5% Deposit Scheme in WA : What You Need to Know

Saving a deposit is often the hardest part of buying a home in Perth. Rent, bills and the ordinary costs of daily life all compete with your savings goals, and a 20% deposit can feel years away. The Australian Government 5% Deposit Scheme exists to change that maths for eligible buyers, making 5% deposit home loans in Perth a realistic path to purchase.

It is not a grant, and it does not reduce the purchase price. Instead, the scheme provides a government guarantee that encourages lenders to accept a much smaller deposit. For many Perth buyers, that is the difference between renting for another five years and holding the keys to their own place. Understanding how the scheme works, what it costs and where to focus your energy will help you use it well.

What is the Australian Government 5% Deposit Scheme?

The Australian Government 5% Deposit Scheme, formerly known as the Home Guarantee Scheme, supports eligible first home buyers to enter the property market sooner. Under the scheme, first home buyers need a minimum deposit of 5%, while single parents and legal guardians can buy with a minimum deposit of 2%.

The major benefit is that eligible buyers do not have to pay Lenders Mortgage Insurance, commonly called LMI. Normally, when your deposit is below 20% of the purchase price, lenders charge LMI to protect themselves against the added risk. Because the government backs part of the loan under the scheme, that insurance cost is removed.

That single difference can save thousands of dollars and makes the scheme genuinely valuable. A low deposit no longer automatically means a large additional insurance bill on top of everything else you are already paying for.

Who can use the 5% Deposit Scheme?

The scheme targets two main groups. The first is first home buyers with a minimum 5% deposit. The second is single parents or legal guardians, who only need a minimum 2% deposit to get into their own home.

The scheme also extends to people who have not owned property in Australia in the last ten years, even if they owned a home previously. This means a buyer who sold a property years ago and is now trying to get back into the market can still be eligible.

One of the most commonly misunderstood points is income. There are no income caps under the scheme, so your income does not restrict your access. That said, lenders still assess your overall financial position, and the specific eligibility rules can change, so it pays to confirm the current details before you start looking at properties.

## What changed in October 2025?

On 1 October 2025, the government expanded the Australian Government 5% Deposit Scheme to support more Australians into home ownership. Housing Australia announced the expansion as part of a broader effort to make buying a home more attainable.

The exact detail of the expanded criteria is best confirmed against the official government sources, as the changes affect who can qualify and in what circumstances. If you have looked into the scheme before and decided it was not for you, this is a good moment to revisit your position. Rules and thresholds can shift, and a fresh look with current information may change the answer.

Costs to plan beyond the deposit

A 5% deposit gets you into the market, but it is not the only cost you will need to cover. First home buyers often focus on the deposit and overlook the expenses that arrive around settlement. When your deposit is small, planning for these costs matters even more.

Other costs commonly involved in buying a home include:

• Government charges such as stamp duty and transfer fees, which vary depending on the purchase price and your situation

• Conveyancing and legal costs for the paperwork

• Building and pest inspections before you commit to the property

• Loan application or establishment fees if the lender charges them

• Moving costs, utility connections and basic furnishings for the new home

None of these costs are unique to the 5% Deposit Scheme, but they have a bigger impact when your savings buffer is thinner. Building a small reserve above your deposit will make settlement far less stressful and give you more confidence once the keys are in your hand.

## Tips for Perth buyers using a 5% deposit

A few practical habits will help you make the most of a 5% deposit loan:

• Confirm your eligibility before you fall in love with a property. Check the official scheme information or speak with a mortgage broker early, because the criteria are specific and subject to change.

• Treat the no-LMI benefit as a real saving. The money you are not spending on Lenders Mortgage Insurance can be redirected toward other costs or kept as a buffer.

• Remember the ten-year rule. If you have not owned property in Australia for the last ten years, you may still qualify, so do not assume the scheme is only for first home buyers.

• Keep some savings aside after settlement. A low deposit leaves less equity in the home, and having a cash buffer helps you manage unexpected expenses.

• Use a local broker. A Perth-based broker can explain how the scheme applies to your situation and help you compare loans from lenders that participate in the scheme.

## How a Perth mortgage broker can help

Em Bee Finance is a boutique Perth-based mortgage and finance broking business led by principal broker Mool Bhargava. Unlike a call-centre broker, the team provides plain-English, low-pressure advice and compares home loans from a panel of 55+ lenders.

For a Perth buyer using the 5% Deposit Scheme, a broker helps with the parts that are easy to get wrong: understanding which lenders are participating, whether you meet their lending criteria and which loan product actually suits your budget. The broker also stays with you from the first conversation through to settlement, which makes a real difference when you are working through the paperwork for the first time.

Because the scheme involves both government eligibility rules and lender requirements, having someone who can explain both sides in clear language is genuinely useful. Em Bee Finance regularly works with first home buyers across Perth and can advise whether a 5% deposit loan is the right option or whether an alternative suits your circumstances better.

Frequently Asked Questions

What is a 5% deposit on a $600,000 house?

A 5% deposit on a $600,000 property is $30,000. Under the Australian Government 5% Deposit Scheme, an eligible first home buyer could purchase with that $30,000 saved, rather than waiting to build a 20% deposit of $120,000. For single parents and legal guardians, the minimum deposit would be 2%, or $12,000. Remember that the deposit is separate from other purchase costs such as stamp duty and conveyancing.

Can you buy a house with a 5% deposit in Australia?

Yes. The Australian Government 5% Deposit Scheme allows eligible home buyers to purchase a home with a deposit as low as 5%, or 2% for single parents and legal guardians. The scheme supports first home buyers and people who have not owned property in Australia in the last ten years. Meeting the scheme criteria does not automatically guarantee loan approval, because lenders still assess your income, expenses and credit history.

Does the 5% Deposit Scheme apply in Western Australia?

Yes. The scheme is a national Australian Government initiative, so eligible Perth buyers can access it through participating lenders. Living in Western Australia does not prevent you from using it. The criteria can change over time, so it is worth confirming the current rules with a local mortgage broker or through the official government sources before you begin your search.

Do you pay Lenders Mortgage Insurance with the 5% Deposit Scheme?

No. One of the main benefits of the Australian Government 5% Deposit Scheme is that eligible buyers do not pay Lenders Mortgage Insurance, even though their deposit is below 20%. The government's guarantee to the lender removes the need for LMI. This saves thousands of dollars in upfront costs and is often the reason buyers can afford to enter the market sooner than they expected.