We hear it all the time: “You need at least a 20% deposit to get approved for a home loan.” For many Australians working hard to save, that number feels unrealistic and often holds them back from even considering buying a home. For too long, the narrative that homeownership is out of reach and a 20% deposit is required, has circulated through the media and passed around by well-meaning friends, family members, or even outdated online home loan calculators. But the reality is, this myth is keeping many Australians from even starting their journey to homeownership, when entering the property market is a lot more achievable than they think.
What Is the 20% Home Deposit and Why Is It Misunderstood?
Traditionally, a 20% deposit when purchasing a home has been seen as the benchmark to avoid Lenders Mortgage Insurance (LMI). This is charged when a buyer borrows more than 80% of a property’s value. But that’s not the same as saying you can’t buy a home unless you have 20% saved.
In fact, many lenders, especially for first home buyers, will accept as little as 5% of the purchase price as the upfront deposit.
That means if you’re eyeing a $600,000 home, you may not need $120,000 saved. You might be able to buy with just $30,000, a difference that could save you years of saving and open up opportunities far sooner than you expected.
What makes this even more accessible are the government support schemes designed to assist eligible first-time buyers. These include First Home Guarantee programs, stamp duty concessions, and low-deposit loans that make it possible to buy without draining your entire savings or putting your financial wellbeing at risk.
But What About LMI and Loan Risk?
It’s true that borrowing with a lower deposit may mean paying LMI but that cost is often added to the loan itself, not something that has to be paid upfront. And in some cases, the opportunity cost of not buying, missing price growth or renting for another few years can outweigh the LMI fee.
Every borrower’s situation is different, which is why it’s important to understand your personal options, not just the standard assumptions.
If you’ve been told to wait until you hit 20%, but you’re already earning a steady income and have some savings behind you, it may be time to run the numbers with a broker who knows how to get creative with lenders.
Understanding Your Borrowing Power
What many first home buyers don’t realise is that borrowing power isn’t just about how much you have in the bank, it’s about income, liabilities, credit score, and structure.
Even if you haven’t hit 20%, a smart lending strategy can help you get started earlier and potentially put you in a stronger financial position than waiting another two to three years.
Our role at Flenley is not to push you into a loan before you’re ready. It’s to give you the full picture — clearly, transparently, and based on your unique goals.
Here’s What You Can Do Next
If you’ve been saving for a while and carefully tracking your finances but still don’t feel like you’re anywhere close to 20%, don’t write off the idea of homeownership in Australia just yet. It may be time to ask a different question: What’s actually possible for me now? Start with a quick refinance or borrowing power check. There’s no obligation and no pressure, just clarity.And if you’re not ready today, we’ll give you a clear plan for how to get there sooner, not later.
Whether you’re a solo buyer, a couple, or a growing family, the most important thing you can do is get accurate information about your borrowing capacity and approval options, not generic assumptions. We’re here to help you understand the options, map out the possibilities, and take the guesswork out of getting started.
Book your free refinance review today or contact us for a one-on-one chat.