If you’ve been looking into buying your first home, you’ve probably heard people talk about the “5% deposit no LMI scheme.”
It sounds too good to be true… but it’s a real government program designed to help first-home buyers get into the market sooner.
Here’s the simple breakdown.
1. What the scheme actually is
The official name is the Home Guarantee Scheme.
It allows eligible first-home buyers to:
- Buy a property with just 5% deposit, and
- Avoid paying Lenders Mortgage Insurance (LMI)
LMI is normally charged when your deposit is under 20%, and it can cost thousands — sometimes even $15k–$20k depending on the loan amount.
With this scheme, the government guarantees up to 15% of your deposit so you don’t pay LMI at all.
You get in sooner, with far less savings, and save a huge upfront cost.
2. Who is eligible? (Simple version)
To qualify, you generally need to:
- Be a first-home buyer — or haven't owned in 10 years
- Have at least a 5% genuine deposit — but it could be less if buying new after the First Home Grant and our $10k Deposit Boost™
- Buy under the property price caps for your state
- Live in the home (not buy it as an investment)
If you’re in a position to own and looking to escape renting, this is one of the strongest pathways available.
3. Why so many buyers use it
For most first-home buyers, the hardest part of buying isn’t the repayments — it’s saving a big enough deposit.
This scheme helps because:
- You need far less money upfront
- You avoid expensive LMI
- You can buy years sooner
- You stop renting earlier and start building equity sooner
For a lot of renters paying $500–$700 a week, buying with a 5% deposit is often more achievable than they expect.
4. What to think about before applying
Even though the scheme is great, it’s worth thinking about:
- Can you comfortably afford repayments?
- Do you have some deposit savings?
- Are you buying within your means?
- Are you eligible for other support like the First Home Owner Grant if you’re building?
The scheme is designed to help you enter the market safely — not stretch you thin. When used well, it can cut years off your journey to homeownership.
