Guide to Buying Your First Home: Federal Schemes Explained

06th Feb, 2026 | Live the Dream, Articles, First Home Buyer

At a Glance: The Three Federal Schemes

Scheme	Who it’s for	Deposit/Equity needed	Key obligation
5% Deposit Scheme	First home buyers & single parents who haven’t owned property in 10 years.	Minimum 5% deposit of the property’s value.	Must live in the home while the Guarantee is active.
FHSSS	First home buyers looking to boost their deposit savings using their super fund.	You determine the amount saved, up to set limits.	Must live in the home for at least 6 of the first 12 months.
Help to Buy	Eligible home buyers on lower to middle incomes.	Minimum 2% deposit.	Government shares ownership (equity) of the home. Each state Government must legislate for its implementation.

1. Australian Government 5% Deposit Scheme

Only recently expanded and renamed, this scheme is designed to help you buy a home sooner by reducing the 20% deposit hurdle. Instead of saving for years to reach that figure, you can get into the market with as little as a 5% deposit without paying Lenders Mortgage Insurance (LMI), if you’re eligible and subject to lender conditions.

How it works: The government provides your Participating Lender with a Guarantee of up to 15% of the property’s value. This gives the lender the security they need to offer you a loan on a smaller deposit.

The scheme has two levels:

For First Home Buyers: For individuals or joint applicants buying their first home, with as little as a 5% deposit.
For Single Parents/Legal Guardians: For those with at least one dependent child, who may have previously owned a home but have not owned property in Australia in the last 10 years, with as little as a 2% deposit.

A quick note on Property Value: The scheme is based on the ‘Property Value’, which is the value assessed by your lender. This may be different from the price you agree to pay for the property. Your broker and lender can guide you on what this means for your deposit.

Eligibility Basics:

Buyer: You must be an Australian citizen or permanent resident, at least 18 years old, and meet the previous property ownership rules.
Property: The home must be a residential property, and its purchase price must be within the price cap for its location.
Loan: To be eligible, the loan must be an owner occupier loan with principal and interest repayments from a Participating Lender.

Ongoing Obligations: The key rule is that you must live in the property. If your circumstances change and you want to move out while the Guarantee is active, you can’t simply rent it out. You must discuss your options with your lender, as this would breach the owner-occupier requirement. Likewise, refinancing is possible under certain conditions, but you can’t increase your loan amount.

HOW MUCH CAN I BORROW?

2. First Home Super Saver Scheme (FHSSS)

The FHSSS helps you use your superannuation account as a tax-effective savings vehicle for your first home deposit. It allows you to make voluntary contributions into your super, which you can later withdraw to put towards your home.

How it works: You can contribute extra money into your super fund, either before-tax (concessional) or after-tax (non-concessional). When you’re ready to buy, you apply to the Australian Taxation Office (ATO) to release these eligible funds, along with any associated earnings.

Because pre-tax contributions are taxed at a lower rate (typically 15%) than your regular income, you can potentially save a deposit faster.

Key Considerations:

There are limits on how much you can contribute and have released to you.
The process for releasing funds may take time, so it is important to allow sufficient time for the withdrawal process before you start signing contracts.

3. Help to Buy Scheme

Help to Buy is a shared equity scheme. This is a different approach where the government contributes to the purchase price in exchange for a share (equity) in your property.

How it works: You provide a deposit of at least 2%, and the government contributes a percentage of the purchase price. In return, the government holds an equity stake in your home. This means you need a smaller home loan, which results in lower mortgage repayments.

When you sell the property, the government receives its share of the sale price, including its portion of any capital growth. You also have the option to buy back the government’s share over time.

Key Considerations:

Shared Ownership: It’s important to understand the long-term implications of the government co-owning your home, including how you manage maintenance and what happens upon sale.
The scheme is yet to launch, with the official Government source stating that “Scheme is coming soon.”

How the Schemes Differ at a Glance

	5% Scheme	FHSSS	Help to Buy
Deposit needed	Minimum 5% of property value.	A government guarantee to your lender.	You must live in the home while the Guarantee is active.
Who it’s for	You save your own deposit (e.g., 5% or more).	A way to save your deposit using your super fund.	You must live in the property for at least 6 of the first 12 months.
Owner-Occupier Rules	Minimum 2% deposit.	A shared equity partnership with the government.	The Government states that: “Further information on ongoing obligations and Scheme exit will be published once Help to Buy is officially announced and open for applications.”^[1]

Where to Confirm Details

The rules, price caps, and lists of Participating Lenders for these schemes are updated regularly. The official federal government hub is your single source of truth.

CHECK THE OFFICIAL INFORMATION HUB

Here you will find eligibility tools, postcode search tools for price caps, and links to state-specific information for the Help to Buy scheme.

Frequently Asked Questions

1. What happens if I want to rent out my home under the 5% Deposit Scheme?

You can’t. The scheme requires the property to be your principal place of residence while the Guarantee is active. If your circumstances change, you must contact your lender to discuss your options.

2. Are there time limits for building or buying off-the-plan?

Yes. The schemes have strict timeframes for entering building contracts and completing construction. It is essential to discuss these with your lender before committing.

3. Do these schemes mean I avoid LMI?

The 5% Deposit Scheme and Help to Buy are specifically designed to help you avoid paying LMI. The FHSSS is a savings method, so whether you pay LMI depends on the size of your final deposit (e.g., less than 20%).

4. Can I refinance my loan while under the 5% Scheme Guarantee?

You may be able to refinance with another Participating Lender, but you cannot increase your total loan amount or extend the loan term beyond what is allowed. Refinancing to a non-participating lender will end the Guarantee.

5. What documents will I need?

While it varies, you will generally need proof of citizenship, income (payslips), savings history (bank statements), and signed statutory declarations confirming your eligibility. Your broker will provide a complete checklist.

Guide to Buying Your First Home: Federal Schemes Explained

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