The deposit is not the only number that matters

First home buyers · 7 min read · Updated September 2026

Almost everyone who calls us for the first time has a deposit number in their head. It is usually a good number, saved carefully over several years. What comes as a surprise is how much of it disappears before the keys change hands.

1. The deposit itself

Twenty per cent of the purchase price is the traditional benchmark, because at that point most lenders stop charging lenders mortgage insurance. On an $800,000 property that is $160,000 — which, at current Sydney and Melbourne prices, takes most couples the better part of a decade to save.

The good news is that 20% is a threshold, not a requirement. Plenty of loans settle at 10%, 5%, or with no deposit at all where a family member offers security. The trade-off is the insurance premium, which brings us to the second number.

2. Lenders mortgage insurance

LMI protects the lender, not you, if the loan goes bad and the property sells for less than the debt. It is charged once, and it is usually capitalized — added onto the loan rather than paid in cash.

The premium scales sharply with how little deposit you have. At a 10% deposit on an $800,000 purchase you might pay somewhere around $15,000 to $20,000. At 5%, it can approach $30,000. That is real money, but it is not automatically a reason to wait: if the market rises 6% while you spend two more years saving, the price has moved further than the premium ever cost you.

3. Stamp duty

This is the one that catches people. Stamp duty is a state tax, it is calculated on a sliding scale, and on a mid-priced property it can run to tens of thousands of dollars. It is due at settlement, in cash, and it cannot be added to your loan.

First home buyer concessions exist in every state and are genuinely generous below certain price thresholds — often a full exemption at the bottom of the range, tapering to nothing above it. Those thresholds matter enormously: buying $20,000 over the line can cost you $30,000 in duty. Knowing exactly where the cliff sits in your state before you bid at auction is not optional.

4. The costs nobody mentions

• Conveyancing or legal fees — typically $1,500 to $2,500.
• Building and pest inspection — around $600 for a house, and worth every cent.
• Strata report — $300 or so for an apartment, and it will tell you about the leaking garage before you own it.
• Loan application and valuation fees — often waived, but not always.
• Moving, connections and the first round of furniture — budget more than you think.

5. The buffer the lender wants to see

Beyond all of the above, most lenders want evidence of genuine savings and some residual funds after settlement. Turning up with exactly enough, to the dollar, reads as risk to an assessor. A few thousand left over strengthens the file.

Putting it together

On an $800,000 purchase with a 10% deposit in a state with no first-home concession available, the cash you need on the table looks roughly like: $80,000 deposit, $31,000 stamp duty, $3,000 in legals and inspections — around $114,000, with the LMI capitalized into the loan. If a first home buyer concession applies, that same purchase might need closer to $84,000.

The gap between those two figures is why the first conversation matters. Our deposit calculator gives you a rough version in a minute, and we'll give you the accurate one, for your state and your situation, whenever you're ready.