First home First home loans with a smaller deposit
Earning well, but still waiting on a 20% deposit? It's not your income. It's a rule nobody explains.
You may not need 20%. Under the Australian Government 5% Deposit Scheme, eligible first home buyers can buy with a 5% deposit, below a price cap of $1.5 million in Sydney. Your real number is that deposit plus stamp duty and fees for your state and price. In NSW, a first home up to $800,000 pays no stamp duty.
Saving 20% first
- Deposit
- $170,000
- Stamp duty
- $9,797
5% Deposit Scheme
- Deposit
- $42,500
- Stamp duty
- $9,797
Illustrative. Established home, eligible first home buyer, NSW concession applied. Excludes lender, legal and other costs. A smaller deposit means a bigger loan and higher repayments.
How much deposit do I need for my first home?
Twenty per cent is one option, not a rule. With the 5% Deposit Scheme you can buy with 5%, or 2% if you're an eligible single parent. Help to Buy can bring it down to 2% if your income is under its caps. Some lenders also lend above 80% outside the schemes, at a cost.
Most people I meet earn well and can manage the repayments. What stops them is the cash on the day. So the question isn't only "how much deposit". It's how much deposit, plus stamp duty, plus fees, for your state and your price. That's your real number.
Every way in, with the catch on each
I check these in order, government schemes first. Eligibility applies to every one.
| Way in | Deposit from | May suit | The catch |
|---|---|---|---|
| 5% Deposit Scheme | 5% | Citizens and permanent residents buying a home to live in, under the price cap | Price caps by location. You must move in within 6 months and keep living there. Participating lenders only. Principal and interest repayments. |
| 5% Deposit Scheme for single parents | 2% | Single parents or legal guardians of a dependent child | Same price caps. A 98% loan means higher repayments, so the buffer matters. |
| Help to Buy | 2% | Citizens with income up to $103,000 single, or $165,000 for couples and single parents | The government owns up to 30% for an existing home or 40% for a new home. You repay its share when you sell or when you can. 10,000 a year places. |
| Family guarantee | As little as 0% | A parent with equity in their own home | Their home secures part of your loan until the guarantee is released. |
| Lender low-deposit loans | Usually 5% to 10% | Strong incomes, or prices over the scheme caps | Usually lenders mortgage insurance or a higher cost, added to the loan. |
| Save 20% | 20% | Buyers who already have it, or are close | Another lease or two while the target moves with prices. |
Am I eligible for the 5% Deposit Scheme?
You may be eligible if all of these are true at your home loan date:
- You're an Australian citizen or permanent resident, aged 18 or over.
- You're a first home buyer, or not owned property in Australia in the last 10 years (both applicants, in a joint application).
- You're buying a home to live in, and you'll move in within 6 months of settlement.
- You have at least 5% of the property value saved, but less than 20%.
- The price is at or under the cap for the location.
- The loan is owner-occupier, principal and interest, up to 30 years, through a Participating Lender.
There have been no income caps and no limit on places since 1 October 2025.
Price caps, as at 1 July 2026
| State | Capital city and regional centres | Rest of state |
|---|---|---|
| NSW | $1,500,000 | $800,000 |
| VIC | $950,000 | $650,000 |
| QLD | $1,000,000 | $700,000 |
| WA | $850,000 | $600,000 |
| SA | $900,000 | $500,000 |
| TAS | $700,000 | $550,000 |
| ACT | $1,000,000 | — |
| NT | $750,000 | $600,000 |
Regional centres include the Central Coast, Illawarra, Newcastle and Lake Macquarie in NSW, Geelong in VIC, and the Gold Coast and Sunshine Coast in QLD. Confirm the cap for a postcode with the lender.
How much is stamp duty on a first home?
It depends more on the state than on the price. Here is the duty on the same $750,000 established first home in each state.
| State | Stamp duty | Why |
|---|---|---|
| NSW | $0 | No duty up to $800,000 (First Home Buyers Assistance Scheme) |
| ACT | $0 | Home Buyer Concession Scheme. No price cap or income test from 1 July 2026 |
| QLD | $10,925 | First home concession |
| WA | $24,225 | First home owner rate |
| TAS | $28,935 | General rate. The first home exemption ended on 30 June 2026 |
| SA | $35,080 | General rate. First home relief is for new homes |
| NT | $37,125 | General rate. No first home concession on established homes |
| VIC | $40,070 | Concession ends at $750,000, so full duty applies |
Illustrative, for an eligible first home buyer who is an Australian citizen or permanent resident, buying an established home to live in. Worked out with my stamp duty calculator, rules checked 14 October 2026. Each state has its own conditions, such as moving in and staying for a set time.
What do lenders look at when the deposit is small?
If your income is a base salary and you've passed probation, most lenders read it the same way. If it's casual, bonus, overtime or self-employed income, they don't. That's where the choice of lender matters most.
- Genuine savings. Many lenders want to see savings built up over about three months.
- Your debts at their limits. A $10,000 credit card counts as $10,000, even with a zero balance. HECS-HELP counts too.
- Your buffer. Lenders test your repayments at a higher rate than the one you'd pay.
- The property. Some lenders are cautious with small apartments and some new estates.
When may waiting be the better answer?
Sometimes the right pace is slower. I'll tell you if I think it is.
- The repayments on a bigger loan would leave you with very little buffer.
- You might move or sell within two or three years. Buying and selling costs can outweigh the rent you'd save.
- The homes you want sit just over the price cap.
- Closing a card or clearing a car loan first would change which lenders say yes.
How I work The Pace Plan
The same three steps, whichever door you came through.
- Step 1
Get your real number
The deposit, the stamp duty and the fees for your state and price.
- Step 2
See every way in
Government schemes first, and the catch on each, in writing.
- Step 3
Set your pace
Choose the option and the timeline, then pre-approval, offer and settlement, timed to your lease, with a plan to pay it off.
Schemes first, every time. I tell you the catch. If waiting is the better answer, I'll say so.
FAQ Questions clients ask
Do I pay lenders mortgage insurance with a 5% deposit?
Not under the 5% Deposit Scheme, as long as you keep meeting its rules, such as living in the home. Outside the scheme, a deposit under 20% usually means lenders mortgage insurance or a higher cost, so I check the scheme first.
What is the 5% Deposit Scheme price cap in Sydney?
The cap is $1,500,000 in Sydney and the NSW regional centres, and $800,000 in the rest of NSW. Both the purchase price and the lender’s valuation must be at or under the cap.
Are there income caps on the 5% Deposit Scheme?
No. Income caps and the limit on places were removed on 1 October 2025. Help to Buy, the shared equity scheme, still has income caps.
Can I use the scheme if I’ve owned a home before?
Yes, if neither applicant has owned property in Australia in the 10 years before the home loan date. That includes property owned with a former partner. My buying again page explains the rules for people who’ve owned before.
Can I buy with a friend or a sibling?
Yes. The scheme accepts individuals or two joint applicants, including partners, friends or family members. Both of you must meet the eligibility rules, and loans with three or more borrowers don’t qualify.
Does the scheme cover new builds and house-and-land?
Yes, it covers new and existing homes. For land with a separate build contract, the land price and build cost together must stay under the price cap, and the build must start within 12 months of settlement.
How long do I have after pre-approval?
Under the scheme, you have 90 days from pre-approval to find a home and sign a contract. Lender pre-approvals outside the scheme usually last about 90 days too.
Get your real number in one 30-minute session.
Then set your own pace.
So your next lease could be your last.