Interactive explainer
True cash to buy estimator
Enter a property price, your deposit percentage and your state, and the estimator shows the deposit, an LMI flag if you are under 20%, indicative stamp duty for that state, plus conveyancing and inspection fees, all summed to the real upfront cash you need. It works from the thing savers miss: the cash on top of the deposit.
Estimate your real cash to buy
Indicative only, for an owner-occupied first-home purchase. Stamp duty and concessions vary by exact price and eligibility; always check your state revenue office.
Real upfront cash to buy
$
Assumptions: stamp duty uses indicative first-home concession bands by state (full or partial relief below state price caps, tapering above them); conveyancing fixed at $1,750; building and pest inspections at $700; loan fees at $600. LMI is flagged when the deposit is under 20% but its premium is not added here, since it is usually capitalised into the loan; budget several thousand dollars for it separately. Indicative 2026 figures. Sources: state revenue offices (Revenue NSW, State Revenue Office VIC, QLD Office of State Revenue, RevenueSA, RevenueWA), Housing Australia (First Home Guarantee).
| State | Example price | Deposit | Indicative stamp duty | Conveyancing | Inspections | Real cash to buy |
|---|---|---|---|---|---|---|
| NSW | $800,000 | 5% ($40,000) | $0 (first-home exemption to $800k) | $1,500 to $2,000 | $600 to $800 | ~$42,300 |
| VIC | $700,000 | 5% ($35,000) | ~$24,700 (concession tapers to $750k) | $1,500 to $2,000 | $600 to $800 | ~$62,000 |
| QLD | $600,000 | 5% ($30,000) | $0 (first-home concession to $700k) | $1,200 to $1,800 | $600 to $800 | ~$32,100 |
| SA | $600,000 | 5% ($30,000) | $0 (first-home relief on new/eligible homes) | $1,200 to $1,800 | $600 to $800 | ~$32,100 |
| WA | $550,000 | 5% ($27,500) | ~$0 to $3,800 (first-home rate to $550k) | $1,200 to $1,800 | $600 to $800 | ~$31,500 |
The short answer
What a house deposit target really is
Most people saving for a house treat one number as the finish line: 20% of the purchase price. It feels official, like a rule. It is not. The 20% figure is the threshold at which most lenders stop charging Lenders Mortgage Insurance (LMI), a one-off premium that protects the bank, not you, when you borrow with a smaller deposit. There is no legal minimum deposit, and through schemes like the First Home Guarantee eligible buyers can enter with as little as 5% and pay no LMI at all. The number that actually decides whether you can buy is not the deposit alone, it is the deposit PLUS the upfront costs almost every first-time saver underbudgets: stamp duty (which swings wildly by state and by whether you qualify for a first-home concession), conveyancing, building and pest inspections, and loan fees. This page reframes the savings target around the true cash to buy, so you save for the bill that actually lands, not the one you imagine.
Here is the core takeaway in one line: the 20% deposit is the point at which most lenders stop charging Lenders Mortgage Insurance, not a legal minimum, and the number that actually decides whether you can buy is the deposit PLUS the upfront costs (stamp duty, conveyancing, inspections and loan fees) that savers routinely leave out. That reframes the whole savings plan. Twenty per cent is a goal worth aiming at because it avoids the LMI premium, but it is not the only door in, and it is never the full bill. Save for the cash that actually lands at settlement.
Reframe the assumption: "deposit" and "cash to buy" are not the same number. You can cross the deposit line and still be short at settlement because stamp duty, conveyancing, building and pest inspections and loan fees were never in the plan. Set your target as the full upfront cash for your price and your state, then decide whether to reach 20% or enter sooner with LMI or a guarantee scheme.
The blind spot
Where the 20% deposit target hides the real bill
Most "how to save for a house deposit" content does one of three unhelpful things, and each one sets you up to be short of cash on settlement day.
First, it treats 20% as a rule. It tells you to save a fifth of the price as if it were compulsory, when 20% is simply the threshold at which lenders stop charging LMI. Savers who believe it is mandatory either delay buying for years to reach a number they never needed, or panic that homeownership is impossible, when 5% and 10% paths exist.
Second, it stops at the deposit and ignores the rest of the cash. The deposit is only one line in the settlement bill. Stamp duty alone can be tens of thousands of dollars depending on your state and price, and conveyancing, building and pest inspections and loan fees stack on top. A plan that saves only for the deposit lands you at settlement short of the very money you need to complete the purchase.
Third, it treats stamp duty as a flat add-on. In reality it is a state tax that swings enormously by jurisdiction and by price, and first-home concessions can erase it entirely below a cap, then taper sharply above. Quoting a single national figure for upfront costs hides the fact that two identical purchases in different states can need very different cash. The result is a savings target that is precise about the wrong number and vague about the one that matters.
How the cash to buy is built, piece by piece
Expert analysis: what your real savings target is made of
The deposit and the 80% lending line
Lenders think in loan-to-value ratio (LVR), the share of the property they are lending against. Borrow more than about 80% of the value, that is, put down less than 20%, and the lender charges Lenders Mortgage Insurance, a one-off premium that protects the lender if you default. That is the entire reason 20% has folklore status: it is the LVR at which LMI disappears, not a legal floor. You can borrow at 90% or 95% LVR and pay the premium, which is commonly capitalised into the loan rather than paid in cash. So the deposit is a dial, not a switch: more deposit means less LMI and a smaller loan, but there is no minimum the law sets.
Stamp duty: the state tax that reshapes the target
Stamp duty (transfer duty) is levied by each state and territory, so it is the biggest reason two buyers with the same budget need very different cash. It scales with the dutiable value of the property, and crucially first-home concessions and exemptions can cut it to zero below a price cap and then taper as the price rises. NSW, for example, exempts eligible first-home buyers up to a threshold; Queensland and others run their own concession bands; Victoria tapers a concession across a price range. The practical effect is that your savings target moves with both your state and whether you qualify, which is exactly why a single national number is misleading. Always price your own duty at your own state revenue office.
The fees savers forget: conveyancing, inspections and loan costs
Beyond duty sit the smaller but unavoidable cash items. Conveyancing or solicitor fees to handle the legal transfer commonly run $1,200 to $2,000. Building and pest inspections, which protect you from buying a problem, add roughly $600 to $800 combined. Loan or lender fees, such as application and settlement charges, add a few hundred dollars more. None of these are the deposit, all of them are cash you need at or before settlement, and together they can add several thousand dollars to the target the deposit-only plan never counted.
Buying sooner: LMI versus a government guarantee
There are two ways to enter with less than 20% down. You can simply pay LMI and borrow at higher LVR, which lets you buy now and spread the premium over the loan. Or, if you are eligible, the First Home Guarantee through Housing Australia lets first-home buyers purchase with as little as 5% and no LMI, because the government guarantees the gap. Both can be the right call when prices are rising faster than you can save, since waiting to reach 20% can mean the target keeps moving away. The catch with both is that a smaller deposit does not shrink the upfront costs: you still need the stamp duty, conveyancing, inspections and fees in cash, so the smaller-deposit path only works when the full cash to buy is covered.
What this looks like in real savings plans
How the 20% myth catches Australian savers out
The mechanics above are not theory. They are exactly how households end up delayed, short on cash, or surprised at settlement:
The saver who waited for a number they never needed
A renter spends three extra years grinding toward 20% because they believe it is compulsory. In that time prices climb, so the deposit they are chasing keeps growing. Had they used a 5% guarantee or accepted LMI, they could have bought years earlier at a lower price, and the rent paid while waiting was money gone for good.
The buyer who saved the deposit and forgot the duty
A first-home buyer hits their deposit target and starts house-hunting, only to discover that in their state the property they want sits just above the stamp-duty concession cap. Tens of thousands of dollars in duty suddenly appear in the settlement bill, money that was never in the plan, and the purchase stalls while they scramble.
The interstate price-tag trap
A couple compares two similar homes at the same price in different states and assumes the cash to buy is identical. One state exempts them from duty as first-home buyers; the other taxes the purchase in full. The same headline price needs very different savings, and they only learn it after making an offer.
The thin-deposit buyer with no buffer
A buyer scrapes together a 5% deposit but treats it as the whole cost, leaving nothing for conveyancing, inspections and loan fees. They either skip the inspection (and risk buying a problem) or borrow more to cover the fees, entering ownership with no cash buffer for a rate rise or a repair.
The insider insight
The deposit is a dial, the cash to buy is the real target
Here is the part most savings guides never put plainly. The deposit percentage is not a pass-or-fail gate, it is a dial you set against two costs that pull in opposite directions: LMI on one side, and the cost of waiting on the other. Push the dial to 20% and you avoid the premium, but you may spend years saving while prices and rent run on. Set it at 5% or 10% and you can buy sooner, paying LMI or using a guarantee, but only if the rest of the cash, the stamp duty and fees, is genuinely in the bank. The buyers who get this right are not the ones who hit a magic percentage, they are the ones who priced the full cash to buy for their state and their price first, then chose where to set the dial.
The non-obvious truth: there is no minimum deposit, only a threshold (20%) that turns off LMI and a guarantee scheme (5%) that does the same for the eligible. The number that actually determines whether you can settle is the deposit plus stamp duty plus conveyancing plus inspections plus loan fees, and that number changes with your state. Save for that total, decide the deposit dial on the maths of LMI versus waiting, and the 20% mythology stops running your timeline.
The practical consequence: do not set your savings goal at 20% of a price out of habit. Price the full cash to buy for the home and state you are aiming at, then work backwards to a deposit that balances the LMI premium against how long the extra would take to save.
Grounded in the analysis
What you should actually do to set your deposit target
Specific moves that follow from how the cash to buy is built, not generic savings tips.
Target the full cash to buy
Price the whole bill, not the deposit: deposit plus stamp duty for your state and price, conveyancing, building and pest inspections, and loan fees. Use your state revenue office to get the real duty for your bracket, and make that total your savings goal.
Decide the deposit dial on the maths
Work out how long reaching 20% takes versus buying sooner with LMI or the First Home Guarantee. Compare the LMI premium against the rent and price growth you would face while saving. Choose 5%, 10% or 20% on numbers, not on the assumption that 20% is compulsory.
Check your scheme and keep a buffer
Confirm your eligibility for the First Home Guarantee and any first-home grant or duty concession before you set the target, since they can cut the cash needed sharply. Then keep a cash buffer past settlement so you are not entering ownership with nothing left for a repair or a rate rise.
Planning the wider move? See our guide to buying a house, work through the moving checklist, and when the keys are yours, sort your utility connections.
Current figures, last updated 2026-06-16
Indicative Australian house-deposit and upfront-cost figures for 2026. Sources: state revenue offices (Revenue NSW, State Revenue Office VIC, QLD Office of State Revenue, RevenueSA, RevenueWA) and Housing Australia for the First Home Guarantee. Stamp duty and concessions vary by exact price, dutiable value and eligibility, so treat every figure as a ballpark and check your own state revenue office.
The bottom line
Why your savings target is bigger and smaller than you think
The 20% deposit is a useful goal for one reason only: it switches off LMI. It is not a law, not a minimum, and never the whole bill. The number that decides whether you can actually settle is the deposit plus stamp duty, conveyancing, building and pest inspections and loan fees, and that total moves with your state and whether you qualify for a first-home concession. So price the full cash to buy first, check your eligibility for the First Home Guarantee and any duty concession, then set the deposit dial on the maths of the LMI premium against the cost of waiting. With prices high and leases turning over, the buyers who get in soonest and safest in 2026 are the ones who saved for the real cash to buy, not for a percentage they treated as a finish line.
Common questions
A Selectra expert answers your house deposit questions
There is no legal minimum. The 20% figure everyone quotes is the deposit at which most lenders stop charging Lenders Mortgage Insurance (LMI), not a rule you have to meet. Many buyers purchase with 10% or 5%, paying LMI on top, and eligible first-home buyers can use the First Home Guarantee to buy with as little as 5% and no LMI at all. What you genuinely need is the deposit your lender requires for that property PLUS the upfront costs: stamp duty, conveyancing, building and pest inspections, and loan fees. Save for the full cash to buy, not the deposit in isolation, because the extra costs can run to tens of thousands of dollars.
Lenders Mortgage Insurance is a one-off premium a lender charges when you borrow more than about 80% of a property's value, that is, when your deposit is under 20%. It insures the lender against you defaulting; it does not protect you. Twenty per cent is therefore a threshold to avoid LMI, not a minimum deposit. You can absolutely buy with less and pay the premium, which on a typical purchase can run from a few thousand to well over ten thousand dollars and is often added to the loan. Whether crossing the 20% line is worth it depends on how long it would take you to save the extra and what prices are doing while you wait.
The big one is stamp duty (transfer duty), which varies enormously by state and by price, and which first-home concessions can reduce to zero in some states and at some price points. Then there is conveyancing or solicitor fees (commonly $1,200 to $2,000), building and pest inspections (around $600 to $800 combined), and loan or lender fees such as application and settlement charges. Add LMI if your deposit is under 20%, plus moving costs and connecting utilities. These are real cash you need at or before settlement, which is exactly why budgeting only for the deposit leaves people short.
Hugely, and it is the single biggest swing between buyers. Stamp duty is a state tax, so the same priced home can carry very different duty in NSW, Victoria, Queensland, SA and WA. First-home concessions and exemptions can wipe it out entirely below a price cap (for example a full exemption up to a threshold), then taper as the price rises. So two people buying identical $700,000 homes in different states, one eligible for a concession and one not, can need tens of thousands of dollars more or less in upfront cash. Always check your own state revenue office for the duty on your price and your eligibility before you set a savings target.
Often yes, if you have budgeted the full upfront cash. The First Home Guarantee lets eligible first-home buyers purchase with as little as 5% and no LMI, and lenders will lend at 90% or 95% with LMI added. Buying sooner with a smaller deposit can make sense when prices are rising faster than you can save, because waiting to reach 20% can mean chasing a moving target. The risk is entering with thin savings and no buffer for the upfront costs or a rate rise. The smaller-deposit path works when the deposit is small but the total cash to buy, including stamp duty and fees, is fully covered.
It depends on the maths of your situation, not on the 20% myth. Saving to 20% avoids the LMI premium and gives you a bigger equity buffer, which is the safer path if you can get there in a year or two without prices running away. Buying earlier with LMI or a guarantee scheme can be the better call when rents are high, prices are climbing, and the cost of waiting outweighs the premium. Run both: estimate how long the extra deposit takes to save, what the LMI premium would be, and what you expect prices to do in that window, then decide on numbers rather than on the assumption that 20% is compulsory.
