Saving for this initial deposit is one of the biggest challenges as a first home buyer. Depending on the estimated cost of the build, a deposit can range from $10,000 to over $100,000.

So, how big of a deposit do you need for a new home build? It will ultimately come down to the property you’re buying or building, eligibility for government circumstances, and your ability to save for the upfront deposit.

How Much Deposit is Needed for a New Home Build?

The general rule for a house deposit is that you need 20% of the property value. This 20% is the minimum requirement for most lenders without Lenders Mortgage Insurance (LMI).

Lenders mortgage insurance is an extra cost that protects the lender in the event borrowers are unable to make repayments and default on the home loan. With LMI, lenders can reduce the deposit percentage to as low as 5%.

Home buyers eligible for the Home Guarantee Scheme will only need a 2% or 5% deposit to build a house while also avoiding the need to purchase LMI.

The Home Guarantee Scheme

The Home Guarantee Scheme is a nationwide initiative aimed at helping Australian buyers purchase or build a home for residence.

In the Home Guarantee Scheme, the Australian Government provides a guarantee to a lender, allowing buyers to contribute a lower deposit rate of 2-5% without having to pay for LMI.

The Home Guarantee Scheme allows buyers to purchase:

• An existing house, apartment, or townhouse
• A house and land package
• Vacant land with a separate home building contract
• Off-the-plan properties

There are three types of guarantee under the scheme:

First Home Guarantee

The First Home Guarantee is only applicable to buyers who have not owned a property in Australia in the last 10 years. This requirement applies to both parties in a joint application.

If eligible, home buyers only need to put up a 5% deposit for their first home. 

Regional First Home Buyer Guarantee

The Regional First Home Buyer Guarantee helps buyers buying or building a home in a regional area with a 5% deposit requirement. Applicants must have lived in the regional area (or an adjacent regional area) for at least 12 months up to the date of the home loan application.

Family Home Guarantee

The Family Home Guarantee allows single parents with one or more dependent children to purchase a home with a 2% deposit. Applicants must not currently own property or have other property interests once the new home is settled. 

As of the time of writing, the Home Guarantee Scheme has limited places available. From 1 October 2025 onwards, the Home Guarantee Scheme will be expanded to offer unlimited places for applicants, along with increased thresholds for eligible property prices.

Eligibility Requirements for the Home Guarantee Scheme

To be eligible for the Home Guarantee Scheme, applicants must meet the specific criteria for the type of guarantee, as well as:

• Hold Australian Citizenship or Permanent Residency in Australia
• Be at least 18 years old
• Have a taxable income under the maximum cap of $125,000 or a combined $200,000 for joint applicants (This requirement is being removed as part of the expanded scheme, effective 1 October 2025)
• Have enough savings to meet the minimum deposit amount
• Apply for a home loan with a Participating Lender
• Buy or build a property that does not exceed the property price cap - each location has a different property price cap listed. (Property price caps are being increased as part of the expanded scheme, effective 1 October 2025)

Should You Pay More or Less Deposit for a New Home Build?

Paying a smaller deposit for a new home means you keep more of your savings, but you will need to borrow more money. Borrowing more on a home loan will subject you to a higher overall interest cost over the full term of the loan, as well as higher monthly repayments.

As a general rule, you should seek professional financial advice before deciding how much deposit to put down for a new home build. If you are able to contribute a larger deposit upfront (without putting yourself at financial risk), you could save more on interest while having lower mortgage repayments.

Whether you’re a first home buyer or looking to build in a regional area like Townsville, Keir Constructions is a trusted builder you can rely on for a high-quality home. We offer cost-effective house and land packages in Townsville that combine the cost of the land and property into one simplified package. Get in touch with our team to discuss how we can help you build a home with the Home Guarantee Scheme.