Deposit

Plain-English definition. The deposit is the upfront cash contribution a buyer pays toward a property's purchase price, with the lender funding the balance through a mortgage. It typically ranges from 5% to 20% of the price.

How it works in Australia. A "contract deposit" of usually 10% is paid at exchange and held in the agent's or conveyancer's trust account until settlement. The "lender deposit" determines your LVR: 20% means 80% LVR and avoids LMI. Below 20% triggers LMI unless you have a guarantor or qualify for the Home Guarantee Scheme, which lets eligible first home buyers purchase with 5% deposit without LMI. "Genuine savings" rules require lenders to see at least 5% has been saved over 3+ months — gifted deposits often need supplementary verification.

Concrete example. Buying a $750,000 first home with 5% deposit ($37,500) through the Home Guarantee Scheme: borrow $712,500 (95% LVR) with no LMI. With 20% deposit ($150,000), the loan is $600,000 (80% LVR), again no LMI. With 10% deposit ($75,000), the loan is $675,000 at 90% LVR and LMI of roughly $10,000–$14,000 applies.

Common confusion. Buyers conflate deposit with all upfront cash needed. The true cash-to-complete includes deposit plus stamp duty, conveyancing, building inspection, loan application fees, mortgage registration and removalist costs — easily 4–6% of the price on top of the deposit in NSW and Victoria.