$140,000. That's a 20% deposit on a $700,000 home, and it's the number that has a generation of renters convinced ownership sits ten years away. It doesn't.
How much deposit you need for a first home in Australia in 2026 sits between 2% and 15% of the purchase price, depending on your circumstances, and 20% appears nowhere on that list. Housing Australia will guarantee eligible buyers at 5%, with no income caps and no place limits. Through Wity, any borrower can buy with 15% down and pay no LMI. Doctors and dentists can go to 5%.
The timing matters too. The RBA lifted the cash rate three times across February, March and May 2026 before holding at 4.35% in June, and auction clearance rates have slipped into the low 40s on Cotality's June 2026 numbers. Rising rates thin out the crowd. Fewer bidders on auction day, more room to negotiate on price, and a genuine window to get your deposit strategy sorted before the next RBA decision on 11 August 2026.
How much deposit do you actually need for a first home?
It depends on which pathway you take, not on the old default. On a $700,000 purchase, the options look like this:
| Pathway | Deposit | On a $700,000 home | LMI payable |
|---|---|---|---|
| The old 20% default | 20% | $140,000 | None |
| Wity's universal tier (any borrower) | 15% | $105,000 | None, waived up to 85% LVR |
| Nurses, midwives, allied health and senior professionals (through Wity) | 10% | $70,000 | None, waived up to 90% LVR |
| Australian Government 5% Deposit Scheme (formerly the First Home Guarantee) | 5% | $35,000 | None, Housing Australia guarantees the gap |
| Doctors and dentists (through Wity) | 5% | $35,000 | None, waived up to 95% LVR |
| Single parents (2% deposit pathway of the scheme) | 2% | $14,000 | None |
Six pathways. One of them is obsolete.
They stack with state help as well. Queensland has abolished stamp duty for first home buyers building new, with no price cap, and the ACT scrapped all first home buyer duty from 1 July 2026. On top of the deposit itself, budget roughly 3-5% of the price for settlement costs, conveyancing and inspections.
Who decided 20% was the magic number anyway?
Not parliament. Not the RBA. The 20% figure exists because most lenders charge Lenders Mortgage Insurance the moment your loan passes 80% of the property's value, and on an $800,000 purchase with a 10% deposit that premium typically runs $12,000 to $18,000, added to your loan so you pay interest on it for decades. We unpack the whole mechanism in LMI explained.
You've been told to save 20%. That advice is costing you years, and it's built on a rule that no longer applies.
Two things broke it. First, the government's 5% guarantee went uncapped in October 2025. Second, specialist lending policies available through Wity waive LMI well past the old line: up to 85% LVR for any borrower, regardless of profession; up to 90% for nurses, midwives, allied health professionals and senior professionals such as lawyers and accountants; and up to 95% for doctors and dentists. On a $1M purchase at 85%, that's typically $15,000 to $22,000 in LMI you don't pay.
Parents who own property offer a third route. A guarantor home loan uses their equity as security, which can take your cash deposit close to zero, though it puts their asset partly on the line.
How does the 5% scheme work now the caps are gone?
Since 1 October 2025, the 5% Deposit Scheme has had no income test and no annual place limits. Any eligible first home buyer with 5% saved can apply, and Housing Australia guarantees up to 15% of the loan so participating lenders treat you as if you'd saved 20%. No LMI. The old regional scheme was folded in at the same time, and the scheme's 2% deposit pathway for single parents continues.
The catch is the price caps: $1.5M in NSW, $950,000 in Victoria, $1M in Queensland, $900,000 in South Australia, $850,000 in WA and $1M in the ACT. Against Cotality's June 2026 medians ($1.266M in Sydney, $1.118M in Brisbane, $808,000 in Melbourne) those caps cover units and townhouses in most capitals, but not the median Sydney or Brisbane house. The full eligibility detail lives in our 5% Deposit Scheme guide.
A separate option, Help to Buy, launched on 5 December 2025 as a shared-equity scheme. It reintroduces income caps ($103,000 single, $165,000 joint from 1 July 2026) and runs on a small lender panel for now, so for most buyers the guarantee is the simpler door.
Buy now with 5%, or keep saving for 20%?
Same couple. Two paths.
Mia and Jack rent in Footscray for $550 a week and have $55,000 saved. The townhouse they want costs $690,000.
Path A: wait for 20%. They need $138,000. Saving $2,300 a month, the extra $83,000 takes them three more years, during which they pay about $85,800 in rent, and if Melbourne prices grow even a modest 3% a year, the same townhouse costs around $754,000 in 2029. Their 20% target quietly climbs to $151,000. The goalposts move faster than they can run.
Path B: buy now with 5%. Under the 5% Deposit Scheme (Victoria's $950,000 cap clears it easily), they buy with $34,500 down and no LMI. By mid-2029, at that same 3% growth, they're sitting on roughly $64,000 in price growth plus around $20,000 of principal repaid, an equity position near $119,000.
The gap: roughly $64,000 in growth captured versus a savings target that moved $13,000 further away, plus $85,800 in rent that built nothing. Path B carries the bigger loan and bigger repayments than their rent, so it isn't free money. It's a trade: repayments on your own asset instead of rent on someone else's.
Based on typical scenarios. Individual outcomes vary.
What can still trip you up?
The deposit is only one of the tests. Three others catch first home buyers who thought the hard part was over.
Genuine savings. Lenders want to see the deposit accumulate, not appear. We've watched an approval stall for six weeks because a deposit landed as one lump sum the month before the application; when a lender asks for genuine savings, they generally mean three months of statements showing the money building. Our genuine savings guide covers what counts and what doesn't.
Serviceability. APRA held its 3% buffer at the May 2026 review, so a lender assesses your repayments at your actual rate plus three percentage points. A smaller deposit means a bigger loan to service. The Wity Borrowing Power Assessment models your capacity across 45+ lenders rather than one bank's calculator, which is how buyers discover the difference between their weakest and strongest lender match can run into six figures.
Deposit speed. The First Home Super Saver scheme lets you build up to $50,000 of deposit inside super at concessional tax rates, $15,000 per year, and the ATO tax break can shave a year or more off the savings grind. The mechanics are in our FHSS guide.
What should you do this month?
Work out which row of the table you sit in. Check your target suburb against the price caps. Then get your borrowing power tested properly while the auction crowds are thin, because rising-rate windows reward buyers who arrive prepared, and they close without much notice.
Want to see how much deposit your situation needs? Start the Wity questionnaire →: free, no credit check, two minutes.