Buying your first home without the panic
The property conversation in Australia runs on fear: buy now or be locked out forever. That noise helps nobody make a good decision. This guide strips it back to what actually matters, how much you really need, what the schemes do, and the order to move through, so you can decide on facts rather than dread.
Last updated 1 July 2026 · About 12 minutes · General information only, not personal advice
Eligible first-home buyers can purchase with as little as a 5% deposit and avoid lenders mortgage insurance under the federal First Home Guarantee.
Source: Housing Australia, First Home Guarantee. Places and eligibility rules apply and change, so confirm the current details before you rely on them.How much deposit do you actually need?
The classic rule is a 20% deposit, because at that level lenders do not charge you insurance for the risk of a low deposit. On a $600,000 home, 20% is $120,000, which is why so many people feel it is impossible. But 20% is not a legal requirement, it is a threshold that avoids one specific cost. Plenty of first-home buyers purchase with 5% to 10%, using the schemes below.
| Deposit | On a $600,000 home | What it means |
|---|---|---|
| 20% | $120,000 | No lenders mortgage insurance. Smallest loan and repayments. |
| 10% | $60,000 | Usually pays LMI, unless you use a scheme. |
| 5% | $30,000 | Possible with the First Home Guarantee, LMI avoided if eligible. |
What lenders mortgage insurance really is
Lenders mortgage insurance (LMI) protects the bank, not you, if you cannot repay the loan. It kicks in when your deposit is below 20%, and it can add thousands to tens of thousands of dollars to your costs, either paid upfront or added to the loan. It is not a scam, but it is a real number to plan around, and avoiding it is one reason the schemes below matter so much.
Unsure what a term means? The money glossary defines LMI, offset accounts, redraw, pre-approval and the rest in plain English.
The government schemes worth knowing
- First Home Guarantee. Lets eligible buyers purchase with a 5% deposit while the government guarantees the rest, so you skip LMI. Places are limited each year.
- First Home Super Saver Scheme. Lets you make extra contributions into super and later withdraw them, plus earnings, toward a deposit, using super's tax advantages. Caps and rules apply.
- State grants and stamp duty concessions. Most states offer a First Home Owner Grant and reduced or waived stamp duty for eligible buyers, especially for new builds and homes under a price cap. These vary a lot by state, so check your state revenue office.
None of these are automatic. Each has eligibility rules, income tests and price caps that change over time, so treat them as a starting list to research, not a promise.
The costs people forget
Your deposit is not the only cash you need. Budget for:
- Stamp duty, unless a concession removes it
- Conveyancing or solicitor fees
- Building and pest inspections
- Loan application and valuation fees
- Moving costs, and a buffer for the first few months of ownership
A common guide is to have a few percent of the purchase price set aside on top of the deposit for these.
The steps, in order
- Know your number. Work out a realistic budget and use a borrowing power calculator to see a rough price range.
- Save the deposit in a separate account so it is not tempting, and consider the First Home Super Saver Scheme.
- Get pre-approval from a lender or through a mortgage broker so you know your limit and can act quickly.
- Research suburbs and inspect widely before you fall in love with one place.
- Do your due diligence with inspections and a solicitor before you sign anything.
- Make an offer or bid with a firm ceiling you decided in advance, not in the heat of an auction.
Common questions
Is it better to keep renting and invest instead?
Sometimes. Renting and investing the difference can work well for some people, especially if it keeps you flexible. It is a genuine financial decision, not a moral failing either way. See our investing guide for the alternative path.
Can I buy on my own?
Yes. Single buyers, including single women, purchase homes every day, and the schemes above apply to eligible single applicants too.
What if I can only afford a 5% deposit?
Then the First Home Guarantee is the first thing to check, because it is designed for exactly that situation and removes LMI if you qualify.
Sources referenced: Housing Australia (First Home Guarantee); ASIC Moneysmart; Australian Taxation Office (First Home Super Saver Scheme); your relevant state revenue office. Scheme rules change, so confirm current details before acting. Last checked 1 July 2026.