Buy your first home in Victoria sooner with government-backed 5% deposit schemes

Buy your first home in Victoria sooner with government-backed 5% deposit schemes, shared equity, and family guarantees. No need to wait to save 20%

Many first-home buyers have long seen the 20% deposit as an insurmountable barrier to entering the property market. But with evolving government schemes and lender options in Victoria, 2025, buyers can now get in sooner with as little as 5% deposit. This blog explores how to break in earlier without waiting years to save 20%.

Why a 20% deposit is the traditional benchmark

Lenders typically require 20% deposits to lower their risk. Borrowers with less often pay Lenders Mortgage Insurance (LMI), protecting lenders but adding upfront cost. While 20% remains ideal, recent support options mean it’s no longer mandatory.

Alternative pathways to buy sooner

Government home buyer guarantees

• The First Home Guarantee (FHBG) allows eligible buyers to purchase with 5% deposit without LMI, with unlimited places and a $950,000 property price cap in Melbourne.
• The Family Home Guarantee offers single parents a 2% deposit solution without LMI.
• The Regional First Home Buyer Guarantee targets buyers outside metro areas with similar benefits.
• These schemes require Australian citizenship/permanent residency status and owner-occupation intent.

Victorian Homebuyer Fund (shared equity)

• The government invests up to 25% of the property’s price (35% for Indigenous buyers) for a shared ownership stake, reducing borrowers’ loan and deposit requirements.
• Shared equity suits income-strong but asset-light buyers who want home ownership sooner.

Lenders Mortgage Insurance (LMI) options

• Enables loans with smaller deposits (as low as 5%) by charging an insurance premium that protects lenders.
• Choosing when to pay or fold premiums into loans can save time versus waiting to save a larger deposit.

Family guarantees

• Parents or close relatives can use home equity as security, allowing up to 100% borrowing plus costs.
• Guarantors must understand risks, as their property backs the loan portion not saved.

Additional financial supports

• Victorian first-home buyers get stamp duty concessions: complete exemption under $600,000 and tapered rates up to $750,000.
• The First Home Owner Grant offers $10,000 for new builds under $750,000.
• Buyers can combine schemes, grants, and concessions to maximise affordability.

Important considerations and tips

• Properties purchased must be the buyer’s principal residence.
• Income and property value caps apply under schemes.
• Pre-approval and tailored financial advice are critical.
• Responsible borrowing helps avoid overextending financially.

Today’s Victorian first-home buyers have multiple options to enter the property market with less than a traditional 20% deposit. Government guarantees, shared equity, LMI, and family support open doors sooner, helping make home ownership a realistic goal. Early exploration, thorough budgeting, and professional advice are key to navigating these pathways successfully.

Further questions

This is general information only and is subject to change at any given time. Your complete financial situation will need to be assessed before acceptance of any proposal or product.