Can You Buy a Home with a 5% Deposit?

Yes, but through a specific scheme

Buying with a 5% deposit is possible for eligible first home buyers through the Australian Government 5 percent Deposit Scheme. Under the scheme the government guarantees part of the loan, which removes the need for Lenders Mortgage Insurance.

Outside that scheme, a 5% deposit on a standard loan normally means paying LMI, unless a lender's occupation-based waiver applies to your profession.

What the scheme provides

• A minimum 5% deposit for eligible first home buyers, and 2% for eligible single parents or legal guardians.
• No income cap and no limit on the number of places.
• No LMI, because the guarantee replaces it.
• Applications through participating lenders, not directly to Housing Australia.

What it does not provide

• A lower purchase price. The guarantee changes the loan structure, not the property's value.
• Freedom from eligibility rules. You generally need to be a first home buyer, or not to have owned property or land in Australia in the last 10 years, and you must occupy the home.
• Immunity from price caps. Location-based property caps apply, and they differ by city and region. A home above the cap does not qualify, however suitable it is.
• A guarantee that your lender will approve the loan. The scheme supports a loan; it does not approve one.
• Cover for your other costs. Duty, legal fees and inspections still come out of your own money.

This is the point most often missed: with a 5% deposit and no LMI, your savings still have to cover the transaction costs, and you still need a buffer.

How it interacts with a discounted purchase

A discounted price helps here more than anywhere else, because a lower price makes the 5% deposit a smaller number and makes the price cap easier to satisfy. It can also change the loan size enough to alter LMI, serviceability and rate.

Two cautions. First, confirm the property and the scheme are acceptable to the lender together — a discount scheme a lender will not lend against is not usable. Second, check whether any other benefit you are using can be combined with the guarantee.

The alternative: an occupation-based waiver

If you do not qualify for the scheme, or the property sits above the cap, several lenders publish LMI waivers for listed professions. Westpac publishes a waiver up to 90% LVR for registered nurses and listed allied health roles earning at least $90,000, and up to 95% for dentists, general practitioners, hospital doctors and medical specialists. People First Bank publishes one up to 90% LVR on loans up to $1.2 million for registered nurses, fully qualified paramedics and sworn police. Bank First publishes one for eligible education and healthcare first home buyers, excluding off-the-plan, construction and refinance.

A waiver removes the insurance premium; it does not reduce the price or fund the deposit. Understanding government home buyer assistance sets out the current published terms and conditions.

What to do next

1. Check whether you meet the scheme's definition of a first home buyer.
2. Check the price cap for the area you want to buy in.
3. Speak to a participating lender about the deposit, costs and buffer.
4. Confirm any state duty concession separately — it is assessed on the transaction, not by the lender.
5. Get pre-approval before you commit to a property.

How much deposit does an Essential Worker need compares the deposit levels, and what happens after your eligibility check explains what EWH does next. EWH is a private service, separate from government programs.