How much deposit do you need to buy a first home in Victoria?

The short answer: most first home buyers in Victoria aim for a 20% deposit — that's the point where lenders stop charging Lenders' Mortgage Insurance (LMI). But you can buy with far less: many lenders accept 5%, and government schemes can get eligible buyers in with low deposits and no LMI. The right number depends on the price of the home, your income, which schemes you qualify for — and, sometimes, how much time you have.

Priya and Dan don't have much time.

Meet Priya and Dan

Priya is a nurse at a hospital in Melbourne's west; Dan does IT support, in the city two days a week. They've been renting in Footscray for six years, and they've saved $68,000 — every skipped holiday of it. Their first baby is due in seven months.

They're looking at townhouses around $650,000, close enough to the hospital that Priya's night shifts don't end with a forty-minute drive. And late one Tuesday, Dan does the maths that every first home buyer eventually does: twenty per cent of $650,000 is $130,000. They have half that. The baby is not going to wait three more years of saving.

So the real question isn't "how much deposit do you need?" It's the one Priya asks over the top of her laptop: "What actually happens if we buy with what we have?"

Priya and Dan aren't real people — but their situation is. Every rule and number in this story is real and linked to its source below.

What the deposit actually has to cover

The first thing they discover is that the deposit is only part of the cash they need on the day. Alongside it, they'll need to budget for:

1. Stamp duty (land transfer duty) — though this is where Victoria is kind to first home buyers: at their price point, eligible buyers get a concession, and below a lower threshold the duty can be waived entirely. The thresholds and rules change, so they check them directly with the State Revenue Office Victoria rather than a forum post from two years ago.
2. Conveyancing and legal fees — someone has to read the contract before they sign it.
3. Building and pest inspection — a few hundred dollars against a six-figure mistake.
4. Loan and application fees, and
5. Moving and settling-in costs — which arrive in the same month as everything else.

A common mistake is saving the deposit and forgetting this list, then coming up short at settlement. For Priya and Dan, it means their $68,000 isn't really $68,000 — a slice of it is already spoken for.

The 5% path, and what LMI really is

With 20% out of reach, their broker walks them through the low-deposit path. Buy with 5–10% down and the lender will usually charge Lenders' Mortgage Insurance — a premium that can run to five figures. The part that surprises Dan: LMI protects the lender, not them, and it's usually added to the loan — so they'd pay interest on the insurance too, for decades.

That's the honest cost of speed. A smaller deposit gets them in years earlier; LMI and a bigger loan make every month after settlement slightly heavier. Whether that trade is worth it depends on how fast prices move against how fast they can save — and on a nursery deadline that doesn't negotiate.

The schemes that change their maths

Then the picture improves. Because they're eligible first home buyers, three levers exist specifically for people in their position:

• First Home Guarantee — now the Australian Government 5% Deposit Scheme (federal) — lets eligible buyers purchase with a low deposit without paying LMI, because the government guarantees part of the loan. Places and price caps apply and change; the current rules live at Housing Australia.
• Victoria's first home buyer duty concession — at their $650,000 price point, eligible buyers pay reduced stamp duty; below the lower threshold it disappears entirely. Details at the State Revenue Office.
• The First Home Owner Grant — for new builds only, so not their townhouse, but worth knowing it exists via the SRO.

Suddenly the maths looks different: a 5% deposit on $650,000 is $32,500. With the guarantee removing LMI and the concession shrinking the duty, their $68,000 covers the deposit and the other costs — with a buffer left for the month the baby arrives.

How it played out

They didn't wait three years. They also didn't kid themselves: the low-deposit path means a bigger loan and bigger repayments, and they stress-tested those repayments against one income for the months Priya will be on leave — using the calculators at Moneysmart rather than optimism.

The question that settled it wasn't "can we scrape in?" It was: would the repayments still leave room to live, on one income, in a bad month? When the answer held, they moved.

If you're like Priya and Dan

This is exactly the maths Havenli does with you, for your situation — what you could afford, the deposit you'd actually need, which schemes you may qualify for at a specific price point, and what a specific property would cost to own, before and after settlement. General guidance with every claim linked to its source — and when you're ready to turn a budget into an approval, Havenli helps you connect with a broker. See how Havenli works, end to end, or read how they turned "somewhere in the west" into an actual shortlist.

This story is general information, not financial, legal or taxation advice — Priya and Dan aren't real people, their numbers are illustrative, and your circumstances will differ. Scheme rules, caps and duties change; always confirm the current details with the official sources linked above, and talk to a licensed professional for advice on your situation.