5% Deposit Scheme helps more than 300,000 Aussies buy a first home

Buying a first home doesn’t mean scraping together a 20% deposit. Here’s how you could break into the property market with just a 5% deposit. 

The Australian government’s 5% Deposit Scheme has been around since 2020, and in that time it’s been a game-changer for more than 300,000 first home buyers. The scheme lets you buy your first home with just a 5% deposit — or 2% for single parents.

The scheme has also helped fund the construction of close to 30,000 new homes. So, it’s no surprise that more than one-in-three first home buyers relied on the scheme to buy a place of their own in 2024-25.

Wondering if the 5% Deposit Scheme is right for you? Here’s what’s involved.

How the 5% Deposit Scheme works

The scheme overcomes a key challenge for first home buyers – saving a 20% deposit at a time when property values in many areas are continuing to rise. With a deposit below 20%, most lenders will require you to pay lenders mortgage insurance (LMI), costing thousands.

That’s part of the beauty of the 5% Deposit Scheme – the federal government guarantees your home loan, meaning there’s no need to pay LMI.

There are also no waitlists, no income limits and no place limits. You’re free to buy an established home or build a new place – as long the property falls within the price limits that apply in your area.

Long story short, if you meet eligibility criteria, and can chip in a minimum 5% deposit (or 2% if you’re a solo parent), the scheme could bring forward your savings timeline, and fast-track your journey to home ownership.

Mix and match with other first home buyer incentives

The 5% Deposit Scheme can be combined with other first home buyer assistance across federal, state and territory governments. These incentives include the First Home Owner Grant (FHOG), which provides a one-off grant in most states and territories to first home buyers who buy or build a new home.

Stamp duty waivers or concessions may also be available to you. And the First Home Super Saver Scheme could let you grow a deposit using your super.

The possible downsides

The 5% Deposit Scheme may be a great help. But it still makes sense to talk to us. A smaller deposit often means taking out a bigger loan. It can also mean slower equity growth, making it harder to refinance down the track.

That’s why your choice of home loan is so important. Call our Lending Specialists to check the numbers and find the right home loan for you.

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