First Home Buyers: How the 5% Deposit Scheme Can Get You Into the Market Sooner (and Mistakes to Avoid)
Great news for first home buyers — as of 1 October, you can now purchase a property with as little as a 5% deposit and no Lenders’ Mortgage Insurance (LMI), thanks to the Australian Government’s newly expanded First Home Guarantee Scheme.
With access widened and property price caps increased, the program is expected to help around 70,000 first home buyers take their first step onto the property ladder this year. For those still struggling with getting the required deposit or purchasing over the cap then security guarantee could be an option.
If you’re planning to join them, it’s worth understanding how the scheme works — and the common mistakes to steer clear of when buying your first home.
🏡 Unpacking the Australian Government 5% Deposit Scheme
Formerly known as the Home Guarantee Scheme, the program has been rebranded as the Australian Government 5% Deposit Scheme — and it’s designed to help more Australians buy their first home sooner.
Here’s how it works:
- You can purchase a home with just a 5% deposit, and the government guarantees the remaining 15%, removing the need for costly Lenders’ Mortgage Insurance (LMI). Please note that you will still need to pay stamp duty and settlement costs on top of this.
- Price caps have lifted, meaning buyers can now access more realistic property options in high-demand markets.
- There’s now no cap on the number of eligible applicants, expanding opportunities for first-home buyers nationwide.
For example:
- In Sydney, you could purchase a $1.5 million home with just a $75,000 deposit (plus stamp duty and settlement costs).
- In Perth, a $850,000 home would only require a $42,500 deposit. (Including stamp duty and estimated costs total deposit $82,500).
With the new rules in play, it’s an exciting time for first-time buyers — but before you jump in, make sure you avoid some of the common missteps that can trip up new homeowners.
🚫 4 Common Mistakes First Home Buyers Make
1. Underestimating the Real Costs of Buying
Your deposit isn’t the only upfront expense. You’ll also need to budget for:
- Stamp or transfer duty
- Building and pest inspections
- Legal and conveyancing fees
- Transfer and registration costs
- Loan establishment fees
- Moving and connection costs
And don’t forget ongoing costs like council rates, strata fees, maintenance, utilities, and insurance. Building a buffer into your budget can help you avoid financial strain once you move in.
2. Letting Emotion Drive Your Decisions
It’s easy to fall in love with a beautiful kitchen or a leafy street — but emotions can lead to overbidding or overlooking red flags.
Stay grounded and focused on your key criteria: location, structure, budget, and growth potential. Remember, there will always be another great property if this one doesn’t work out.
3. Skipping Pre-Approval
Getting pre-approval means your lender has reviewed your financial situation and given you a clear idea of how much you can borrow.
This not only helps you narrow your search but also puts you in a stronger position to negotiate with confidence. Most pre-approvals last around 90 days, so it’s a great step to take early in your buying journey.
4. Skipping the Building and Pest Inspection
Trying to save a few hundred dollars by skipping an inspection could cost you thousands later.
Always arrange a building and pest inspection before signing the contract, so you can identify issues like structural damage, termites, asbestos, or water leaks — and make an informed decision before you commit.
💡 Ready to Get Started?
Buying your first home is an exciting milestone — and having the right experts on your side makes all the difference.
At Fox Mortgage Services, we’ll:
- Review your financial situation and goals
- Compare loan options from a wide range of lenders
- Explain which first home buyer schemes or grants you might be eligible for
- Guide you through the process from pre-approval to settlement
We make the journey stress-free and straightforward — so you can focus on finding your dream home, not worrying about the paperwork.
👉 Get in touch or book an appointment with the Fox Mortgage Services team today to find out how we can help you buy your first home sooner.