Short answer: no, you do not have to save a full 20% deposit to buy a home.
Many buyers in Brisbane and across Queensland are purchasing with deposits as low as 5–10 percent using a mix of lender options, government guarantees and family support. A 20% deposit is still very helpful because it usually means no Lenders Mortgage Insurance (LMI) and can give you sharper rates, but it is not a hard rule.
This guide walks through:
- When a 20% deposit really matters
- What happens if you buy with less
- How low you can realistically go
- How to decide what is right for you
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Use calculators to see what your deposit really means
Once you have a rough idea of your deposit size, it helps to see how that translates into real numbers, how much you might be able to borrow, what your repayments could look like and how much stamp duty you should plan for.
You can use our tools to do that in a few minutes:
- Use the borrowing power calculator to estimate how much a lender might let you borrow based on your income, deposit and other details.
- Try the home loan repayment calculator to compare repayments with different deposit sizes, interest rates and loan terms.
- Check the stamp duty calculator to see how much transfer duty you might pay on different purchase prices in Queensland.
Running these numbers side by side can make it much easier to answer the real question for your situation: do you really need a 20% deposit, or is a smaller deposit still workable?
Quick snapshot: your deposit options
Here is the big picture in simple terms:
- 20% deposit
Often no LMI, more equity from day one, can unlock better pricing. - 10–15% deposit
Very common. You may pay LMI, but you can get into the market sooner. - 5% deposit
Often used by first home buyers with schemes or lender support. You will almost always pay LMI unless you qualify for a government guarantee.
The “right” deposit is the one that balances your time in the market, your cash savings, your risk comfort and your long-term plans.
What does a 20% deposit actually mean?
A 20% deposit is simply 20% of the property price paid upfront.
- On a $700,000 property, a 20% deposit is $140,000
- Your home loan would cover the remaining $560,000
This is where Loan to Value Ratio (LVR) comes in. In this example:
- Deposit: 20%
- Loan: 80%
- So your LVR is 80%
Lenders see an 80% LVR as lower risk because you already have meaningful equity in the property. That is why so many people talk about 20% as the “magic” number.
Why 20% became the gold standard
There are three big reasons 20% is still used as a benchmark:
- You usually avoid LMI
Most lenders do not charge Lenders Mortgage Insurance when your LVR is 80% or lower. Once you borrow more than 80% of the property value, LMI usually becomes part of the picture. - You start with more equity
With a bigger deposit, you own more of the property from day one. That gives you more room if the market softens or your situation changes. - You may access better pricing
Some lenders reserve their sharpest rates and fee packages for clients with 20% or more deposit, because those loans are less risky for the bank.
From a risk and cost point of view, 20% is excellent. The challenge is that, in a growing market, it can take years to save.
The real trade-off: LMI versus waiting longer
If you have less than a 20% deposit, you can still get a loan in many cases. The main difference is that Lenders Mortgage Insurance is likely to be added.
Key points:
- LMI is a one-off premium that protects the lender, not you
- The cost depends on your LVR, loan size and lender policy
- It is often capitalised (added) to your loan so you do not pay it in cash upfront
So the big question becomes:
Is it better to
(a) buy now with a smaller deposit and pay LMI,
or (b) keep saving until you reach 20%?
In a rising market, waiting for 20% can mean the property you want keeps moving out of reach. In a flat or falling market, the equation can be different. That is why running the numbers for your exact situation is important.
Buying with less than 20%: how low can you go?
There are several ways buyers are entering the market with smaller deposits.
1. 10–15% deposit with LMI
This is a very common pathway.
Pros:
- You can buy sooner instead of saving for years
- The deposit target is more realistic while you are also paying rent
Cons:
- You will likely pay LMI
- Your monthly repayments are higher because you borrow more
For many clients, the extra LMI cost is acceptable if it means getting into a good property sooner.
2. 5% deposit with lender options and guarantees
A number of lenders will consider home loans with 5% genuine savings if you:
- Have stable income and employment
- Meet their credit and spending criteria
- Fit within their property and postcode rules
On top of that, there are national schemes that allow eligible first home buyers to purchase with a 5% deposit and avoid standard LMI because part of the loan is guaranteed by the government.
These schemes:
- Have strict eligibility rules
- Only apply to certain property types and price caps
- Have limited places each year
When they fit, they can dramatically reduce your upfront savings requirement.
3. Guarantor loans using family equity
Some lenders also offer family guarantee or family pledge loans, where a parent or close family member offers part of the equity in their own home as security.
This can allow you to:
- Borrow up to 100% of the purchase price
- Avoid LMI even with a small cash deposit
You still need to be able to comfortably service the loan. Everyone involved also needs to understand that if repayments are not maintained, the guarantor’s property could be at risk. Because of this, clear advice and open family conversations are essential.
When might a full 20% deposit still be worth it?
Even though you do not need 20%, there are situations where it can still be the smarter move.
Aiming for a full 20% deposit might make sense if:
- You can realistically reach it within a reasonable timeframe
- You are buying a higher-value property where LMI would be very expensive
- Your income is variable and you prefer lower repayments and less debt
- You are naturally conservative with money and want more buffer
In these cases, staying in the rental market a bit longer to build a stronger deposit position can give you more peace of mind.
When a smaller deposit can work in your favour
On the other hand, using a smaller deposit can make sense when:
- You are renting in an area where rent is similar to, or higher than, loan repayments
- Property prices are trending up and likely to outrun your savings
- You qualify for grants or guarantees that reduce the extra costs
- You have strong income and want to start building equity sooner
Often the tipping point is when the extra time spent saving 20% ends up costing you more in missed capital growth and rent than the one-off LMI cost.
How to decide what deposit target is right for you
Instead of fixating on “20% or nothing”, it helps to compare a few realistic scenarios:
- Buy now with a 5–10% deposit and pay or minimise LMI
- Buy in 1–2 years with a larger deposit and no LMI
- Use a guarantor or scheme to change the equation entirely
For each scenario, you want to see:
- Estimated purchase price
- Deposit required
- LMI cost (if any)
- Loan size and monthly repayments
- How your savings and emergency buffer will look after settlement
Once you put real numbers to each option, the best path forward is usually much clearer.
How Mortgage Box can help
Mortgage Box works with buyers across Brisbane and Queensland who are trying to answer this exact question in the real world, not just on paper.
We can help you:
- Compare what buying now with a smaller deposit looks like versus waiting
- Estimate potential LMI costs and how to reduce them where possible
- Check your eligibility for low-deposit schemes and concessions
- Explore first home buyer mortgage options that fit your goals and risk comfort
- Map out a plan for your deposit, stamp duty, fees and a sensible buffer
If you are unsure whether to hold out for 20% or use a smaller deposit to get started, a conversation with a broker can save you months of guessing. So if you are looking into property and want to chat about your options contact us at mortgage box and we can sit down and go through your options.
