In short: This calculator compares three ways to buy the same home: a 5% deposit under the First Home Guarantee (no LMI, no income cap, $950,000 Melbourne cap), a 10% deposit with LMI, or waiting to save 20%. On a $650,000 home, saving $2,000 a month, the 20% path takes about four years longer than 5%, and at 5% annual growth the home could cost roughly $140,000 more by then.
- 5% deposit + First Home Guarantee$32,500 · ready 0y 2m · LMI $0 · $3,702/mo
- 10% deposit + LMI$65,000 · ready 2y 0m · LMI $19,498 · $3,624/mo
- 20% deposit, no LMI$130,000 · ready 5y 7m · $3,118/mo
- Extra interest, 5% vs 20% (30 yrs)$112,942
- Extra interest, 10% vs 20% (30 yrs)$97,881
Waiting to save 20% avoids LMI but exposes you to price growth in the meantime; the guarantee removes LMI at 5%. Stamp duty and costs excluded here — see the upfront costs calculator.
With the 5% guarantee you could buy in: 0y 2m
That is a general estimate on standard assumptions. Every lender applies its own expense benchmarks, income shading and policy, so the real figure moves from lender to lender. Gorakh spent years as a senior credit officer deciding exactly these questions. Send him the numbers above and he will tell you what is realistic and which lenders fit — at no cost to you for home loans.
- A former senior credit officer reads itGorakh assessed loan applications on the lender side before he became a broker.
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The usual question is "how much deposit do I need". The better one is "which deposit gets me a home sooner at the lowest total cost".
How this calculator works
Enter the target price, current savings, monthly savings, a savings interest rate and an assumed annual property growth rate. For each deposit level the tool shows months until you can buy, the likely price by then, the loan size, whether LMI or the First Home Guarantee applies, and the repayment. It flags when growth pushes you past a scheme cap.
What each path involves
| Deposit | Typical route | LMI | Trade-off |
|---|---|---|---|
| 5% | First Home Guarantee (owner-occupier, citizen or PR, 18+, no property in the last 10 years) | None under the scheme | Larger loan and repayments; limited lender choice; price cap $950,000 Melbourne and Geelong, $650,000 rest of Victoria |
| 10% | Standard loan with LMI, or a guarantor | Yes unless guaranteed | LMI premium added to the loan; still a reasonably large loan |
| 20% | Standard loan, best pricing tiers | None | Years of extra saving while prices and rents move |
Worked example on a $650,000 home
A Wollert couple have $20,000 saved and can put away $2,000 a month at 4% p.a. interest towards a $650,000 established house. For illustration, the loan rate is 6.00% p.a. over 30 years and property growth is 5% a year.
| 5% deposit (First Home Guarantee) | 10% deposit with LMI | 20% deposit | |
|---|---|---|---|
| Deposit needed today | $32,500 | $65,000 | $130,000 |
| Months to reach it from $20,000 | about 6 | about 22 | about 50 |
| Likely price by then at 5% growth | about $670,000 | about $710,000 | about $790,000 |
| Loan at purchase | about $636,000 | about $640,000 | about $632,000 |
| LMI (indicative) | nil | roughly $10,000 to $16,000, often capitalised | nil |
| Monthly repayment | about $3,815 | about $3,840 plus LMI | about $3,790 |
The three loans end up almost identical, because the price grows as fast as the deposit. The difference is when they own a home and what it cost. The 20% path spends four more years renting and buys at a price about $120,000 higher, with more stamp duty. The 10% path pays LMI to buy two years earlier than 20%, but still 16 months after the 5% path.
Growth is the swing factor. At 0% growth the 20% deposit wins on total cost; at 7% the 5% path wins by a wide margin. That is why the calculator lets you change the assumption.
When a bigger deposit is still the right call
- You do not qualify for the First Home Guarantee (for example, you have owned property in the last 10 years, or you are on a temporary visa), so 5% means LMI on a 95% loan, which can be substantial. Check the LMI calculator.
- The home you want is above the $950,000 Melbourne cap.
- Your borrowing power, not your deposit, is the real constraint. A bigger deposit means a smaller loan and easier servicing under the APRA 3% buffer. Test it with the borrowing power calculator.
- You expect a windfall, such as a family gift, within months. Gifted deposits are accepted by most lenders with a signed letter; our guide on genuine savings explains how lenders treat them.
Ways to bring the purchase forward
Combining schemes is often the fastest route. A new home under $750,000 attracts the $10,000 First Home Owner Grant on top of the guarantee, and the duty exemption below $600,000 saves up to about $31,000. A guarantor loan removes LMI without waiting. Use the deposit savings calculator to test a higher savings rate and the upfront costs calculator to cover duty, conveyancing and moving.
Frequently asked questions
Is it better to buy with 5% now or wait for 20%?
It depends on price growth, your savings rate and whether you qualify for the First Home Guarantee. In a rising market, buying sooner with 5% and no LMI usually costs less overall than waiting years to save 20%, because the price grows faster than the deposit. In a flat market, waiting avoids a larger loan and higher repayments. Run both scenarios above.
How much is LMI on a 10% deposit?
Lenders' mortgage insurance on a 90% loan of around $585,000 typically runs into the low tens of thousands of dollars, and the premium rises steeply as the LVR approaches 95%. Rates vary by lender, insurer and loan size, so use the LMI calculator for an estimate and ask your broker for the exact quote. Most borrowers capitalise the premium into the loan.
Does the First Home Guarantee have an income limit?
No. Since October 2025 the scheme has no income cap and no limit on places. You must be an Australian citizen or permanent resident aged 18 or over, buy as an owner-occupier, not have owned property in Australia in the past 10 years, and stay under the price cap: $950,000 in Melbourne and Geelong, $650,000 elsewhere in Victoria. Check your position with the eligibility calculator.
Can I use a gift from my parents as part of the deposit?
Yes. Most lenders accept a gifted deposit with a signed letter confirming it is not repayable. Some still want 5% of the price in genuine savings held for three months, though this varies by lender. Speak to us before the money moves so the paperwork lines up.
What if the price cap rises above my budget while I save?
The calculator flags this. If growth pushes your target above $950,000 in Melbourne, you lose access to the guarantee and would need LMI or a 20% deposit. That is a strong argument for buying a little earlier, or for looking at newer suburbs such as Kalkallo, Donnybrook or Wollert where prices sit well under the cap.
Talk to GNT Finance
GNT Finance helps first home buyers across Melbourne's north choose the deposit path that gets them in sooner without over-borrowing. We check your First Home Guarantee eligibility, compare LMI across lenders and organise gift and guarantor paperwork, at no cost to you for our home-loan service in most cases. Book a free consultation or call 0426 403 703.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.