If you are saving to buy your first home, the number in your savings account can start to feel like a finish line. Reach $40,000. Reach $80,000. Reach 20% of the purchase price. Then you are ready—right?
Not quite.
The money needed to buy a first home is not one number. It is three:
- Your contribution towards the purchase price — usually called the deposit.
- The costs of completing the purchase — such as transfer duty, conveyancing and inspections.
- Money left after settlement — your buffer for moving, repairs and the surprises that arrive with home ownership.
That distinction matters. Someone with a $60,000 deposit and no money for buying costs may be less ready than someone with $55,000 who has deliberately kept $5,000 aside.
This guide shows you how to build a realistic cash target for buying your first home in Australia—without pretending there is one magic percentage that suits everyone.
The short answer: Start with the property price, choose a realistic deposit pathway, add the purchase costs that apply in your state or territory, then add a buffer you will not need to spend at settlement. Your borrowing capacity must support the balance.
📑 Table of Contents
- The simple formula most deposit calculators miss
- What does a 5%, 10% or 20% deposit look like?
- The deposit is not the whole upfront cost
- A worked example: the same $800,000 home, two very different cash targets
- Five deposit traps first home buyers often discover too late
- Could government support reduce the amount you need?
- How to calculate your own realistic target
- Frequently asked questions
- So, how much do you actually need?
The simple formula most deposit calculators miss
Use this as your starting point:
Cash target = deposit + purchase costs + post-settlement buffer
Then test it against the other side of the equation:
Property price = your contribution + the amount a lender is prepared to lend
These calculations are connected. A $70,000 cash balance does not automatically mean you have a 10% deposit for a $700,000 home. If $12,000 of that money is needed for purchase costs and you want $8,000 left after settlement, only $50,000 is available towards the price.
Your savings and your borrowing capacity therefore need to be assessed together—not as separate projects. Falcon’s guide to how much you can really borrow explains the income, expense, debt and lender-policy factors behind that second number.
What does a 5%, 10% or 20% deposit look like?
The table below shows the deposit component only. It does not include transfer duty or other buying costs.
| Property price | 5% deposit | 10% deposit | 20% deposit |
|---|---|---|---|
| $600,000 | $30,000 | $60,000 | $120,000 |
| $800,000 | $40,000 | $80,000 | $160,000 |
| $1,000,000 | $50,000 | $100,000 | $200,000 |
Buying with around 5%
Some lenders may consider applications with a small deposit. Eligible first home buyers may also be able to use the Australian Government 5% Deposit Scheme. From 1 October 2025, the expanded scheme has no income caps, no waitlist and no lenders mortgage insurance (LMI). First home buyers generally need at least a 5% deposit; eligible single parents or legal guardians may be able to buy with 2%.
There are still conditions, participating-lender requirements and property price caps. You remain responsible for the loan, buying costs and repayments. A smaller deposit also means a larger loan, so “eligible” and “comfortable” are not the same thing.
Buying with around 10%
A 10% contribution can reduce the loan compared with a 5% pathway and may broaden your options. Unless an exemption, government scheme or another arrangement applies, however, borrowing more than 80% of the lender-assessed property value may involve LMI.
LMI protects the lender, not the borrower. It may be paid upfront or added to the loan, depending on the lender and application. Its cost is not a flat percentage, so it should be calculated for your actual scenario rather than guessed.
Buying with 20% or more
A 20% deposit is a useful benchmark because an 80% loan-to-value ratio will often avoid LMI and reduce the amount borrowed. That does not make it a universal rule. Waiting to reach 20% has its own trade-offs, and a buyer may have a viable, responsible pathway sooner.
The right question is not “What is the perfect deposit?” It is “What does each available pathway cost now, cost over time and leave me able to manage?”
The deposit is not the whole upfront cost
The Moneysmart home-buying guidance suggests treating 20% plus buying costs as a strong savings goal, while also noting that eligible buyers may have lower-deposit options. Whatever deposit you choose, allow separately for the following.
Transfer duty—or stamp duty
Transfer duty is a state or territory tax and can be one of the largest upfront costs. The amount depends on where you buy, the property value and how you will use the property. First home buyer exemptions and concessions can change the result substantially.
For example, under the current NSW First Home Buyers Assistance Scheme, eligible buyers pay no transfer duty on a new or existing home valued at $800,000 or less, with concessional rates applying above $800,000 and below $1 million. These thresholds and eligibility rules can change, so check the relevant revenue office before relying on a figure.
Do not assume that being a first home buyer automatically means paying no duty. The property may sit above a threshold, the concession may be partial, or eligibility conditions may not be met.
Conveyancing or legal work
A conveyancer or solicitor can review the contract, conduct searches, explain legal obligations and manage the transfer and settlement process. The price will depend on the work involved and any third-party search or registration charges.
This is not an area to budget at zero. Contract review can be particularly important before bidding at auction, where the contract is generally unconditional and there is no cooling-off period.
Building, pest and strata checks
The appropriate checks depend on the property. A freestanding house may call for building and pest inspections. An apartment or townhouse may require a strata report and careful review of levies, building issues and the owners corporation’s finances.
You may pay for checks on more than one property before buying successfully. Include that possibility in your budget instead of assuming your first offer will be the one that settles.
Loan, valuation and settlement charges
Depending on the lender and loan, there may be application, valuation, settlement or package fees. Some loans have few upfront fees; others exchange a lower advertised rate for ongoing or package costs. Ask for the complete cost, not just the headline rate.
Moving and immediate ownership costs
Settlement is followed quickly by practical expenses: removalists, utility connections, insurance, locks, basic repairs and purchases you could defer while renting. Apartment owners may also have strata levies, while all owners should plan for council rates and maintenance.
These expenses do not increase your deposit, but they increase the amount of cash you should ideally have available.
A worked example: the same $800,000 home, two very different cash targets
Imagine a first home buyer looking at an $800,000 property.
Pathway A: a 5% deposit
- Deposit towards the price: $40,000
- Loan before any capitalised costs: approximately $760,000
- Plus: applicable transfer duty, legal work, inspections, lender charges and a cash buffer
If the buyer is eligible for the Australian Government 5% Deposit Scheme and the property is within the relevant cap, LMI may not apply. If the buyer is also eligible for a full state transfer-duty exemption, the cash required could be far lower than the 20% benchmark.
But the buyer is still taking a larger loan and must satisfy the lender’s serviceability and credit requirements. The repayments and total interest are likely to be higher than under a larger-deposit pathway.
Pathway B: a 20% deposit
- Deposit towards the price: $160,000
- Loan before fees: approximately $640,000
- Plus: applicable transfer duty, legal work, inspections and a cash buffer
This buyer borrows $120,000 less and will generally avoid LMI. The trade-off is the time and opportunity cost involved in saving the additional $120,000.
Neither pathway is automatically better. The useful comparison includes:
- the time needed to save
- likely repayments at more than one interest rate
- total loan costs
- scheme and lender eligibility
- the quality of the property available within the cap
- how much money remains after settlement
This is why your “money needed” figure should be a decision range, not a slogan.
Once you know the approximate loan size, the next step is to compare structures and features rather than focusing only on the rate. Our guide to fixed, variable and split home loans explains the practical differences.
Five deposit traps first home buyers often discover too late
1. The contract deposit and home-loan deposit are not always the same
A sale contract commonly refers to a deposit payable when contracts are exchanged. That contract deposit is part of the purchase price, but it is not necessarily identical to the total contribution used in your loan calculation.
For example, your finance may be structured around a 5% contribution while the contract asks for 10%. A lower contract deposit may sometimes be negotiated, but this must be handled before signing with advice from your conveyancer or solicitor. Do not assume the lender will solve it after exchange.
2. The lender values the property below your offer
Your loan is generally calculated using the lender’s accepted value, which may be lower than the price you agreed to pay. If you offer $800,000 but the lender values the property at $760,000, the gap may have to come from your cash—or the loan structure and approval may change.
The emotional last bid at an auction can therefore create a very real funding gap.
3. Every dollar is assigned to settlement
Emptying your accounts to complete the purchase can leave no room for a broken hot-water system, an insurance excess or a higher-than-expected first rates bill. A buffer is not “extra deposit”. Its purpose is to survive settlement.
4. A grant is counted before eligibility or timing is confirmed
First home owner grants are administered by states and territories and often focus on new homes. Eligibility, property caps, payment timing and residence requirements vary. Confirm whether a grant can form part of the funds needed at your particular stage of the transaction.
5. Pre-approval is treated as permission to spend all available cash
Pre-approval is normally conditional. Changes to your debts, employment, spending, deposit or the chosen property can affect final approval. Keep purchase costs visible and avoid taking on new credit between pre-approval and settlement.
Could government support reduce the amount you need?
It may, but different programs solve different problems.
Australian Government 5% Deposit Scheme
This can help eligible buyers purchase with a lower deposit and no LMI. The scheme does not give you the deposit or reduce your responsibility for the loan. Property price caps and other eligibility rules apply, and applications must go through a participating lender.
First Home Super Saver Scheme
The First Home Super Saver Scheme may let eligible buyers use certain voluntary super contributions and associated earnings towards a first home. The current limits allow up to $15,000 of eligible contributions from any one financial year and up to $50,000 across all years.
The release process and timing rules matter. A determination and release request are not something to leave until settlement week, and tax outcomes depend on the type of contributions made.
State and territory grants or duty concessions
First home owner grants, transfer-duty concessions and shared-equity programs vary by location. Some apply only to new homes. Some have price, income, citizenship, age or occupancy rules. You may qualify for more than one form of support, but each should be verified against your proposed property before it is included in the funding plan.
How to calculate your own realistic target
Step 1: Choose a property-price range
Use recent listings and sales to set a lower and upper price—not one dream-home number. For example, model $650,000, $700,000 and $750,000.
Step 2: Check a realistic borrowing range
Your income is only part of the assessment. Lenders also consider living expenses, debts, credit limits, dependants, income type and loan policy. A maximum borrowing figure is not automatically a comfortable budget.
Use Falcon’s home-loan calculators to test repayment scenarios, then have your actual position assessed before relying on the result.
Step 3: Compare deposit pathways
Run at least three versions if they may be available to you: a lower-deposit scheme, a standard smaller-deposit loan and a 20% deposit. Compare the cash target, loan size, LMI treatment, repayments and time needed to save.
Step 4: Estimate the costs for the property and location
Use your state or territory revenue-office calculator for duty. Add quotes or realistic allowances for legal work, inspections and loan costs. An apartment and a house may require different due diligence.
Step 5: Protect a buffer
Choose an amount that remains untouched after settlement. The right buffer depends on your income stability, the property’s condition and your other commitments. The important part is treating it as unavailable for the deposit.
Step 6: Recheck before making an offer
Savings, lender policies, scheme rules and property caps can change. Update the calculation when the chosen property is known and have the contract reviewed before signing.
Frequently asked questions
Can I buy my first home with $30,000?
Possibly, but it depends on the property price, your borrowing capacity, the costs in your state or territory and whether you qualify for a lower-deposit pathway. A $30,000 balance could represent a 5% deposit on a $600,000 home before buying costs, but it would not automatically cover duty, legal work, inspections or a buffer.
Do first home buyers need a 20% deposit?
Not always. Some lender policies and government-supported pathways allow eligible buyers to purchase with less. A deposit below 20% may mean a larger loan and could involve LMI unless a scheme, exemption or other arrangement applies.
Can a first home owner grant form part of my deposit?
It may contribute to the funds available, but the answer depends on the grant, the property, payment timing and the lender’s policy. Confirm eligibility and when the funds become available before including a grant in your settlement calculation.
How much money should I keep after settlement?
There is no universal amount. Consider your income stability, other commitments, insurance excesses, moving costs and the property’s likely maintenance needs. The key principle is to choose the buffer before deciding how much cash is available for the deposit.
So, how much do you actually need?
You may not need 20% of the purchase price—but you do need more than a percentage written on a loan advertisement.
A genuine first-home budget accounts for:
- the contribution required for the loan pathway
- all buying costs that cannot be added to the loan
- any valuation or contract-deposit gap
- a deliberate amount left over after settlement
- repayments that remain manageable beyond the first month
The best next step is to turn your savings balance into two or three complete buying scenarios. That tells you whether you are short of a deposit, short of borrowing capacity, missing a cost—or potentially closer than you thought.
Talk with Prasanth at Falcon Lending Solutions about your target property range, savings and current commitments. We can help you map the likely upfront costs, compare relevant lending pathways and work out what to prepare before you start making offers.
General information only. This article does not take into account your objectives, financial situation or needs. Government scheme rules, property caps, grants, concessions, lender policies, fees and credit criteria apply and may change. Consider obtaining independent legal, tax and financial advice where appropriate.