What Deposit Do I Need to Buy My First Home in Victoria?
By Lowest Interest Rates Australia
Introduction
I’ll never forget the moment I decided to start saving for my first home in Victoria. One minute I was enjoying Sunday brunch and scrolling through house listings for fun, and the next — BAM! — I saw my dream home. The kitchen had marble benchtops, the backyard had space for a veggie garden, and it was walking distance to my favourite coffee shop. Then reality hit: “How much deposit do I actually need to make this happen?”
If you’ve ever asked yourself that question (and maybe sighed a little while checking your bank balance), you’re not alone. For most first-home buyers, figuring out the deposit is one of the biggest and most confusing steps in the journey to home ownership. The good news? It’s not as scary as it seems once you understand the rules, government support, and clever ways to save.
In this article, I’ll break down exactly how much deposit you need to buy your first home in Victoria, what options are available if you don’t have the full amount yet, and how to get there faster — all in plain English.
Table of Contents
- Understanding Home Deposit Basics
- What’s the Standard Deposit in Victoria?
- Can You Buy a Home with Less Than 20% Deposit?
- Government Schemes and Grants for First-Home Buyers in Victoria
- Understanding Lender’s Mortgage Insurance (LMI)
- Example Deposit Scenarios in Victoria
- Tips to Save for a Deposit Faster
- How Lenders Assess Your Borrowing Power
- Other Hidden Costs to Budget For
- Final Thoughts — Start Your Home Loan Journey with Lowest Interest Rates
Understanding Home Deposit Basics
A home deposit is the upfront amount you pay towards the purchase price of a property. The rest is covered by your home loan. The deposit shows lenders that you’re financially committed and capable of saving — both key factors in securing approval.
In Victoria, as in the rest of Australia, your deposit is usually expressed as a percentage of the property’s total value. For example, a 20% deposit on a $600,000 home would be $120,000.
While that sounds like a mountain of money, there are many options for buyers with smaller deposits — thanks to government programs and lenders’ flexible policies.
What’s the Standard Deposit in Victoria?
The traditional rule of thumb is that you’ll need a 20% deposit to buy a home in Victoria. This amount ensures you avoid paying Lender’s Mortgage Insurance (LMI) and gives you stronger borrowing power.
However, with rising property prices (especially in Melbourne), saving a full 20% can be challenging. The good news is that most lenders now offer home loans with lower deposit requirements — some as low as 5% for eligible buyers.
Here’s a quick look at what different deposit levels might mean:
| Deposit Percentage | Home Price ($600,000 example) | Deposit Required | Notes |
|---|---|---|---|
| 20% | $600,000 | $120,000 | No LMI payable, best loan terms |
| 10% | $600,000 | $60,000 | LMI applies, broader lender options |
| 5% | $600,000 | $30,000 | LMI applies, may qualify for First Home Guarantee |
In short: while 20% is ideal, you don’t have to wait until you reach that amount to start your journey toward owning a home.
Can You Buy a Home with Less Than 20% Deposit?
Yes — absolutely! Many first-home buyers in Victoria purchase with deposits between 5% and 15%. Lenders understand that saving a full 20% can take years, so they allow smaller deposits with the help of Lender’s Mortgage Insurance (LMI) or government assistance.
Here’s what you need to know:
- 5% deposit: Minimum for most lenders; may qualify for government support.
- 10% deposit: A balanced option — lower LMI, more lenders available.
- 15% deposit: Strong position with lower LMI and better interest rates.
Some lenders also consider using a guarantor loan, where a family member offers equity from their property as security. This can help you buy sooner without paying LMI at all.
Government Schemes and Grants for First-Home Buyers in Victoria
Buying your first home in Victoria comes with several financial perks — if you know where to look. The government has introduced multiple initiatives to help new buyers enter the property market sooner.
1. First Home Owner Grant (FHOG)
Eligible buyers can receive a $10,000 grant (or more in regional Victoria) when purchasing a newly built home valued up to $750,000. This money can go directly towards your deposit or other upfront costs.
2. First Home Guarantee (FHBG)
Under this scheme, eligible first-home buyers can purchase a home with as little as 5% deposit without paying LMI. The federal government guarantees up to 15% of the loan, helping you reach your home ownership goal faster.
3. Victorian Stamp Duty Concessions
If you’re buying a home valued under $600,000, you may be exempt from paying stamp duty. Homes valued between $600,000 and $750,000 receive a partial discount. This can save you tens of thousands of dollars.
4. Regional First Home Buyer Guarantee
If you’re purchasing in regional Victoria, this program lets you buy with just a 5% deposit — again, without needing to pay LMI — while boosting support for local housing markets.
Understanding Lender’s Mortgage Insurance (LMI)
Lender’s Mortgage Insurance is a fee charged by lenders when your deposit is less than 20% of the property’s value. It protects the lender (not the borrower) if you can’t repay your loan.
LMI costs vary depending on the loan amount, deposit size, and lender. On a $600,000 home with a 10% deposit, LMI might cost between $8,000 and $15,000.
Although LMI doesn’t benefit you directly, it can help you buy sooner — which can make sense in a rising property market where waiting could cost you more in the long run.
Example Deposit Scenarios in Victoria
Let’s look at some real-world examples of how deposits might work for a first-home buyer in Victoria.
Example 1: Traditional 20% Deposit
- Home Price: $650,000
- Deposit: 20% ($130,000)
- LMI: Not required
- Loan Amount: $520,000
Pros: No LMI, lower repayments.
Cons: Takes longer to save.
Example 2: 10% Deposit with LMI
- Home Price: $650,000
- Deposit: 10% ($65,000)
- LMI: Around $10,000
- Loan Amount: $585,000
Pros: Buy sooner, flexible lenders.
Cons: Higher monthly repayments due to LMI cost.
Example 3: 5% Deposit with Government Scheme
- Home Price: $600,000
- Deposit: 5% ($30,000)
- LMI: Waived under First Home Guarantee
- Loan Amount: $570,000
Pros: Lower upfront cost, faster entry.
Cons: Eligibility and property value limits apply.
Tips to Save for a Deposit Faster
Saving for a deposit can feel daunting, but small, consistent changes can make a huge difference. Here are some practical strategies to speed up the process:
- Set a clear savings goal: Know your target number and timeline.
- Automate your savings: Set up a direct debit into a dedicated home deposit account.
- Cut non-essential spending: Review subscriptions, dining out, or luxury purchases.
- Consider a high-interest savings account or term deposit: Let your money work for you.
- Take advantage of government incentives: Grants and schemes can boost your deposit significantly.
- Look for affordable suburbs: Start smaller — regional Victoria offers great value and growth potential.
Remember, progress compounds. Even saving $200 a week adds up to more than $10,000 a year!
How Lenders Assess Your Borrowing Power
Your deposit is only one part of the equation — lenders also look closely at your borrowing power. This includes factors such as:
- Your income and employment stability
- Existing debts and credit card limits
- Regular living expenses
- Credit history and repayment behaviour
- Number of dependents
Having a larger deposit can improve your chances of approval and help you secure a better interest rate, but responsible financial habits play an equally important role.
Other Hidden Costs to Budget For
It’s easy to focus solely on the deposit, but remember that buying a home comes with extra costs. Budgeting for these will help you avoid nasty surprises:
- Stamp Duty: Exempt or reduced for first-home buyers under certain limits.
- Conveyancing Fees: Typically $1,000–$2,000 for legal documentation.
- Loan Application Fees: Some lenders charge a setup or valuation fee.
- Inspection Costs: Building and pest inspections usually cost $300–$600.
- Moving Expenses: Don’t forget removalists, cleaning, and utilities setup.
Planning for these costs ensures your savings strategy is realistic and stress-free.
Final Thoughts — Start Your Home Loan Journey with Lowest Interest Rates
Buying your first home in Victoria is an exciting milestone — and yes, the deposit might feel like the biggest hurdle. But with the right guidance, smart savings habits, and the support of government schemes, that dream can be closer than you think.
Whether you’re saving your first $10,000 or ready to buy your first property, having the right experts by your side makes all the difference. The team at Lowest Interest Rates specialises in helping first-home buyers across Victoria find the best mortgage options, compare lenders, and secure the most competitive rates on the market.
Visit LowestInterestRates.com.au today to take the first step toward owning your dream home — faster, smarter, and with expert support every step of the way.
