Everyone tells you "save a 20% deposit and you’re ready to buy." It’s good advice with a hidden cost: it makes you think 20% is the whole number. It isn’t. Australian property comes with a tax wedge, a fee wedge, and a cashflow buffer that can easily add another 5 to 8 percentage points to what you actually need.
I’ll walk through the real numbers using a $850,000 property as the example. Adjust for your own number, the proportions stay roughly the same.
The deposit
Banks generally want 20% to avoid Lender’s Mortgage Insurance (LMI). That’s $170,000 on $850k. You can put down less and pay LMI, which we’ll come back to.
Stamp duty
Stamp duty varies by state, and there are first home buyer concessions which often eliminate it entirely on cheaper properties. But assume you’re buying mid-range: in Victoria, on $850k as a first home buyer, you’re looking at roughly $15,000 to $20,000 of duty after concessions. In NSW and Queensland, it’s in similar territory.
If you’re not eligible for first home buyer concessions (because you’re buying second, or above the cap), it’s much worse. Could be $40k+ on the same property in Victoria.
Government and bank fees
The boring stuff that no one mentions until settlement.
- Title registration: a few hundred dollars
- Mortgage registration: another few hundred
- Bank settlement and document fees: $300 to $1,000
- Building and pest inspection: $400 to $700
- Conveyancer or solicitor: $1,200 to $2,500
- Loan application fee (some banks): up to $1,000
Call it $3,500 to $6,000 in fees that aren’t the deposit and aren’t the duty.
Cash buffer
This is the bit nobody talks about and the bit that gets first home buyers in trouble. After settlement you need:
- First few months of mortgage payments while income/expense rhythms settle
- Council rates upfront (usually a quarter’s worth)
- Building insurance (annual, paid up front)
- Utility connections, redirects, the moving truck, possibly a fridge that fits the new kitchen
- Repairs and immediate fixes the inspection turned up
Realistic buffer: $8,000 to $15,000. People who skip this end up putting it on a credit card at 19.99%, which is the most expensive way to fund a house.
The total
Adding the four numbers above for an $850k purchase as a first home buyer in Victoria, with concessions:
- Deposit (20%): $170,000
- Stamp duty: $17,000
- Fees and conveyancing: $5,000
- Buffer: $10,000
- Total: ~$202,000
That’s 23.7% of the purchase price, in cash, on the day you sign. The "20% deposit" rule was off by $32,000.
The under-20% deposit option
You can buy with as little as 5% deposit if you pay LMI. On $850k with a 5% deposit, LMI would be around $30,000, which gets capitalised onto the loan (added to what you owe).
The First Home Guarantee is the federal government scheme that lets you buy with as little as 5% deposit and skip LMI entirely. There are caps on income and property price, but if you qualify, it’s genuinely a good deal. Worth checking.
For most people, the LMI question is "do I want to wait two years to save another $90k for the deposit, or pay $30k now and start paying down the asset?" In a market with property growth running at 4 to 6% a year, "wait" is often the more expensive option.
What Funance does
The New Home goal builder in Funance handles all of this in one place. You enter your target purchase price, your state, your first home buyer status, and the deposit percentage you’re aiming for. It calculates:
- Stamp duty based on your state’s actual rules and concessions
- LMI if your deposit is under 20%
- Realistic fee and buffer estimates
- Total cash required at settlement
- Monthly savings needed at your timeline to get there
The repayment side then takes over: at the rate you’d realistically get, what does the monthly look like? Can you afford it? What happens if rates rise? All in the Goals and Scenarios tabs.
What to do this week
Pick a property price you’re actually targeting. Be realistic. Then run the numbers above for your state. Decide whether you’re going for 20% (no LMI) or under (with LMI or First Home Guarantee).
Once you have the total cash number, work out months until purchase divided into target. That’s your monthly savings number. If it’s achievable, you’ve got a plan. If it isn’t, you need either a longer timeline, a cheaper property, or to find that money in your budget.
The fact that this conversation is concrete instead of vague is most of the battle. The number that scares you on paper is the number you can plan around.