How Much Deposit Do I Need to Buy a Property?

Whether you’re dreaming of your first apartment, planning your next investment, or upgrading to fit a growing family, the big question remains: how much deposit do I actually need to buy a property in Melbourne?

The General Rule: 20% Is Ideal

Most lenders recommend a 20% deposit of the purchase price. That’s $140,000 on a $700,000 home. With this amount, you avoid Lenders Mortgage Insurance (LMI)—an added cost when your deposit is less than 20%. But that doesn’t mean you’re locked out if you have less saved up.

Let’s break it down by buyer type:

First Home Buyers

Good news—there’s help out there. First home buyers in Victoria have access to several government schemes that can lower the upfront cost:

  • First Home Guarantee (FHBG): Buy with as little as 5% deposit without paying LMI (if eligible).

  • First Home Owner Grant (FHOG): Get up to $10,000 if you’re buying or building a new home.

  • Stamp duty discounts or exemptions: If your property is under $600,000, you might pay no stamp duty at all.

So while 20% is ideal, many first home buyers get started with just 5–10%—especially with the right support.

Investors

For investors, the rules are a little tighter. Most lenders prefer at least a 10–20% deposit, and you’ll still need to budget for stamp duty, legal fees, and potential LMI if your deposit is under 20%.

A larger deposit can help with:

  • Lower interest rates

  • Better cash flow from day one

  • Higher borrowing power for your next investment

Some savvy investors even unlock equity from an existing property to use as a deposit on their next one—no cash needed upfront.

Upsizers

If you’re upgrading, your existing home might be the key to your next deposit. You can use the equity in your current property as part of the deposit, especially if its value has gone up over time.

Many upsizers use a mix of:

  • Sale proceeds from their current home

  • Existing equity

  • Savings

Don’t forget to factor in the costs of buying and selling—like stamp duty, agent fees, and moving costs. A good mortgage strategy can help you upgrade smoothly, sometimes even before selling your current place.

The Bottom Line?

  • 20% deposit = ideal, no LMI

  • 5–10% = possible with LMI or government support

  • Equity = a powerful tool for investors and upsizers

Your deposit doesn’t have to be a dealbreaker. With the right guidance, there’s usually a path forward—no matter where you’re at.

If you need help figuring out what you can afford? Give us a call and we’ll point you in the right direction to a great mortgage broker—they’ll help you map out your options and see what you’re eligible for.

Dianne Kristel Catindoy