If you’ve been thinking about buying your first home in Melbourne, you’ve probably asked yourself the golden question:
“How much deposit do I need?”
We hear it every day and the answer might surprise you. The idea that you must have a 20% deposit is one of the biggest myths we come across. The truth? Many first home buyers in 2025 are getting into the market with much less.
Here’s what you really need to know.
💰 The 20% Myth (and Why You Don’t Always Need It)
While a 20% deposit is ideal (because you avoid lenders mortgage insurance or “LMI”), it’s not a dealbreaker. Plenty of first home buyers are purchasing with as little as 5% or even zero in some cases with the right support.
Let’s break it down:
20% deposit: Avoids LMI, makes lenders happy, gives you stronger borrowing power.
10% deposit: Common among many buyers. You’ll usually pay LMI, but it gets you in the door sooner.
5% deposit: Absolutely doable with certain lenders or government support (more on this below).
0% deposit: Yes – it’s possible if you have a guarantor or qualify for special government schemes.
🏘️ What Does That Look Like in Melbourne Dollars?
Let’s say you’re eyeing a property worth $650,000 (around the median for a unit or townhouse in Melbourne right now):
| Deposit % | Amount Needed | LMI Payable? |
|---|---|---|
| 20% | $130,000 | No |
| 10% | $65,000 | Likely |
| 5% | $32,500 | Yes |
💡 Note: On top of your deposit, you’ll also need to factor in costs like conveyancing, building inspections, and stamp duty (though eligible first home buyers may get discounts or exemptions).
🧾 What About the First Home Guarantee?
If you’re eligible, the First Home Guarantee could be a game-changer. It allows you to buy a home with as little as 5% deposit—without paying LMI.
To qualify, you need to:
Be a first home buyer
Live in the property
Provide the latest years Notice of assessment confirming taxable income under $125,000 (single) or $200,000 (couple)
Buy under the price caps for your area (currently $800,000 in metro Melbourne)
✅ Real example: One of our clients in Chelsea thought she needed to save for another 18 months. After checking her eligibility, we helped her secure a property with just 5% deposit and no LMI, saving her over $20,000 upfront.
Important note:
Eligibility is based on your taxable income as shown on your most recent Notice of Assessment from the ATO. If you earned under the threshold in the last financial year but are on track to exceed it this year, you may still qualify, since eligibility is assessed on your last NOA.📝 To apply, you’ll need to provide:
- Your latest Notice of Assessment showing taxable income under the limits
🔓 LMI Waivers for Key Professions
Some lenders offer LMI waivers for borrowers in specific professions, even if you’re borrowing up to 90% of the property value. This can save you tens of thousands of dollars.
Please note: Not all lenders offer these waivers, and eligibility varies, so it’s worth speaking to a broker who can shop around for you, so you may be surprised to hear you’re profession allows you to have an LMI waiver.
👨👩👧👦 What If I’m Buying With a Partner or a Parent’s Help?
Joint applications can boost your borrowing capacity and shared deposit.
Family guarantor options may let you borrow up to 100% of the property value with no cash deposit at all.
These options can be especially helpful if you’ve got strong income and savings, but not quite enough for a full deposit.
📉 So… Should I Wait to Save More, or Get in Sooner?
It depends on your goals, income, and how fast property prices are moving. Sometimes waiting to save a bigger deposit makes sense. But in Melbourne’s market, where prices can rise while you’re saving, getting in sooner can put you ahead.
That’s where a good mortgage broker comes in, we help you weigh up the numbers and the strategy.
✅ Let’s Find Out What’s Possible
Everyone’s situation is different. You might be closer than you think.
Bonus Tip: Start with a Pre-Approval
Even if you’re still months away from buying, getting pre-approval gives you:
A clear borrowing limit
Confidence to house-hunt
Peace of mind you’re on the right track.
Ready to find out where you stand?
Let’s crunch the numbers together and make your first home a reality.
Disclaimer: While every effort has been made to ensure the accuracy of this information, it is general in nature and should not be considered personal financial advice. We recommend speaking with a qualified mortgage broker to assess your individual circumstances and ensure any advice is tailored to your needs.
