The short answer
- Yes. There are two main ways to buy with a 5% deposit.
- The First Home Guarantee lets eligible buyers use 5% with no lenders mortgage insurance (LMI), on homes up to $900,000 in Adelaide.
- A standard loan with LMI works for most other buyers, but LMI adds to your costs.
- Stamp duty and buying costs come on top of your 5%.
- A small deposit means a small buffer, so it pays to plan for the trade-offs.
Route 1: the First Home Guarantee
The First Home Guarantee, now also promoted as the 5% Deposit Scheme, is run by Housing Australia for the Australian Government. The government guarantees up to 15% of the property's value to the lender, so you can buy with 5% and skip LMI entirely.
Who can use it
- You're 18 or over, and an Australian citizen or permanent resident.
- You're a first home buyer, or you haven't owned or had an interest in property in Australia (including land) in the past 10 years.
- You're applying on your own or with one other eligible person.
- You'll live in the home. It can't be an investment property.
- You use one of the scheme's participating lenders.
What changed on 1 October 2025
- No income caps. Higher earners can now use the scheme.
- No limit on places. Every eligible buyer with a 5% deposit can apply.
- Higher price caps. $900,000 in Adelaide (up from $600,000) and $500,000 in the rest of SA (up from $450,000).
Sources: Housing Australia, 1 October 2025 changes and eligibility.
Route 2: a standard loan with LMI
If you're not eligible for the scheme, or the home is above the price cap, many lenders will still lend up to 95% of the value with lenders mortgage insurance.
- LMI protects the lender, not you. It's a one-off premium, and the smaller your deposit, the more it costs.
- It can usually be added to the loan. That saves cash upfront, but you'll pay interest on it for the life of the loan.
- Criteria are tighter. Lenders look more closely at savings history, income and debts when the deposit is small.
- Pricing can differ. Some lenders charge a higher rate on loans above 80% or 90% of the value.
The two routes side by side
| First Home Guarantee | Loan with LMI | |
|---|---|---|
| Who can use it | Eligible first home buyers, or anyone who hasn't owned property in Australia for 10 years | Most buyers who meet the lender's criteria |
| Price limit | $900,000 in Adelaide, $500,000 in the rest of SA | No scheme limit |
| Mortgage insurance | None | Yes, paid upfront or added to the loan |
| Type of property | New or established home you'll live in | Home or investment, depending on the lender |
| Lenders | Participating lenders only | Many lenders, though some set lower limits |
Example: a $600,000 home in Adelaide
With a 5% deposit of $30,000, you'd borrow $570,000. Here's how the two routes compare for an eligible first home buyer.
First Home Guarantee
| Deposit (5%) | $30,000 |
| Lenders mortgage insurance | $0 |
| Loan from day one | $570,000 |
Loan with LMI added
| Deposit (5%) | $30,000 |
| Lenders mortgage insurance | Added to loan |
| Loan from day one | More than $570,000 |
The LMI premium depends on the lender, the insurer and the loan size, so we'll get you an exact figure.
Either way, stamp duty is on top. On a $600,000 established home in SA it's about $26,830, while eligible first home buyers pay no stamp duty on a new home or vacant land. Our articles on how much deposit you really need and stamp duty in SA walk through the full upfront cost.
The trade-offs of a small deposit
Buying with 5% gets you into a home sooner, and saving the other 15% can take years. But it's worth going in with your eyes open.
- Less equity to start with. If values dip after you buy, you could owe more than the home is worth for a while, which makes selling or refinancing harder.
- A bigger loan. Borrowing more means higher repayments and more interest over the life of the loan.
- Less room for surprises. If your savings go on the deposit and costs, keep some aside for the unexpected.
- Lenders still test affordability. They check you could manage repayments at a rate 3% higher than your actual rate, a buffer set by APRA.
How to get ready
- Check your eligibility for the First Home Guarantee and the SA grants and stamp duty relief.
- Work out your full number: 5% deposit, stamp duty, legal and inspection costs, and a buffer.
- Tidy up your debts and close credit cards you don't use, as lenders count the limits.
- Get pre-approved with a participating lender before you make offers, so you know your price range.
- Stay under the price cap. If the home goes over $900,000 in Adelaide, the scheme won't apply.
Information is general and correct as at October 2026. Scheme rules, price caps and lender policies change, so check the latest before you buy.