The 20% rule is not a rule
A of 20% sounds like a requirement, but it is not. No law or regulation says you must save 20% of a property's value before you can buy. The 20% figure is simply the threshold where lenders waive — an insurance premium that protects the bank, not you, if you default. Below 20%, most lenders charge LMI. Above 20%, they do not.
- 77% of first home buyers said they were unable to save a traditional 20% deposit .
- 24% said they could not save for a deposit at all .
- 87% said saving for a deposit has become harder over the past three years .
These are not fringe cases. The majority of first home buyers already enter the market below the 20% threshold — and many doubt they can ever reach it.
What a decade of saving actually looks like
Even when households can save, the time required to hit 20% is stretching past anything a household can reliably plan for. The ANZ-CoreLogic Housing Affordability Report calculated how long a median-income earner on $101,000 per year takes to save a 20% deposit when setting aside 15% of gross income annually .
City | Estimated years to save 20% | |
|---|---|---|
Sydney | ~10.0x | ~13 years |
Adelaide | 8.9x | ~12 years |
Brisbane | ~8.5x | ~11 years |
National median | 8.0x | 10.6 years |
Perth | ~7.5x | ~10 years |
Melbourne | 7.0x | ~9.7 years |
Canberra | ~6.5x | ~8.5 years |
Darwin | ~5.0x | ~6.5 years |
These figures assume you save consistently for a decade or more with no job loss, no rent increase, and no unexpected expenses. For most people, that is not a realistic run-up.
The target moves while you save
Here is the part most deposit calculators leave out. Prices move too. If dwelling values grow at even 5% per year, a property worth $900,000 today will be worth $945,000 in twelve months — your 20% target just grew by $9,000 without you doing anything wrong.
Using Cotality (formerly CoreLogic) median dwelling values as at March 2026 , the dollar-terms gap between a 5% and a 20% deposit is not small:
City | 20% deposit | 10% deposit | 5% deposit | |
|---|---|---|---|---|
Sydney | $1,296,039 | $259,208 | $129,604 | $64,802 |
Brisbane | $1,080,538 | $216,108 | $108,054 | $54,027 |
Perth | $989,211 | $197,842 | $98,921 | $49,461 |
Adelaide | $922,991 | $184,598 | $92,299 | $46,150 |
Canberra | $903,374 | $180,675 | $90,337 | $45,169 |
Melbourne | $826,132 | $165,226 | $82,613 | $41,307 |
Hobart | $728,815 | $145,763 | $72,882 | $36,441 |
Darwin | $602,284 | $120,457 | $60,228 | $30,114 |
National | $922,838 | $184,568 | $92,284 | $46,142 |
In Sydney, the gap between a 5% and a 20% deposit is $194,406. In Melbourne, it is $123,919. That gap represents years of additional saving against a price target that keeps moving.
Between March 2020 and late 2024, dwelling values in Perth, Adelaide, and Brisbane rose by more than 65% . Buyers who delayed to save a bigger deposit found that prices moved faster than their savings account could.
What waiting actually costs
Saving a larger deposit has genuine benefits — lower repayments, no LMI, and more from day one. But waiting has costs too.
Every year you rent instead of own, you pay someone else's mortgage. Every year property prices rise, your target deposit grows. The ANZ-CoreLogic report found only 10% of dwellings nationally are now considered affordable for a median-income earner, down from 40% in 2022 . The window is narrowing, not opening.
Nearly half of aspiring buyers (48%) reported working overtime to accelerate savings, and 36% took second jobs . The effort required to chase the 20% benchmark is already outstripping what normal saving can deliver.
The 20% deposit is not wrong. It is one option. You can buy with 5% through the Australian Government's 5% Deposit Scheme , or with 5-15% by paying LMI. The question is not whether you can save 20%. It is whether waiting to save 20% costs you more than the alternatives.