The deposit required to buy a home in Australia depends on the purchase price, the lender, and whether you are using government schemes. Understanding the true cost - including stamp duty and government charges - prevents the common mistake of targeting a deposit that falls short at settlement.

• Standard 20% deposit: At 20% of the purchase price, you avoid Lenders Mortgage Insurance (LMI). On a $750,000 property that is $150,000. Plus stamp duty (varies by state - in NSW approximately $29,067 on a $750,000 purchase for an investor; first home buyers may receive an exemption or concession), conveyancing ($1,500–$2,500), building and pest inspection ($500–$800), and moving costs. Total funds needed: typically 22–25% of the purchase price.
• 10% deposit with LMI: LMI is a one-off insurance premium (paid by the borrower, protecting the lender) that allows you to borrow above 80% LVR. On a $750,000 property with a 10% deposit ($75,000), LMI is approximately $15,000–$20,000 depending on the lender and LVR. This amount is typically capitalised onto the loan - you do not pay it upfront, but you pay interest on it for the life of the loan.
• 5% deposit with First Home Guarantee: The federal government's First Home Guarantee (FHBG) allows eligible first home buyers to purchase with a 5% deposit ($37,500 on $750,000) with the government guaranteeing the remaining 15% - so no LMI is payable. Income caps apply ($125,000 single / $200,000 couples for 2024-25). Property price caps also apply by state - in NSW the cap is $900,000 for major cities. 35,000 places per financial year (limited allocation - apply early through a participating lender).
• Genuine savings requirement: Most lenders require that at least 5% of the purchase price be held in genuine savings - meaning funds that have been accumulated over at least 3 months in your name. Gifts, inheritances, or tax refunds recently received may not qualify as genuine savings without a waiting period. Lender policies vary - check with your broker or lender before assuming a gift counts.

The FHSS scheme allows eligible first home buyers to save for a deposit inside superannuation - taking advantage of the concessional 15% tax rate on contributions - and then withdraw those savings for a home purchase. For higher-income earners, the tax savings are substantial.

• How it works: Make voluntary contributions to super (salary sacrifice or personal deductible contributions). These contributions are taxed at 15% inside super instead of your marginal rate (up to 47%). When ready to buy, apply to the ATO to release the funds. Eligible amounts are the voluntary contributions plus deemed earnings (calculated at the shortfall interest charge rate - not actual investment returns).
• Contribution limits: You can contribute up to $15,000 per financial year under FHSS, to a total maximum of $50,000 across all years (increased from $30,000 in the 2022-23 Federal Budget). Contributions must be voluntary - employer SG contributions do not count. Personal deductible contributions require a Notice of Intent to Claim lodged before the tax return.
• Tax on withdrawal: When you withdraw FHSS amounts, you pay tax on the released amount at your marginal rate MINUS a 30% offset. For a 37% taxpayer, effective tax on withdrawal is 7% (37% − 30%). Compare: contributions were taxed at 15% going in. The net saving versus saving in a HISA (taxed at 37%) is approximately 22% on contributions and the deemed earnings.
• Practical illustration: A couple both earning $95,000 (marginal rate 32.5%) each contributing $15,000/year for 3 years save approximately $5,175 in tax each ($15,000 × 3 × 17.5% saving) - a combined $10,350 tax benefit on top of the $90,000 principal. The actual benefit depends on your marginal rate and the years of contribution.
• Key restrictions: You must never have owned property in Australia (or a legal interest in land in Australia) to be eligible. You must intend to genuinely occupy the property as your principal place of residence. Once you request a FHSS determination, you have 12 months to sign a contract - extensions are available but not guaranteed. You cannot re-contribute FHSS amounts if the purchase falls through (subject to exceptions).

The First Home Owner Grant is a one-off cash payment from state and territory governments to eligible first home buyers. Amounts, eligibility criteria, and property price caps vary significantly by jurisdiction. As at 2025:

• NSW: $10,000 for new homes valued up to $600,000. No FHOG for established homes. Separate stamp duty exemption for new and existing homes valued up to $800,000 (full exemption) with concessions up to $1,000,000.
• Victoria: $10,000 for new homes in metropolitan areas valued up to $750,000. $20,000 for new homes in regional Victoria valued up to $750,000. Stamp duty exemption for homes valued up to $600,000; concession to $750,000.
• Queensland: $30,000 for new homes valued up to $750,000 (increased from $15,000 in 2023). Stamp duty concession for homes valued up to $700,000.
• Western Australia: $10,000 for new homes in the south-west land division valued up to $750,000; $10,000 for new homes elsewhere valued up to $1,000,000. Stamp duty concession for homes valued up to $530,000.
• South Australia: $15,000 for new homes with no price cap (as at 2025). Stamp duty concession for off-the-plan and new homes.
• Tasmania: $30,000 for new homes (increased from $20,000 in 2023-24). No price cap currently. Stamp duty concession of 50% for established homes up to $600,000.
• ACT: $7,000 for new or substantially renovated homes. Separate Home Buyer Concession Scheme for stamp duty relief. Important: Always verify current FHOG amounts and caps with your state revenue office - these change regularly and the above reflects 2025 conditions.

Once you understand how much you need and which schemes apply, the focus shifts to accumulating the deposit as efficiently as possible.

• High-interest savings account (HISA): For money needed within 2 years, a HISA (currently 4.5–5.25% in 2025) provides liquidity without market risk. Interest is taxable at your marginal rate - at 32.5% a 5% HISA earns effectively 3.375% after tax. For a 2-year horizon, this is appropriate given the capital preservation priority.
• FHSS inside super: For money not needed for 2–5+ years, the FHSS scheme provides the best after-tax accumulation rate for 32.5%+ earners. Commit to a regular salary sacrifice or personal deductible contribution each month.
• Term deposits for certainty: For money you will not need to access, a term deposit locks in a rate (currently 4.5–5.0% for 12 months) and removes the temptation to spend. Break costs apply if you access early.
• Automate the savings transfer: Set up an automatic transfer from your transaction account to your deposit savings account on payday - before you have a chance to spend it. Treat the transfer as non-negotiable. Increase it by the amount of any pay rise.
• Avoid investing a short-term deposit in shares: Sharemarket investments are appropriate for 7+ year horizons. If your deposit timeline is 2–4 years, a sharemarket correction (e.g. a 30% fall) can permanently delay your purchase - you would need to either sell at a loss or wait for recovery. Keep a short-term deposit in cash or cash equivalents.

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