"You need 20% deposit" is the number most people hear before they have looked into buying a home in Queensland at all. It is a useful benchmark, not a hard rule. What your deposit actually needs to be depends on the lender, the property price, whether you qualify for a government scheme, and how much lenders mortgage insurance you are willing to pay to get in sooner.
Why 20% is the number everyone quotes
A 20% deposit brings your loan-to-value ratio (LVR) to 80% or below, which is the threshold most lenders use to waive lenders mortgage insurance (LMI). Below that threshold, LMI is typically required - a one-off premium that protects the lender, not you, if the loan is not repaid and the property sale does not cover the shortfall.
What a 5%, 10% and 20% deposit actually changes
| Deposit | LVR | Typical outcome |
|---|---|---|
| 20%+ | 80% or less | No LMI, broadest lender choice, often better rate tiers |
| 10% | 90% | LMI applies, still broad lender choice |
| 5% | 95% | Higher LMI, fewer lenders, may suit First Home Guarantee |
LMI is not a fixed fee - it scales with both your deposit size and the loan amount, and can add a meaningful sum to your upfront costs or be capitalised into the loan itself.
What counts as "genuine savings"
Most lenders want to see that a portion of your deposit - commonly 5% of the purchase price - has been genuinely saved or held over time, rather than appearing in your account immediately before you apply. A deposit gift from family or a government grant can often make up the remainder, but the genuine savings component is usually assessed separately from the total deposit figure.
Is a bigger deposit always worth waiting for?
A larger deposit can mean no LMI, a lower LVR-based rate tier, and smaller ongoing repayments. But it also means more time spent saving while paying rent and while property prices may keep moving. The maths is genuinely personal: sometimes the cost of LMI is smaller than a year or two of additional rent and price growth, sometimes it is not. A broker can model both paths against your actual numbers.
For a plain-English breakdown of the rate terms involved in that comparison, see our guide to APR vs. interest rate vs. comparison rate.
Government schemes that lower the deposit bar
Eligible first home buyers in Queensland may be able to reduce the deposit needed well below 20% through schemes such as the First Home Guarantee, alongside grants and stamp duty concessions. Eligibility depends on income, property price caps and other criteria, and places under some schemes are limited. See our full guide to first home buyer grants and schemes in Queensland for what each is worth and whether they can be combined.
The takeaway
20% deposit avoids LMI and keeps lender options widest, but it is not a requirement to buy - many Queensland buyers purchase with 5-10% deposit, with or without a government scheme. The right deposit for you depends on how the extra saving time compares to the LMI cost, and whether you qualify for support that changes the equation entirely.
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Finance is subject to lender approval, lending criteria, terms, conditions, fees and charges. The information in this article is general and does not take into account your personal or business needs.
Last reviewed: 10 September 2026. This article was prepared using information available from the Australian Securities and Investments Commission and Moneysmart. This content provides general information only. It should not be treated as personal financial, tax, legal or credit advice.
Frequently asked questions.
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No. Many lenders will approve a home loan with a 5-10% deposit. The trade-off is that below 20% you will typically pay lenders mortgage insurance (LMI), and eligible first home buyers may be able to avoid LMI entirely through the First Home Guarantee scheme with as little as 5% deposit.
LMI protects the lender, not you, if you default and the sale of the property does not cover the outstanding loan. It is a one-off premium, usually added to your loan amount, and the cost increases the smaller your deposit is relative to the property value.
Most lenders want to see that at least 5% of the purchase price has been saved or held over a period of time (commonly three months), rather than gifted or borrowed immediately before applying. A gift or grant can often make up the rest of the deposit, but the genuine savings component has its own requirement.
Often, yes - a lower loan-to-value ratio (LVR) can unlock better rate tiers with some lenders, on top of avoiding or reducing LMI. But the rate difference should be weighed against how long it would take to save the extra deposit, and what you are paying in rent in the meantime.
Eligible first home buyers may be able to purchase with as little as 5% deposit under the scheme, with the government guaranteeing the remaining amount up to 15% so LMI is not charged. Places are limited and eligibility depends on income, property price caps and other criteria - see our guide to first home buyer grants and schemes in Queensland for the detail.
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