Why lenders love a 20% deposit
Lenders assess loans using the loan-to-value ratio, or LVR. A 20% deposit equals 80% LVR, which has become the standard threshold in Australian lending. Borrow above that, at 85%, 90% or 95% LVR, and Lenders Mortgage Insurance (LMI) typically applies, protecting the lender if you default. It isn't a small cost either: on a $700,000 property with a 5% deposit, LMI could add approximately $25,000 to $30,000 to your loan costs.
Buying with less than 20%
At a 10% deposit (90% LVR), LMI still applies but at a lower cost than at 95% LVR, and some lenders are more competitive at this tier than others.
At 5%, through the federal First Home Guarantee, the government guarantees the remaining 15% toward the 20% threshold, meaning no LMI at all. As of 1 October 2025, there are no income caps (the previous $125,000 individual and $200,000 couple limits have been removed), no annual limit on places, and higher property price caps for Queensland: up to $1,000,000 in Brisbane, the Gold Coast and the Sunshine Coast, and $700,000 elsewhere.
At 2%, the Family Home Guarantee is available to eligible single parents or guardians with dependent children, with the government guaranteeing up to 18% and no LMI payable.
And at effectively no deposit, a guarantor loan lets a family member use equity in their own home to guarantee part of yours, allowing borrowing of up to 100% in some cases. This tends to work well for first home buyers with strong income but limited savings.
Queensland-specific help available right now
The Queensland First Home Owner Grant currently sits at $30,000 for contracts signed between 20 November 2023 and 30 June 2026, reverting to $15,000 after that date. It applies to new homes only, homes that have never previously been occupied or sold as a residence, capped at a total property value under $750,000. You'll need to move in within 12 months and live there for at least six months, and be an Australian citizen or permanent resident, 18 or older, with no prior residential property ownership in Australia. It's worth being clear: the FHOG applies to new homes only. If you're buying established, you can't access the grant, but you may still qualify for stamp duty concessions and the First Home Guarantee.
Stamp duty concessions, effective from 1 May 2025, work differently depending on what you're buying. New homes and vacant land attract zero stamp duty with no price cap at all. Established homes under $709,999 get the full $17,350 concession, effectively nil duty. Between $710,000 and $800,000, a partial sliding-scale concession applies. Above $800,000, no concession applies and standard rates are payable.
The First Home Super Saver Scheme lets you make voluntary superannuation contributions and later withdraw up to $50,000 (plus earnings) for a home deposit, with those contributions taxed at 15% rather than your marginal rate. It's available for both new and established homes, and can be stacked with the FHOG and the First Home Guarantee.
What stacking the schemes looks like in practice
Take a first home buyer purchasing a $620,000 new house and land package in Springfield Central, using both the First Home Guarantee and the FHOG. The 5% deposit required is $31,000. Stamp duty on the new home is nil. The FHOG applies a $30,000 credit at settlement. Conveyancing fees run an estimated $1,500 to $2,000, building and pest inspection $500 to $700, and loan application and lender fees somewhere between $0 and $600. LMI is nil, since the First Home Guarantee removes it. All up, the total net cash needed comes to roughly $3,000 to $5,000, a fraction of what the same purchase would otherwise require. Worth repeating: the grant is typically paid at settlement by your lender through the Queensland Revenue Office, not upfront, so you still need the genuine 5% deposit saved and available at the time you sign.
Costs beyond the deposit itself
Budget for more than just the deposit. Stamp duty is nil for eligible first home buyers on new homes or land, with concessions on established homes under $800,000. Conveyancing typically runs $1,200 to $2,500. Building and pest inspection runs $400 to $800. Loan application fees vary, some lenders charge nothing, others $300 to $600. LMI is nil if you're using the First Home Guarantee or have a full 20% deposit, otherwise it can run $10,000 to $40,000 or more depending on price and LVR. Moving costs typically run $500 to $2,500, and utility connection and setup another $200 to $500. As a general rule of thumb, plan to have your deposit plus an additional 3% to 5% of the purchase price available to cover these costs, unless stamp duty has been waived for you.
Do you need "genuine savings"?
Many lenders require a portion of your deposit to come from genuine savings, funds accumulated over three to six months that demonstrate financial discipline, rather than money that's appeared suddenly.
Accepted as genuine savings: regular bank account deposits held for three-plus months in a consistent pattern, term deposits, First Home Super Saver contributions, proceeds from selling an asset like shares, a vehicle or crypto, and equity in an existing property.
Treated more cautiously: gifted funds from family (usually accepted with a statutory declaration at 80% LVR, but often can't make up 100% of the deposit at 90%-plus LVR), the FHOG itself (paid at settlement, so it can't meet your initial deposit requirement), borrowed funds such as a personal loan (generally not accepted at all), and large recent lump sums that need to be explained.
The general rule at 90%-plus LVR is that at least 5% of the purchase price needs to come from genuine savings held for a minimum of three months, though this varies by lender.
How much should you actually aim to save?
If you're eligible for the First Home Guarantee, aim for 5% of the purchase price plus purchase costs, minus any grant you'll receive. On a $600,000 home, that's roughly $30,000 in deposit plus $3,000 to $5,000 in costs, offset by the $30,000 FHOG if you're buying new.
If you're avoiding LMI without a government scheme, aim for the full 20% plus costs. On a $600,000 home, that's $120,000 in deposit plus $5,000 to $10,000 in costs.
If you're using a guarantor, you may need little to no deposit at all, but should still budget $3,000 to $8,000 for purchase costs. Your specific requirements will always depend on the property, the lender, and your individual circumstances.
Frequently asked questions
Can I use the Queensland First Home Owner Grant as my deposit? The Queensland Government doesn't recommend relying on it as your deposit. It's paid at settlement, while your deposit is required at contract signing. Some lenders will factor in an incoming grant during assessment, but you generally need genuine savings upfront regardless.
Can I buy an established home with a 5% deposit? Yes, the First Home Guarantee applies to both new and established properties. It's only new home buyers who can also access the $30,000 FHOG, though established purchases still benefit from zero or reduced stamp duty within the concession thresholds.
Can I use my superannuation for a deposit? Not directly, you can't access your regular superannuation for a home deposit. You can withdraw up to $50,000 of voluntary contributions under the First Home Super Saver Scheme, which is separate from your locked employer contributions.
What if I've previously owned an investment property? If you owned an investment property but never lived in it, you may still qualify for the FHOG and stamp duty concessions in Queensland. You must not have previously received the FHOG anywhere in Australia, and must not have owned an occupied residence. This is worth confirming with a broker or conveyancer given your specific history.
How does bad credit history affect deposit requirements? Most lenders will want a larger deposit, 20% or more, regardless of LMI, if you have defaults, missed payments or bankruptcy in your history. Some specialist lenders will consider a blemished credit history at a higher LVR, typically with different rates and fees.
How long does it take to save a deposit? At a savings rate of $1,000 a month, it takes roughly two and a half years to save a 5% deposit on a $600,000 home, and around ten years for a full 20% deposit. Government schemes exist partly to help buyers enter the market sooner than that timeline would otherwise allow.
Getting the right guidance
Working out exactly how much you need, and which schemes you can combine, is where a broker earns their keep. Stanford Financial helps Queensland buyers confirm their eligibility across every available scheme, work out the real cash required after grants and concessions, and get pre-approved before house hunting begins.
Call us on 0483 980 002 or book a free assessment online.
