A first home buyer in Australia can generally buy with a 5% deposit and no Lenders Mortgage Insurance by using the federal First Home Guarantee, or with a 5% to 20% deposit on a standard loan where LMI applies below 20%. State grants and stamp duty concessions stack on top of the federal schemes, and in the most generous state combination they are worth roughly $60,000. Eligibility is assessed on income, property price caps and whether the home is new or established.
The honest answer is that the deposit sets your cost, not your eligibility. Below 20% you can still buy, but Lenders Mortgage Insurance applies unless a government guarantee covers you.
Indicative positions on an $800,000 purchase. LMI premiums vary by lender and are added to the loan rather than paid upfront in most cases.
| Deposit | LVR | LMI applies? | What it means for you |
|---|---|---|---|
| 5% ($40,000) | 95% | Yes, unless a government guarantee applies | Highest LMI cost. First Home Guarantee removes it entirely if you qualify. |
| 10% ($80,000) | 90% | Yes | LMI still significant. Wider lender choice than at 95%. |
| 15% ($120,000) | 85% | Yes, but materially cheaper | The premium drops sharply between 90% and 85%. |
| 20% ($160,000) | 80% | No | No LMI, best rates, every lender on panel available. |
Budget for costs beyond the deposit: stamp duty where a concession does not fully apply, conveyancing of roughly $1,500 to $3,000, building and pest inspection of $400 to $800, and lender fees. Many first buyers are caught by these rather than by the deposit itself.
Federal schemes and state benefits are assessed separately and can be claimed together. Most first buyers claim fewer than they are entitled to, usually because the state grant is restricted to new builds and they assume that rules them out of everything.
Buy with a 5% deposit and pay no LMI, because the government guarantees part of the loan to the lender. Since 1 October 2025 there is no income cap and no limit on places. Property price caps still apply and vary by state and region.
Save your deposit inside superannuation at 15% tax rather than your marginal rate, then withdraw up to $50,000 plus earnings. Needs 2 to 3 years of lead time to be worth using.
A one-off state payment, almost always restricted to newly built homes. Ranges from $7,000 in the ACT to $30,000 in Queensland, each with its own price cap.
Frequently worth more than the grant itself. NSW exempts first buyers up to $800,000; Victoria up to $600,000 with a taper to $750,000; South Australia has abolished duty on new homes for all buyers.
Cancelling unused credit cards and closing dormant BNPL accounts before you apply is the single cheapest way to raise your borrowing capacity. It costs nothing and can move your ceiling by tens of thousands.
Establishes your real borrowing position and flags what is holding it down, without touching your credit file.
Close unused cards and BNPL accounts, pay down small personal debts, and let 3 months of clean statements accumulate.
Federal guarantee eligibility, your state grant, and your stamp duty position. This determines your true deposit requirement.
One application to the lender whose policy actually fits you. Now you know your ceiling and can bid or offer with confidence.
Scheme price caps are hard edges. Ten thousand dollars over a cap can cost you tens of thousands in forfeited concessions.
Five per cent is the practical minimum. With the First Home Guarantee you can buy at 5% with no Lenders Mortgage Insurance. Outside the scheme, 5% to 20% is possible but LMI applies below 20%, and the premium rises steeply as the deposit shrinks.
Usually only at settlement, not as evidence of savings during assessment. The grant flows through the conveyancing process on the settlement date, so lenders generally require you to demonstrate your deposit and genuine savings separately beforehand.
For the First Home Owner Grant, no — both applicants must be eligible first home buyers. The federal First Home Guarantee has separate criteria and can be available to people who have not owned property in Australia for 10 years or more.
Genuine savings are funds you have accumulated yourself, typically over at least 3 months, rather than received as a gift or windfall. Most lenders require 5% in genuine savings on high-LVR lending. Some accept rental payment history as a substitute.
No, but it reduces how much you can borrow. HECS repayments are deducted from your assessable income while the debt exists, and it cannot be rolled into a home loan. On an average graduate balance the effect is usually tens of thousands off your borrowing ceiling.
Run both numbers rather than assuming. State grants are usually restricted to new builds, but stamp duty concessions typically apply to both. In several states the duty concession on an established home is worth more than the grant on a new one.
Your Kreddi Score shows your borrowing position, the schemes you qualify for, and exactly what is holding your capacity down — in 15 minutes, with no impact on your credit file.
NIK Finance Pty Ltd (ACN 685 393 917) is a Credit Representative (567387) of Finsure Finance & Insurance Pty Ltd (Australian Credit Licence 384704). This page is general information only and does not constitute financial advice. Consider your personal circumstances and speak with a licensed broker before applying for credit.