How Much Deposit Do You Really Need to Buy a House in Melbourne?
The real numbers on deposits in Melbourne — from 5% low-deposit options to the 20% that avoids LMI, plus the hidden upfront costs buyers forget.
The short answer
Most lenders want a 20% deposit to avoid Lenders Mortgage Insurance (LMI) — but you can buy with far less. Here's how the numbers stack up on a $700,000 Melbourne home.
Deposit options compared
| Deposit | Amount | LMI payable? | Notes | |---|---|---|---| | 20% | $140,000 | No | Cleanest path, best rates | | 10% | $70,000 | Yes (~$12k–$16k) | Common for upgraders | | 5% | $35,000 | Yes, unless using a Guarantee scheme | Popular with first home buyers | | 5% via First Home Guarantee | $35,000 | No — govt guarantees it | Limited places |
Don't forget the upfront costs
Your deposit isn't the only cash you need. Budget for:
- Stamp duty (unless exempt as a first home buyer)
- Conveyancing / legal fees — $1,000–$2,500
- Building & pest inspection — $400–$800
- Loan application / valuation fees — varies by lender
- Moving + initial repairs
What is LMI and can I avoid it?
Lenders Mortgage Insurance protects the lender (not you) if you default, and is charged when you borrow more than 80% of the property value. Ways to avoid or reduce it:
- Save a full 20% deposit
- Use a guarantor (often a parent using equity in their home)
- Qualify for the First Home Guarantee
- Some lenders waive LMI for specific professions (doctors, lawyers, accountants)
The smart move
A bigger deposit isn't always the best financial decision — sometimes buying sooner with LMI beats waiting two years while prices rise. We model both scenarios for you.
Not sure which deposit strategy is right for you? Talk to Finance Wealth — we'll run the numbers on your actual situation and lenders.
General information only. Your complete financial situation will need to be assessed before acceptance of any proposal or product.