How Much Deposit Do You Really Need to Buy a Home in Melbourne?
If you’ve been putting off buying your first home because you haven’t hit that magical 20% deposit... good news:
You probably don’t need 20%.
At Nude Home Loans, we’ve helped first home buyers in Melbourne buy property with as little as 5% saved. That’s not a typo — and it’s totally legit.
Let’s break down how it works, what you really need, and how to get in sooner (without eating canned tuna for a year).
💸 The 20% Deposit Myth
Yep, 20% is a common benchmark — and for good reason. If you can hit it:
You won’t pay Lenders Mortgage Insurance (LMI)
You’ll have smaller monthly repayments
You’ll generally get better rates
BUT it’s not the only way.
Plenty of first home buyers in Melbourne are getting in with far less.
🔢 So What’s the Minimum Deposit?
Technically, most lenders will consider you with as little as 5% deposit.
Here’s how the numbers look on a $600,000 property:
5% deposit = $30,000
10% deposit = $60,000
20% deposit = $120,000
Big difference, right?
Of course, there are pros and cons with each — let’s dive into them.
📈 5% Deposit: Get In Sooner
Pros:
Start building equity faster
Get into the market before prices rise
Access First Home Guarantee (no LMI)
Cons:
Higher monthly repayments
You’ll pay LMI unless you qualify for a scheme (more below)
Great for: Renters who want out ASAP and have stable income but lower savings.
📈 10% Deposit: Good Balance
Pros:
Smaller loan = lower repayments
LMI costs are lower than with 5%
Cons:
Still need to factor in upfront costs (stamp duty, legal fees, etc.)
Great for: Buyers who’ve saved a bit but don’t want to wait years for 20%.
📈 20% Deposit: The Classic Path
Pros:
No LMI
Better interest rates
Lower risk to lenders = more options
Cons:
Can take years to save (especially in Melbourne)
Might miss the market while you save
Great for: Buyers with extra savings or parental help.
🌟 Real Nude Client Example: Pakenham Purchase with 5%
Katie, a solo buyer, came to us with just over $32k saved.
We helped her qualify for the First Home Guarantee
She paid no LMI
Got into a $590k new build in Pakenham
All done with 5.5% deposit
No 20%. No drama. Just smart strategy.
🧱 What About LMI (Lenders Mortgage Insurance)?
If you borrow more than 80%, you usually pay LMI.
It protects the lender, not you
Cost varies based on loan size and deposit
Can be $10k–$30k+ (but often added to your loan)
The good news? There are legit ways to avoid it.
🤝 Schemes That Help First Home Buyers
Here’s what could help you buy with a lower deposit and skip the LMI trap:
First Home Guarantee (previously FHLDS)
Buy with 5% deposit, no LMI
Income + price caps apply
Limited places available
Family Home Guarantee
For single parents, buy with 2% deposit
No LMI if you qualify
First Home Owner Grant (VIC)
$10,000 for new homes under $750k
We check eligibility and apply for you. Easy.
🤔 So, What’s the Right Deposit for You?
Ask yourself:
How fast do I want to get in?
Am I eligible for any government schemes?
How much am I comfortable repaying?
Do I have help (guarantor, gift, inheritance)?
There’s no one-size-fits-all answer. But that’s where we come in.
✅ Let’s Build a Plan That Works for You
Whether you’ve got $20k or $200k, we’ll help you:
Understand what you can afford
Maximise your deposit
Avoid LMI (if possible)
Get you ready to make an offer
👉 [Book a free deposit strategy chat with Nude Home Loans]
Smart advice. Zero pressure. Let’s get you home sooner.
