How Much Deposit Do You Really Need？
- 3 days ago
- 3 min read
Melbourne Property Buying Guide 2026
Buying property in Melbourne is exciting — but one of the biggest questions buyers ask is:
“How much deposit do I actually need?”
Many people believe you must save a full 20% deposit before buying a home. In reality, some buyers enter the market with as little as 5% depending on their situation, loan type, and eligibility for government schemes.
In this guide, we’ll explain:
Minimum deposit requirements in Australia
The difference between 5%, 10%, and 20% deposits
Extra buying costs buyers often forget
Government grants and schemes available in Victoria
Examples based on Melbourne property prices in 2026
What Is a Property Deposit?
A property deposit is the amount of money you contribute upfront when purchasing a property.
Banks then lend the remaining amount through a home loan. For example:
Property Price - Deposit = Loan Amount
If a Melbourne apartment costs:
$600,000
and you have a $60,000 deposit
then the bank may lend:
$540,000
Do You Really Need a 20% Deposit?
Not necessarily. Here’s the common breakdown in Australia:
Most buyers in Melbourne today purchase with somewhere between 5%–15% deposit.
What Happens If You Have Less Than 20%?
If your deposit is under 20%, the bank usually charges:
Lenders Mortgage Insurance (LMI)
LMI protects the bank — not the buyer.
The smaller your deposit, the higher the LMI cost. Example:
Property price: $700,000
Deposit: 10%
LMI could range from approximately $10,000–$25,000 depending on lender and income.
Some buyers choose to:
pay LMI upfront
or add it onto the loan amount.
Example: How Much Deposit for Melbourne Properties?
Example 1 — Apartment in Melbourne CBD
Example 2 — House in Melbourne Suburbs
Don’t Forget the Hidden Buying Costs
Many buyers save only for the deposit and forget additional expenses.
Common extra costs include:
For apartment buyers, it’s also important to review:
Owners Corporation records
special levies
building defects
Section 32 disclosures
before purchasing.
Government Support for First Home Buyers in Victoria
The Victorian Government and Federal Government offer several schemes that may reduce the upfront amount needed.
These may include:
First Home Owner Grant (FHOG)
Stamp duty concessions
First Home Guarantee Scheme
Shared equity programs
Some eligible buyers may purchase with as little as 5% deposit without paying LMI. Eligibility requirements apply.
Is It Better to Wait for 20%?
Not always.
Many Melbourne buyers face a difficult decision:
Save longer for 20% OR Enter the market earlier with a smaller deposit.
Sometimes:
property prices rise faster than savings
rental costs continue increasing
waiting may actually make entering the market harder.
Every buyer’s financial position is different.
What Deposit Is “Comfortable”?
A healthy buying position usually means having:
enough deposit
emergency savings remaining
stable income
manageable repayments.
Buying property should not leave buyers financially stressed.
Banks also assess:
income
debts
credit history
living expenses
employment stability
—not just deposit size.
Melbourne Buyers in 2026
For First Home Buyers
Research government schemes early
Get loan pre-approval before inspections
Understand total costs, not just deposit
For Apartment Buyers
Review OC fees carefully
Check for special levies or defects
Understand rental demand if investing
For Investors
Consider rental yield
Compare suburb growth potential
Factor in ongoing holding costs
There is no single “perfect” deposit amount for buying property in Melbourne.
While 20% remains ideal, many buyers successfully purchase with:
5%
10%
or somewhere in between.
The most important step is understanding:
your borrowing capacity
total upfront costs
repayment affordability
and the risks involved.
Buying property is a long-term financial decision — preparation matters more than simply rushing into the market.
Need Help Understanding Melbourne Property Buying Costs?
Whether you’re:
a first home buyer,
investor,
or purchasing an apartment in Melbourne,
understanding the real upfront costs is essential before making an offer.
At Core Elite Real Estate, we help buyers navigate:
Melbourne apartments
investment opportunities
contract & Section 32 reviews
and local market insights.
Disclaimer
This article is general information only and does not constitute financial, legal, or lending advice. Buyers should seek independent advice from qualified mortgage brokers, financial advisors, and legal professionals before making property or finance decisions.
