How Much Deposit Does a First Home Buyer Need in Queensland (And How to Avoid LMI)

The traditional rule — save a 20% deposit before you buy — no longer reflects the actual options available to Queensland first home buyers. Depending on your circumstances, you may be able to purchase with as little as 2%, avoid Lenders Mortgage Insurance entirely, and still access the $30,000 First Home Owner Grant. The key is knowing which programs apply to you before you start talking to a bank.

The standard deposit options

5% deposit (no LMI via First Home Guarantee)

The First Home Guarantee (FHG) is a federal program that lets eligible first home buyers purchase with a 5% deposit. The government guarantees up to 15% of the property's value, which removes the LMI requirement. As of 1 October 2025, there are no income caps and unlimited places — any eligible first home buyer in Australia can access it.

Queensland price caps:

• South East Queensland (Brisbane, Gold Coast, Sunshine Coast): $1,000,000
• Regional Queensland: $700,000

LMI on a $700,000 purchase with a 5% deposit would typically cost $15,000–$24,000 depending on the lender. The FHG eliminates that cost entirely.

2% deposit via Boost to Buy (regional Queensland only)

Queensland's Boost to Buy shared equity scheme allows purchases with a 2% deposit by having the state government co-own up to 30% of the property (new homes) or 25% (established homes). This reduces both the deposit requirement and your ongoing mortgage repayments.

By early 2026, South East Queensland allocations had been fully exhausted. Only regional Queensland buyers can currently access Boost to Buy. If you are buying in Toowoomba, Mackay, Rockhampton, or another regional area, contact Unity Bank (the primary lending partner) to check availability.

2% deposit via Family Home Guarantee (single parents)

Single parents or eligible single legal guardians can purchase with a 2% deposit and no LMI under the Family Home Guarantee. Unlike the FHOG, this program is not restricted to first home buyers — it is available to any eligible single parent who does not currently own property. For 2025–26, 5,000 places are available nationally.

20% deposit (no programs needed)

A 20% deposit avoids LMI and gives you access to the full range of lenders and products. For most first home buyers in Queensland, reaching a 20% deposit on a $700,000 property means saving $140,000 — a figure that takes many years given rental costs. The government programs above exist precisely because reaching 20% is increasingly difficult.

How Lenders Mortgage Insurance works

LMI is an insurance policy that protects the lender (not you) if you default and the property sells for less than the outstanding loan balance. It is a one-off cost added to your loan at settlement.

The cost scales with your LVR. On a $700,000 purchase with a 10% deposit ($70,000), LMI typically ranges from $8,000 to $14,000. With a 5% deposit, it runs $15,000 to $24,000. These are rough ranges — actual figures depend on the lender and loan amount.

LMI is either paid upfront or capitalized into your loan, in which case you pay interest on it over the life of the mortgage.

Why a mortgage broker matters more than your bank

Your bank has one product: their own. A mortgage broker has access to dozens of lenders, each with different LVR policies, product structures, and appetites for first home buyer applications.

For Queensland first home buyers specifically, a good broker will:

• Assess which of the five relevant programs you qualify for (FHG, RFHBG, Boost to Buy, Family Home Guarantee, Queensland Housing Finance Loan)
• Identify lenders who accept the First Home Guarantee and participate in the Boost to Buy scheme
• Flag if your target property is in a flood zone that would restrict the LVR to 80%, effectively blocking low-deposit programs
• Help structure the FHOG application so the grant arrives at settlement, reducing the cash you need to bring

The Queensland Housing Finance Loan is also worth mentioning for buyers who cannot access commercial credit. It is a state-administered low-deposit home loan requiring only 2% deposit, waiving LMI, and applying no income cap in regional areas (up to $201,000 gross household income until 30 June 2026). Buyers in non-regional areas face a $141,000 income cap. This program is for people with stable incomes who simply cannot save a traditional deposit, not for wealth-building.

What deposit do you actually need at settlement?

The deposit you need at settlement is your cash contribution toward the purchase, net of the FHOG if applicable. On a $750,000 new build using the First Home Guarantee and the $30,000 FHOG:

That is the rough minimum. You will also need a deposit at contract exchange (often 0.25% to hold the property, then 10% by settlement), which your solicitor will structure based on your finance situation.

Getting pre-approval, understanding your program eligibility, and running through the numbers with a broker before you start making offers is not optional — it is the foundation of the entire purchase. The Queensland First Home Buyer Guide includes worksheets to calculate your real cash requirement at each stage, from exchange through to settlement day.

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