A deep dive into the Australian Government 5% Deposit Scheme and Australian Government Help to Buy Scheme

This is probably the one you've heard the most about.

In this scheme, you put down a minimum of a 5% deposit of the home's value as assessed by the lender that you use, your participating lender.

And then the government guarantees the remaining 15% so that you are able to take out your mortgage as normal, but without paying lender's mortgage insurance, which is probably a term you've heard a lot if you are starting to think about buying property.

Lender's mortgage insurance is an insurance there to protect the lender in the event that you default on your loan.

What the scheme does is it takes away the need for banks to have that insurance and therefore the need for you to pay for it.

as the government guarantees that for you.

Now, other than that, there is no government involvement or ownership in the property.

You repay your loan as normal, just with a lower, I suppose, starting position because your deposit that you have put down is that minimum of 5%.

The relationship is not between you and the government.

The relationship is between the government and the lender, reducing the risk in the lender lending to you.

Now, you may have heard of this one before because this scheme has been around in some form for a while.

But from the 1st of October 2025, so less than a year ago, the number of places became uncapped and the income caps that were previously applied to the people wanting to use the scheme have been removed.

There was also a change under those changes where property price caps... have been increased under each of these streams.

Each state and territory has its own property price cap.

Property price caps can vary according to metro areas and select regional centres and regional areas as well.

So if you are interested in joining the 5% deposit scheme, please speak to a participating lender and or Housing Australia about the property price cap that would apply in the areas that you are interested in purchasing.

So that is our first major scheme.

You put down a minimum 5% deposit, you take out a mortgage for the remaining 95% as you otherwise would, but the government are allowing you to not pay the LMI.

So you're not paying that additional cost to access the mortgage at a less than 20% deposit as that is usually when LMI kicks in.

That's your sort of top line overview.

Now we're going to look at the second scheme and then we're going to look at risks and benefits of both in comparison.

So the second scheme is the Australian government help to buy scheme, which I notice is the one that people know the least about.

The way that this one works is rather than the government guaranteeing that portion of the loan, it is a contribution from the government who then share in the purchase of your home.

So this basically enables you to get a smaller loan which means lower repayments.

Where the previous scheme, the 5% deposit scheme, is allowing you to take out a regular schmegular mortgage, but with a smaller deposit, this is allowing you to get a smaller loan overall and therefore lower your repayments.