Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult a licensed financial adviser or mortgage broker before making any property finance decisions.
In 2026, most Australian lenders require a minimum deposit of 5% to 20% of the property’s value, with 20% being the threshold to avoid Lenders Mortgage Insurance (LMI). For owner-occupiers, it is possible to borrow with as little as 5% deposit plus LMI, while investors typically need at least 10–20%. Government schemes like the First Home Guarantee and Family Home Guarantee allow eligible buyers to secure a home with a 5% or even 2% deposit without paying LMI. This article breaks down the real numbers, LVR limits, APRA regulations, and actionable strategies to get your deposit together in 2026.
What Is a Home Loan Deposit and How Is It Calculated?
A home loan deposit is the upfront cash you contribute toward the purchase price, expressed as a percentage of the property value. The balance is covered by your mortgage. Lenders measure your deposit against the Loan-to-Value Ratio (LVR): a 20% deposit equals an LVR of 80%. In 2026, the size of your deposit directly influences whether you’ll pay LMI, the interest rate on offer, and your borrowing capacity.
How deposit size shapes your loan
- 20% or more: No LMI, access to the sharpest interest rates, and simpler approval.
- 10–19%: LMI required, rates slightly higher (typically 10–30 basis points above the best advertised rate), but manageable for many borrowers.
- 5–9.99%: High-LVR loan, LMI is mandatory and more expensive, stricter credit scoring and genuine savings evidence needed.
- Below 5%: Very limited options outside the Family Home Guarantee Scheme (2% deposit) or guarantor-backed loans.
2026 Minimum Deposit Requirements: The Numbers
Using CoreLogic’s February 2026 median dwelling values, here’s exactly what deposit you would need for different LVR levels. All figures assume you pay the full LMI premium upfront where applicable.
| City | Median Value (Feb 2026) | 5% Deposit | 10% Deposit | 20% Deposit (no LMI) |
|---|---|---|---|---|
| Sydney | $1,310,000 | $65,500 | $131,000 | $262,000 |
| Melbourne | $915,000 | $45,750 | $91,500 | $183,000 |
| Brisbane | $860,000 | $43,000 | $86,000 | $172,000 |
| Adelaide | $780,000 | $39,000 | $78,000 | $156,000 |
| Perth | $740,000 | $37,000 | $74,000 | $148,000 |
| Hobart | $690,000 | $34,500 | $69,000 | $138,000 |
| Darwin | $510,000 | $25,500 | $51,000 | $102,000 |
| Canberra | $960,000 | $48,000 | $96,000 | $192,000 |
LMI estimates (single applicant, owner-occupied, P&I loan): At 95% LVR on a $600,000 loan, LMI can range from $12,000 to $21,000 depending on the insurer. At 90% LVR, it falls to $6,500–$11,000.
LVR Limits and APRA Regulations in 2026
APRA’s macroprudential framework continues to shape deposit requirements. In 2026, the key rules are:
- Owner-occupier P&I loans: No specific LVR cap, but lenders must apply robust serviceability buffers (currently a 3% interest rate buffer over the loan rate). Most banks internally cap new high-LVR lending at 90–95%.
- Investor loans: APRA’s guidance expects lenders to limit the proportion of new loans at LVR >80% and to price for higher risk. As a result, most lenders require at least a 10–20% deposit for investment properties.
- Interest-only loans: Usually capped at 80% LVR, with many lenders demanding a 20% deposit or more.
These limits are not legislated hard caps but are enforced through APRA’s supervisory intensity. In 2026, no major bank offers 95% LVR investment loans.
Avoiding Lenders Mortgage Insurance (LMI)
There are four main pathways to bypass LMI in 2026:
- Save a 20% deposit – the simplest but slowest route.
- Use a government guarantee – See the next section.
- Parental or family guarantee – A family member offers their property as security, allowing you to borrow up to 100% of the purchase price without LMI.
- Professional discount – Some lenders waive LMI for eligible professionals, typically doctors, lawyers, and accountants, even with a 10% deposit. This is not a government policy but a risk-based offer from select lenders.
Government Schemes That Lower Your Deposit Requirement (2026 Update)
First Home Guarantee (FHBG)
- Deposit required: 5% (minimum).
- LMI: Waived entirely.
- Eligibility: Australian citizens or permanent residents aged 18+, earning ≤$125,000 (single) or ≤$200,000 (couple).
- Property price caps (2026): Sydney & NSW regional centres $900,000; Melbourne & VIC regional centres $800,000; Brisbane & QLD regional centres $700,000; Perth $600,000; Adelaide $600,000; Hobart $600,000; Canberra $750,000.
- Places per year: 35,000.
Regional First Home Buyer Guarantee (RFHBG)
- Deposit required: 5%.
- Additional requirement: Property must be in a regional area as defined by the scheme.
- Places per year: 10,000.
Family Home Guarantee
- Deposit required: As low as 2%.
- For: Single parents or eligible single legal guardians with at least one dependent.
- Income cap: $125,000.
- Places per year: 5,000.
- LMI: Waived.
All guarantees run on a first-in, first-served basis across participating lenders. In 2026, over 30 lenders participate across the three schemes.
Investor vs Owner-Occupier Deposit Requirements
Investors face higher hurdles:
- Most common deposit: 20% (80% LVR), but 10% is possible with premium LMI and higher rates.
- Rate differential: Investor loans at 90% LVR carry rates 50–100 bps higher than standard owner-occupier loans.
- Serviceability: Lenders assess rental income at a discount (typically 75–80% of gross rent) and apply the same 3% buffer, making it harder to service a high-LVR investment loan.
- APRA expectations: The regulator closely monitors investor loan growth and may reintroduce formal caps if growth exceeds 10% per annum, but as of mid-2026 no cap is active.
FAQ
Q: Can I get a home loan with a 5% deposit in Australia in 2026?
Yes, many lenders offer 95% LVR loans to owner-occupiers with a strong credit profile and genuine savings history. You will need to pay Lenders Mortgage Insurance, which for a $600,000 loan at 95% LVR can cost around $12,000–$20,000 and is typically capitalised into the loan. First Home Guarantee participants can avoid this cost with a 5% deposit.
Q: What is the minimum credit score required for a low-deposit loan?
Most lenders require a credit score of at least 600–650 for a high-LVR loan, though 700+ significantly improves your approval odds and may attract a better rate. Government schemes do not mandate a specific score, but participating lenders apply their own credit policies.
Q: How does the First Home Guarantee work in 2026?
The First Home Guarantee (FHBG) is an Australian Government scheme that guarantees part of your home loan so you can buy with a 5% deposit without paying LMI. In 2026, 35,000 places are available annually. Property price caps apply—for example, $900,000 in Sydney and $800,000 in Melbourne—and income thresholds are $125,000 for singles and $200,000 for couples.
Q: Does having a larger deposit reduce my interest rate?
Yes. Borrowers with an LVR of 70% or less often receive the lowest advertised interest rates, while those above 80% LVR pay a risk-based loading. A 20% deposit typically unlocks the standard rate, and every additional 10% can shave 5–15 basis points off your rate, saving thousands over the life of the loan.
Q: Can I use a parental guarantee instead of a cash deposit?
Yes, a family pledge or guarantee loan lets you borrow up to 100% of the property value if your parents (or another qualifying relative) offer their own property as additional security. This structure eliminates LMI and can be structured so the guarantee is removed once you build enough equity.
Q: Are deposit requirements different for investment properties?
Yes. Most lenders require a minimum 10–20% deposit for investment loans. APRA guidelines make it harder to get high-LVR investor loans, and LMI premiums are significantly higher. A 90% LVR investment loan will usually incur a higher interest rate and stricter serviceability tests than an owner-occupied loan.
References
-
APRA – Residential mortgage lending
https://www.apra.gov.au/
Australia’s prudential regulator publishes the framework for LVR limits and serviceability buffers applicable in 2026. -
National Housing Finance and Investment Corporation (NHFIC) – First Home Guarantee
https://www.nhfic.gov.au/
Official administrator of the government’s home guarantee schemes, with current eligibility, place numbers, and price caps for 2026. -
CoreLogic – Monthly dwelling values
https://www.corelogic.com.au/
Provides the most widely cited median property values used by Australian lenders and analysts. -
Reserve Bank of Australia – Statement on Monetary Policy
https://www.rba.gov.au/
RBA commentary on household lending standards and housing market conditions informs the deposit and LVR landscape in 2026.