A deposit is not one number. It is the cash you contribute to the purchase, and lenders care as much about where it came from as how much of it there is.
Two buyers can hold the same $60,000 and get different answers. One accumulated it over two years. The other received it last month. Policy treats those differently, and the second buyer often does not find out until the application is already in.
This guide explains what counts toward a deposit, why the genuine savings rule exists, how gifted money is evidenced properly, and which lending route each deposit level actually opens.
Lenders separate the deposit into components and apply different rules to each.
| Source | Counts toward the deposit | Counts as genuine savings | Evidence required |
|---|---|---|---|
| Accumulated savings | Yes | Yes, if held three months or more | Statements showing the build-up |
| Gift from a parent | Yes | Generally no | Signed gift letter, donor statements |
| First Home Super Saver release | Yes | Treated favourably by most lenders | ATO determination and release |
| Sale of an asset | Yes | Sometimes | Sale contract and settlement evidence |
| Inheritance | Yes | Generally no | Estate documentation |
| Personal loan | No | No | Not accepted as deposit by mainstream lenders |
| Equity in another property | Yes | Not applicable | Valuation and existing loan statements |
The column that catches people is the third one. Money can be perfectly acceptable as a deposit and still fail the genuine savings test, which changes which lenders will look at the file.
The rule exists because a deposit proves two different things, and lenders want both.
The first is capital. You have money to put in. The second is behaviour. You can consistently spend less than you earn, which is the same discipline that services a mortgage for thirty years. A gift proves the first and says nothing about the second.
Term deposits, shares held for the period and offset balances generally qualify. Money that arrived last week does not, regardless of how legitimate its source.
A gift is not a problem. An undocumented gift is.
Lenders need to establish that the money is genuinely a gift rather than an undisclosed loan, because an undisclosed loan is an undisclosed liability that changes the serviceability assessment.
Assembling gifted deposit evidence sydney lenders will accept takes a week if you start early and derails a settlement if you start late. If parents are helping, a family guarantee is sometimes a better structure than a cash gift, because it avoids moving money at all.
The deposit percentage does not just change the loan size. It changes which lenders will consider you and what it costs.
| Deposit | Loan-to-value ratio | Mortgage insurance | Lender availability |
|---|---|---|---|
| 20% or more | 80% or less | Not payable | Full panel |
| 15% | 85% | Payable, moderate | Most lenders |
| 10% | 90% | Payable, significant | Most lenders, tighter policy |
| 5% | 95% | Payable and substantial, or waived under a scheme | Narrow, and genuine savings almost always required |
| 5% with a scheme place | 95% | Not payable | Participating lenders only |
| Family guarantee | Effectively 80% | Not payable | Lenders offering the product |
Note the last two rows. Both reach a ninety-five per cent purchase without an insurance premium, by completely different mechanisms. Which one is available to you depends on eligibility and on whether a family member is willing and able to be involved.
ASIC publishes neutral background on deposits, loan-to-value ratios and insurance in its Moneysmart home loans guidance.
More detail sits in what lenders mortgage insurance is, how much it costs and the ways to avoid it.
The figures below are illustrative. They show one buyer on an $800,000 purchase at three different deposit levels, to make the trade-off visible. They are not a quote and not drawn from a client file.
| 5% deposit | 10% deposit | 20% deposit | |
|---|---|---|---|
| Deposit | $40,000 | $80,000 | $160,000 |
| Loan | $760,000 | $720,000 | $640,000 |
| Loan-to-value ratio | 95% | 90% | 80% |
| Mortgage insurance | Substantial, unless waived | Significant | None |
| Genuine savings tested | Almost always | Usually | Often not |
| Lenders likely to consider it | Few | Many | All |
| Extra time to save, at $2,000 a month | Nil | 20 months | 60 months |
The bottom row is the one that decides it. Waiting five years to reach twenty per cent only wins if Sydney prices stay still for five years, and the deposit target rises with the market. That is the actual comparison, and it is specific to the suburb you are buying in.
People ask whether to wait for a bigger deposit. The honest answer is that it depends entirely on what the market does while you wait, and nobody can tell you that. What you can control is whether your savings are structured so a lender counts them.
Paritosh Wadhwani, Director and Principal Broker, APW Finance
Twenty per cent of the purchase price avoids lenders mortgage insurance entirely and opens the full lender panel. Five per cent is possible through a scheme place, a family guarantee or a profession waiver, and ten to fifteen per cent sits between the two with an insurance premium payable. Add duty, legal fees and inspections to whichever figure you choose, because those are cash as well.
Money you have accumulated yourself and held for at least three months, evidenced by statements that show it building up rather than arriving at once. Term deposits, shares held across the period and offset balances usually qualify. Many lenders also accept a documented rental ledger showing rent paid on time as an alternative, which helps buyers who have been renting rather than saving.
Yes, and it is common. The lender will require a signed gift letter confirming no repayment is expected, along with bank statements from the donor showing the funds leaving their account. A gift generally does not count as genuine savings on its own, so if your lender requires genuine savings you may need to show a portion accumulated yourself as well.
Most lenders treat it favourably because the money came from your own voluntary contributions, which is evidence of exactly the savings behaviour they want to see. You will need the ATO determination and evidence of the release. The timing matters, since the release process takes weeks and needs to be started well before you intend to settle.
Not from a personal loan or a credit card. Mainstream lenders will not accept borrowed funds as a deposit, and the new repayment reduces your borrowing capacity at the same time. Equity in another property is different and is commonly used, as is a family guarantee, where a relative offers security instead of cash changing hands at all.
It depends on whether prices move while you wait, which nobody can predict reliably. A larger deposit means no insurance premium, a smaller loan and more lender choice. A smaller deposit means buying sooner and paying a premium or using a scheme. The right answer is specific to your suburb, your savings rate and how secure your income is.
Deposit size decides the loan. Deposit source decides the lender. Both matter, and the second one is the part most buyers discover too late.
If money is coming from family, document it early. If you have been renting rather than saving, ask your agent for a ledger before you apply.
Read more about low deposit lending or family guarantee structures. You can also work out how much deposit you need or read how borrowing capacity is calculated.
Ask us to review your deposit position.
Paritosh Wadhwani | Director and Principal Broker, APW Finance
Member of the Finance Brokers Association of Australia (FBAA). Arranging residential, commercial and specialist lending for Sydney clients across a panel of more than 50 lenders.
APW Finance Pty Ltd, 304/20a Lexington Drive, Bella Vista NSW 2153. Email: info@apwfinance.com. Phone: +61 447 959 546.
ACN 620 646 479 | ABN 79 620 646 479
This guide is general information only. It does not take into account your objectives, financial situation or needs, and it is not financial or credit advice. Lending criteria, interest rates, duty thresholds and government schemes change, and every application is subject to lender approval. Consider whether this information suits your circumstances and seek independent advice before acting. Figures quoted are current at the date below and should be confirmed before you rely on them. Last reviewed: October 2026.
APW Finance Pty Ltd delivers expert lending solutions with personalised service, empowering clients across residential, commercial, and business sectors.