
| Stamp Duty | Stamp duty discount available for FHBs, savings up to ~$18,000 |
National Schemes (All States)
| Scheme | What It Does | Eligibility |
|---|---|---|
| First Home Guarantee | Buy with 5% deposit, no LMI. Government guarantees the remaining 15% | Income under $125k (single) or $200k (couple). Property price caps apply per area |
| Regional First Home Buyer Guarantee | Same as above but for regional areas | Must have lived in or adjacent to target area for 12+ months |
| Family Home Guarantee | Single parents can buy with 2% deposit, no LMI | Single parent with at least 1 dependent child |
| First Home Super Saver Scheme | Withdraw voluntary super contributions (up to $50k) for your deposit. Tax-effective way to save | Must apply to ATO before signing a contract |
| Help to Buy | Government co-purchases up to 40% (new) or 30% (existing). You only need 2% deposit | Income under $90k (single) or $120k (couple). Property price caps |
Stamp Duty (Transfer Duty)
Stamp duty is a state government tax on property purchases. It's calculated as a percentage of the property price, and it can be a big number.
NSW: ~$26,600
VIC: ~$37,000
QLD: ~$17,500
WA: ~$27,600
SA: ~$29,300
TAS: ~$24,800
ACT: ~$22,100
NT: ~$25,800
Victoria is the most expensive. Queensland is the cheapest for this price point. First home buyers get significant concessions or exemptions in most states (see the grants section).
Important: Stamp duty is usually paid at or before settlement. It's a cash cost on top of your deposit. Some lenders will let you include stamp duty in the loan (called capitalising stamp duty), but this means a higher LVR and potentially LMI. Budget for it separately.
The Buying Timeline
Here's what the process looks like from start to finish. Total time: typically 8-16 weeks from pre-approval to moving in.
Get Pre-Approval (1-3 days)
A lender conditionally approves you for a loan amount. This tells you your budget and shows sellers you're serious. Pre-approval typically lasts 3-6 months. A broker can get this done fast, often same day.
Search for Property (2-12 weeks)
Inspect properties within your budget. Consider location, commute, growth potential, and condition. Get building and pest inspections on any property you're serious about (~$500-$800 combined).
Make an Offer or Bid at Auction
Private treaty: Submit an offer in writing. The vendor can accept, counter, or reject. You can negotiate.
Auction: You bid on the day. If you win, the contract is unconditional immediately, no cooling off. Have your finance ready.
Exchange Contracts
Sign the contract and pay the deposit (usually 5-10%, held in trust). In most states you have a 5-day cooling off period (except at auction). Engage a conveyancer/solicitor to review the contract before you sign (~$1,000-$2,000).
Formal Loan Approval (3-7 days)
Your broker submits the full application. The lender does a property valuation, verifies your documents, and issues unconditional approval. This is the big one, once you have formal approval, the deal is locked in.
Settlement (4-6 weeks after exchange)
Your solicitor, the seller's solicitor, the lender and (if applicable) the seller's lender all coordinate. Money changes hands, title transfers to you. You get the keys. You're a homeowner.
Week 1: Broker gets pre-approval for $680,000
Weeks 2-6: Inspects 12 properties, shortlists 3
Week 7: Offers $750,000 on a 2-bed apartment. Vendor counters at $760,000. They agree on $755,000
Week 8: Contracts exchanged, pays $37,750 deposit (5%), conveyancer reviews contract
Week 9: Broker submits formal application. Valuation comes back fine. Unconditional approval Day 4
Week 14: Settlement. Keys handed over. Sarah moves in.
Ready to get pre-approved?
A broker can get your pre-approval started today, often within 24 hours.
True Cost of Buying Calculator
The purchase price is just the start. Here's a tool to estimate the real total cash you'll need.
Estimates only. Stamp duty and LMI vary by lender and exact property details. Get exact numbers from a broker.
Conveyancer/solicitor: $1,000-$2,500
Building & pest inspection: $500-$800
Strata report (apartments): $200-$350
Home insurance: ~$1,200-$2,000/year (required before settlement)
Moving costs: $500-$2,000
Connection fees (utilities): $200-$500
Budget an extra $4,000-$6,000 on top of deposit, stamp duty and LMI for these costs.
Knowledge Check
LMI (Lenders Mortgage Insurance) protects:
At an auction, if you're the winning bidder:
The First Home Guarantee lets eligible buyers purchase with just 5% deposit by:
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