Jump into the market up to 4 years sooner with 5% deposit scheme

If you’re like most first home buyers, you’ve probably realised by now that saving up for a 20% deposit can be a real slog. But what if we told you that you now only need a 5% deposit? And better yet, you could already have that amount ready to go now.

Saving up a deposit to buy a first home can be the equivalent of running a financial marathon.

It takes around 5.6 years for the average Australian family to save a 20% deposit, according to PropTrack (and potentially even longer, depending on where you want to buy).

But here’s the rub.

Home prices don’t stand still while you’re growing that all-important deposit.

Rising property prices can push the goal posts further out of reach no matter how hard you save.

The good news is that the recent expansion of the popular Home Guarantee Scheme (HGS) is expected to reduce the time taken to save a deposit by up to four years, says Housing Industry Association (HIA) Senior Economist Tom Devitt.

Our back-of-the-napkin maths says that means it could now take first home owners just over 18 months to save for a first home deposit – and many on their savings journey might already be there.

What is the Home Guarantee Scheme?

The HGS is designed to help first home buyers buy a place of their own sooner.

Unlike, say, the First Home Owner Grant, which sees eligible first home buyers receive a one-off payment, no money changes hands with the HGS.

Instead, it works by letting first home buyers purchase a place with just a 5% deposit, while the federal government guarantees the remaining 15%.

This provides lenders with security equal to a 20% deposit, meaning home buyers don’t need to pay lenders mortgage insurance (LMI) – which is usually not a small amount.

“First home buyers pay between $25,000 and $30,000 in LMI to purchase an average home,” explains the HIA’s Mr Devitt.

In this way, first home buyers can now get into the market with a smaller deposit while also saving on upfront costs.

Unlimited places, higher home price caps from 1 October 2025

The federal government recently announced important changes to the HGS.

From 1 October 2025, the scheme will be open to all Australian first home buyers.

There will be no limit on the number of people who can apply each year.

Income caps will be scrapped, allowing first home buyers with higher incomes to access the scheme. And property price thresholds will be raised to help home buyers where home values have increased.

The bottom line, according to the HIA, is that these changes to the HGS could see first home buyers buy a place of their own four years sooner on average.

How we can help you buy your first home

If you’re a first home buyer, the stars may finally be aligning.

Our job is to help you make the most of every opportunity to buy a home of your own.

Not all lenders have signed up to the HGS.

So talk to us to find out which loans and lenders are part of scheme and get the ball rolling on your first home.