5% Deposit vs 20% Deposit: The Real Trade-Offs

The 20% deposit is the traditional advice. The 5% pathway is how a growing share of Sydney first home buyers actually purchase. Neither is automatically right.

The case for 5%

Time. On Sydney prices, saving from 5% to 20% can take years, and if prices rise while you save, the target moves away from you. Under the government scheme there is no LMI at 5%, which removes the traditional penalty for small deposits.

The case for 20%

A smaller loan, lower repayments, every lender available and the sharpest pricing. You also start with a real equity buffer, if prices dip, you are far less exposed.

The honest middle

The bigger loan at 5% costs more each month, run both versions in the deposit calculator and the repayments calculator. And the scheme has price caps and conditions, eligibility is assessed by Housing Australia and the lender, not a website.

The right answer is personal: prices in your target area, your savings rate, your patience. Twenty minutes with Charles settles it with real numbers.

General information only, not credit, legal or tax advice. Your situation is assessed properly before any recommendation. Government scheme details change; figures are current at the time of writing.