Deposit Required: What to Save and How to Structure It

The deposit you need to buy property in Brisbane is not a single fixed amount.

It depends on whether you want to avoid lenders mortgage insurance, whether you qualify for a government scheme, and how your loan is structured. A 20% deposit remains the cleanest entry point for most buyers, but there are structured options from 5% upward that work when you understand the full cost and long-term position.

How the 20% Deposit Benchmark Works

A 20% deposit eliminates the need for lenders mortgage insurance and gives you access to the full range of home loan products without constraint.

Consider a buyer purchasing in Bulimba. If they contribute 20% of the property value as genuine savings plus additional funds for settlement costs including stamp duty, legal fees, and building inspections, they borrow 80% from the lender and avoid LMI entirely. The loan-to-value ratio sits at 80%, which means the lender's risk weight under APRA's prudential standards remains lower, and the borrower typically qualifies for a better interest rate. This structure also preserves borrowing capacity, because the lower the LVR, the less restrictive the serviceability assessment becomes.

The deposit itself must be genuine savings or an acceptable alternative such as equity from an existing property, a gift from a family member with a statutory declaration, or proceeds from the sale of assets. Lenders apply a three-month savings history test for funds that are not equity or gift-based. That means the deposit needs to have been held in your account for at least 90 days before application.

What Government Schemes Change About Deposit Size

The Australian Government 5% Deposit Scheme allows eligible first home buyers to purchase with a deposit of as little as 5% of the property value, with Housing Australia providing a guarantee to the participating lender of up to 15% of the property value.

No income caps apply, and no annual place limits apply. In Queensland, the property price cap is $1,000,000 in capital cities and regional centres including Brisbane, the Gold Coast and the Sunshine Coast, and $700,000 in other areas. Both the purchase price and the lender's assessed value must be at or below the cap.

Consider a first home buyer in Brisbane purchasing at the $1,000,000 cap. With a 5% deposit, they contribute $50,000 plus settlement costs. Housing Australia's guarantee brings the combined deposit and guarantee to 20%, so the borrower avoids paying LMI. The loan amount is $950,000. The buyer applies through a participating lender, not directly to Housing Australia, and the loan can be structured as variable, fixed, or split depending on what the lender offers.

Applications are made through a panel of participating lenders and cannot be made directly to Housing Australia. Not all lenders participate, and those that do may have different credit policies and rate structures. Working with a mortgage broker who knows which lenders are on the panel and how their policies compare gives you a clearer path to approval.

How Lenders Mortgage Insurance Affects Borrowing Between 5% and 20%

If you do not qualify for a government scheme and your deposit is below 20%, you will pay lenders mortgage insurance.

LMI is a one-time premium calculated on a sliding scale based on your loan amount and LVR. The higher the LVR, the higher the premium. It protects the lender if you default, not you. The cost is typically added to the loan balance rather than paid upfront, which increases your total borrowing and your monthly repayment.

For buyers putting down 10% or 15%, the LMI premium can be several thousand dollars. The exact amount depends on the lender's insurer, the property value, and whether you are borrowing for owner-occupied or investment purposes. LMI applies to residential loans where the LVR exceeds 80 per cent. Some lenders will lend up to 95% LVR with LMI, though borrowing at that level significantly increases both the premium and the ongoing interest cost.

You can calculate the impact on your repayment using our loan repayment calculator. LMI does not reduce over time as you pay down the loan. It is a sunk cost at the start of the loan term.

Deposit Structure for Investment Property and Split-Purpose Lending

Deposit requirements for investment loans are typically higher than for owner-occupied lending, and the interest rate is also higher.

Most lenders require a minimum 10% deposit for investment property, and LMI will apply if the deposit is below 20%. Where there is any doubt about whether a loan is for owner-occupied or investment purposes, APS 112 requires the loan to be treated as an investment loan. This distinction matters because the risk weight applied by the lender under the prudential framework is higher for investment lending, which flows through to pricing and policy.

For buyers using equity from an existing property as a deposit, the structure becomes more complex. The lender will assess the usable equity in your current property, apply an LVR cap to that equity, and determine how much you can contribute toward the new purchase. This is common in Brisbane, where buyers in suburbs like New Farm or Coorparoo may have built significant equity over time and want to retain their existing property while purchasing another.

If you are considering this structure, a loan health check on your existing property is a practical first step. It confirms how much equity you can access, whether your current loan structure supports that access, and whether refinancing would improve your position.

How Settlement Costs Add to the Total Cash Required

The deposit is not the only cash you need.

Settlement costs in Queensland include stamp duty, legal fees, building and pest inspections, and lender costs such as valuation and application fees. Stamp duty is the largest component. For an established home in Brisbane, you can estimate the duty payable using our stamp duty calculator.

In Queensland, stamp duty relief for first home buyers depends on whether you are purchasing a new home, an established home, or vacant land. For established homes, duty is calculated at the standard home concession rate with an additional first home concession amount deducted, with a maximum first home concession deduction of $17,350 for properties valued up to $709,999. The concession phases out in $10,000 property value bands and reaches nil for properties valued at $800,000 or more.

For new homes and vacant land, a full transfer duty concession applies with no price cap for contracts signed on or after 1 May 2025, reducing duty to nil on the residential land component.

Legal fees typically range from $1,500 to $3,000 depending on the complexity of the transaction. Building and pest inspections cost between $500 and $800 combined. Lender valuation fees are usually between $200 and $400. These costs are paid from your own funds and cannot be added to the loan.

If your deposit is 5% or 10%, you need to ensure you have enough cash left after the deposit to cover these costs in full. Running out of cash at settlement is not uncommon for buyers who focus only on the deposit threshold and forget the additional requirement.

How Borrowing Capacity Interacts With Deposit Size

A larger deposit does not always mean you can borrow more, but it does mean you need to borrow less to complete the same purchase.

APRA requires all ADIs to assess new borrowers' capacity to service a home loan at an interest rate that is at least 3.0 percentage points above the loan product rate. This serviceability buffer applies regardless of your deposit size. If your income and liabilities mean you can service a loan of $800,000 at the buffered rate, that is your borrowing limit whether your deposit is 5% or 20%.

What changes with a larger deposit is the property price you can afford. If you can borrow $800,000 and you have a 20% deposit, you can purchase a property worth $1,000,000. If you have a 10% deposit, you can purchase a property worth approximately $888,000. The difference is significant in suburbs where median values are rising.

You can check your current position using our borrowing capacity tool. If your borrowing capacity is constrained by income or existing debt, increasing your deposit will not change that. You would need to improve your income position, pay down other debts, or wait until your financial position strengthens.

Genuine Savings Rules and What Counts as a Deposit

Lenders distinguish between genuine savings and non-genuine savings when assessing your deposit.

Genuine savings are funds that have been held in your bank account, term deposit, or offset account for at least three months. They demonstrate a pattern of disciplined saving and financial stability. Most lenders require at least 5% of the property value to come from genuine savings, even if you have additional funds from other sources.

Non-genuine savings include funds from the sale of assets, tax refunds, bonuses, inheritance, or gifts. These are acceptable as part of your deposit, but they usually cannot make up the entire amount unless you are using a government scheme or have strong compensating factors such as high income or significant equity in another property.

If you are receiving a gift from a family member, the lender will require a statutory declaration confirming that the funds are a gift and not a loan. The person providing the gift may also need to demonstrate where the funds came from, particularly if the amount is large.

For buyers using equity from an existing property, the equity itself is treated as the deposit, and the genuine savings requirement may be waived or reduced depending on the lender's policy.

How to Position Your Deposit for Approval and Rate Negotiation

A structured deposit gives you leverage when negotiating your loan terms.

Lenders price loans based on risk. The lower your LVR, the lower the risk, and the more negotiating power you have on the interest rate. A borrower with a 20% deposit will typically receive a rate discount compared to a borrower with a 10% deposit, even if both are applying for the same loan product.

If you are close to the 20% threshold but not quite there, it may be worth delaying the purchase until you reach that level. The rate discount and the absence of LMI can save tens of thousands of dollars over the life of the loan. Alternatively, if you have access to equity or additional funds from family, structuring the deposit to reach 20% can unlock better loan terms immediately.

For buyers using government schemes, the loan structure is still negotiable. Not all participating lenders offer the same rates or features. Some lenders on the Housing Australia panel offer offset accounts and redraw facilities, while others do not. The scheme guarantees part of the loan, but the loan itself is still a commercial product with terms you can compare.

If you are purchasing an investment property, the deposit structure also affects your tax position. Interest on the loan is deductible, but LMI is also deductible if it is paid upfront rather than capitalised. Structuring the deposit and the loan to optimise deductions requires advice specific to your circumstances.

Call one of our team or book an appointment at a time that works for you. We will structure your deposit and loan to match your financial position and the property you are buying, and we will make sure you are not paying more than you need to.

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