One of the biggest misconceptions in the Australian property market is that buyers always need a 20% deposit to purchase property.
The reality is:
many buyers can enter the market with far less depending on their situation, loan structure, and lender policy.
At Truth Group, I regularly help buyers understand what deposit options may actually be available to them and how different deposit sizes can affect borrowing power, repayments, and lender requirements.
Understanding your deposit strategy early can help you avoid unnecessary delays and create a clearer property buying plan.
Can You Buy Property With a 5% Deposit?
Yes — in some situations, buyers may be able to purchase property with as little as a 5% deposit.
This is more common with:
- first home buyers
- strong income applicants
- buyers using government schemes
- buyers with stable employment
However, lower deposit loans often involve:
- higher Loan to Value Ratios (LVR)
- Lenders Mortgage Insurance (LMI)
- stricter lender policies
- stronger servicing requirements
A 5% deposit can help buyers enter the market sooner, but it’s important to understand the full costs involved.
What Happens With a 10% Deposit?
A 10% deposit is often viewed as a more balanced position.
It may:
✔ improve lender options
✔ reduce LMI costs
✔ improve borrowing flexibility
✔ strengthen applications
Many buyers aim for 10% because it can provide a middle ground between entering the market sooner and reducing overall loan risk.
Why Is a 20% Deposit Important?
Traditionally, a 20% deposit has been considered the “ideal” deposit amount.
This is because buyers with a 20% deposit may:
✔ avoid Lenders Mortgage Insurance (LMI)
✔ access more competitive lender options
✔ reduce overall loan size
✔ improve cash flow long term
However, waiting years to save 20% is not always the right strategy for every buyer.
Sometimes entering the market earlier with the right property and finance structure may make more sense.
What Is Lenders Mortgage Insurance (LMI)?
LMI is an insurance premium designed to protect the lender — not the buyer.
It usually applies when buyers borrow above 80% of the property value.
The amount can vary significantly depending on:
- deposit size
- loan amount
- property value
- applicant profile
- lender policy
Many buyers are surprised by how much LMI can cost, which is why understanding your numbers early matters.
What Are Genuine Savings?
Some lenders require buyers to show “genuine savings.”
This usually means demonstrating:
- consistent savings history
- funds held over time
- stable financial behaviour
Genuine savings may include:
✔ savings accounts
✔ term deposits
✔ shares
✔ equity in some situations
Different lenders assess genuine savings differently.
What About Guarantor Loans?
Some buyers use guarantor loans to enter the property market sooner.
This often involves a family member offering equity in their property as additional security.
Guarantor strategies may help buyers:
✔ reduce deposit requirements
✔ avoid or reduce LMI
✔ increase borrowing flexibility
However, guarantor loans involve risks and responsibilities for both parties, which is why proper advice matters.
The Right Deposit Strategy Depends on Your Situation
There is no “one size fits all” answer.
The right deposit amount depends on:
- income
- borrowing capacity
- long-term goals
- property price
- lender policy
- risk tolerance
- cash reserves
At Truth Group Buyers Agent & Mortgage Broker, I help buyers understand:
✔ how much they may be able to borrow
✔ deposit options available
✔ finance structure strategies
✔ suburb affordability
✔ property buying plans
The goal is not just getting approved —
it’s creating a smarter property strategy.
Need Help Understanding Your Deposit Options?
If you are thinking about buying property and want to understand what deposit options may suit your situation, reach out to Truth Group.
Having a clear finance and property strategy can help simplify the process and reduce costly mistakes.
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