With the launch of the expanded Australian Government 5% Deposit Scheme, eligible first home buyers can now enter the property market with as little as a 5% deposit, and without paying Lenders Mortgage Insurance (LMI).
At Bank Australia, we’re proud to be a Participating Lender in this initiative, helping more Australians achieve home ownership.
What is the 5% deposit scheme?
The 5% Deposit Scheme – part of the Home Guarantee Scheme administered by Housing Australia – allows eligible first home buyers to purchase a property with a deposit as low as 5%, or 2% for single parents or legal guardians. The Australian Government provides a guarantee for up to 15% of the property’s value, or 18% for single parents, meaning buyers can avoid costly LMI and fast-track their journey to home ownership.
Key benefits
- Low deposit requirement: Just 5% for first home buyers, 2% for single parents.
- No income caps: Open to all eligible buyers, regardless of income.
- No LMI: Save thousands in upfront costs.
- Unlimited places: No waitlists or quotas.
- Higher property price caps: Reflective of current market conditions.
- Wide range of property types: Includes houses, townhouses, apartments, house-and-land packages, and off-the-plan purchases.
Real impact for first home buyers
With the median home price in Australia now around $844,000, a 5% deposit means saving $42,200, which can be much more manageable than traditional 20% deposit of $168,800. This change can shave years off your savings timeline, potentially saving up to $42,000 in LMI fees and allowing you to redirect rent payments into your own mortgage.
For example:
- In Melbourne, you could buy a $950,000 home with a $47,500 deposit.*
- In regional Victoria, a $600,000 home would only require a $30,000 deposit.
*An important note that you’ll still need to be able to cover other government and loan costs associated with home buying like stamp duty. The amount varies from state to state and depends on whether you’re eligible for a first home buyer stamp duty concession. Calculate stamp duty now to help get a clearer idea of what you’ll need to save.
Who’s eligible?
To qualify, you must:
- Be an Australian citizen or permanent resident aged 18+
- Be a first home buyer or haven’t owned property in the last 10 years
- Be buying an owner-occupied property within the price cap for your area
- Apply for a principal and interest loan through a Participating Lender
How Bank Australia can help
As a Participating Lender, Bank Australia is here to guide you through every step, from checking your eligibility to securing your home loan. Our team is committed to ethical banking and helping you make informed choices.
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