Buying a first home is a major financial decision, and for many buyers, saving a full 20% deposit can take years. Government initiatives such as the Australian Government 5% Deposit Scheme are designed to help eligible buyers enter the market sooner. However, not all buyers can qualify under the Scheme’s requirements.
Not qualifying does not necessarily prevent you from purchasing a property. Depending on your financial position, income type, and the property being considered, there may be alternative loan options that allow you to purchase with a lower deposit.
The First Home Buyer 5% Deposit Scheme, officially known as the First Home Guarantee, is an Australian Government initiative designed to help eligible first home buyers purchase a home sooner with a smaller deposit. Under the Scheme, buyers can purchase a property with as little as 5% deposit without paying Lenders Mortgage Insurance (LMI), which is normally required when your home deposit is under 20%. This is possible because the Government guarantees up to 15% of the property value to the participating lender, reducing the lender’s risk rather than giving money directly to the buyer.
The Scheme is available to eligible Australian citizens and permanent residents aged 18 and over who are buying a home to live in as an owner-occupier. Places are limited each financial year, and applicants must still meet standard bank lending criteria.
Eligibility can vary slightly by banks, but generally includes:
Read the full eligibility here.
Meeting the Government 5% Deposit Scheme criteria alone does not guarantee a loan approval. Lenders also assess applications based on your individual circumstances:
Applications may be declined where lender policy requirements are not met.
Eligibility under the Scheme requires applicants to meet both the Government eligibility criteria and the lending requirements of the participating lender. Meeting one set of requirements does not guarantee approval if the other is not satisfied. Some common factors that may affect eligibility include:
If you or your buying partner have owned property in Australia within the last 10 years, you may not qualify. Applications where one applicant meets this requirement and the other does not may be assessed differently under the Scheme.
The Scheme is available to Australian citizens and permanent residents only. Applicants who hold temporary visas or bridging visas are not eligible without permanent residency. If you do not qualify, there are home loan options available outside Government programs, including non-resident home loans provided by specialist mortgage lenders.
Banks can still decline the loan even if you meet all the Scheme criteria for reasons such as:
Property eligibility depends on whether it meets both Scheme and lender requirements. The purchase price must be at or below the relevant property value cap for the location, as set by the Scheme. In addition, the property must meet the bank’s lending criteria. Some property types may be assessed differently due to valuation, resale, or marketability considerations. This can include:
Each property is assessed individually to determine whether it meets lender requirements under the Scheme.
While the national income caps for the First Home Buyer 5% Deposit Scheme have been removed, lenders must still confirm that you can comfortably afford the loan. Every bank applies a serviceability (borrowing capacity) test, which assesses whether your income can cover the loan repayments at a higher "stress-tested" interest rate. You may fail borrowing capacity if:
Even with a sufficient deposit and no income caps, you must demonstrate that your income can safely support the loan under the current lending rules. Use Yard’s calculator to obtain an estimate of your borrowing capacity.
Not qualifying for the Scheme does not mean your home ownership journey comes to an end. There are several established pathways that still allow buyers to purchase with a low deposit.
Lender mortgage insurance (LMI) enables borrowers to buy with as little as 5% deposit when they do not qualify for the Scheme. Instead of the Government providing the guarantee, you pay an insurance premium that protects the lender and enables them to approve a low deposit loan. LMI costs vary depending on the loan amount, deposit size, loan type, and the insurer used. If you're trying to work out how to calculate LMI, a good place to start would be to use an LMI calculator.
The main advantage is that LMI lets you enter the market much sooner rather than waiting to save a 20% deposit or relying on Scheme eligibility. This can be financially beneficial in markets where property prices are rising faster than your savings.
A family pledge loan, also known as a guarantor loan, allows a close family member to use equity in their own property as additional security for your home loan. This can help reduce the deposit required and improve your borrowing position when you do not qualify for the First Home Buyer 5% Deposit Scheme. In most cases, a guarantor is a parent or immediate family member, such as a parent in law, stepparent, grandparent, sibling, or legal guardian. The guarantor does not provide cash. Instead, they offer a limited guarantee secured against their property. This means they are only responsible for the guaranteed portion of the loan if repayments are not met.
A guarantor loan may allow buyers to:
These loans are commonly used by first home buyers with stable income but limited savings. Both the borrower and guarantor must meet standard lending criteria, and guarantees can usually be removed once the loan balance reduces to an acceptable level or sufficient equity is established.
Some buyers may consider using an unsecured personal loan to cover a small deposit shortfall when they are close to the required amount. While this can assist in completing a purchase, it is not suitable for all borrowers, as personal loan repayments are included in borrowing capacity and serviceability assessments. This approach may be considered where:
Yard is a specialist non-bank lender that supports borrowers who don’t meet traditional bank criteria, including those who are not able to access the First Home Buyer 5% Deposit Scheme. Our lending approach is flexible and based on each applicant's individual circumstances.
Yard can assist eligible buyers with home loans up to 95% LVR with Lenders Mortgage Insurance, and we offer guarantor loan options for families wishing to help first home buyers enter the market sooner. We are well-suited to borrowers with non-standard income such as casual workers, contractors, shift workers, and self-employed applicants. We also consider a broad range of property types and locations that traditional lenders may not accept.
Yard helps eligible buyers move forward when traditional pathways are not available, offering alternative options for first home buyers. Speak with a Yard Loan Consultant for guidance at every stage of your journey.
Generally, no. Both applicants must meet the first-home buyer definition to qualify for the Scheme. If one buyer has previously owned property (and the property or land has been owned in the past 10 years), the application is usually not eligible, even if the other applicant meets the definition of a first-home buyer. You can still consider alternative low deposit options such as Lender Mortgage Insurance (LMI) loans or Guarantor Home Loans.
The Federal 5% Deposit Scheme (now called the Australian Government 5% Deposit Scheme) has no income caps as of 1 October 2025. Previously, the Scheme had national income caps for individuals and couples but these were removed when the Scheme was expanded.
Yes, Yard can consider self-employed applications where a tax return can be provided only for one financial year. If tax returns have not been completed, Yard can assess low doc applications or alternative income verification for eligible self-employed borrowers, relying on an accountant letter or Business Activity Statements (BAS).
With a guarantor home loan, you may be able to borrow up to 100% of the property value, plus additional costs such as stamp duty, depending on your circumstances and lender policy. The guarantor typically uses equity in their own property to secure a portion of the loan, which reduces the lender’s risk and can remove the need for Lenders Mortgage Insurance.
The exact amount you can borrow depends on several factors, including your income, expenses, credit profile and the amount of equity your guarantor can provide. In most cases, the guarantee is limited to the amount needed to bring the loan to an 80% loan-to-value (LVR) ratio, rather than covering the full loan amount. A Yard Loan Consultant can assess your situation and confirm how much you may be able to borrow with a guarantor in place.
A low deposit home loan may be suitable if you have a stable income and can comfortably manage repayments but have not yet saved a large deposit. This type of loan can help you enter the property market sooner, particularly if rising property prices are making it difficult to save while renting. However, borrowing with a smaller deposit often means higher repayments and additional costs, such as Lenders Mortgage Insurance or higher interest rates.
Before choosing a low deposit option, it is important to consider your long-term financial position, job security and ability to absorb potential rate increases. A Yard Loan Consultant can help you assess whether a low deposit home loan aligns with your goals or whether waiting to build a larger deposit may be a better fit.
A guarantor loan can help buyers enter the property market sooner, but it is important for all parties to understand the responsibilities involved. The guarantor agrees to secure part of the loan using equity in their own property, which means their asset is at risk if the borrower cannot meet repayments. For this reason, guarantees are usually limited to a specific portion of the loan rather than the full amount.
It is also important to consider how and when the guarantee can be removed. This typically occurs once the borrower has built sufficient equity or refinanced the loan in their own name. Guarantors should seek independent legal and financial advice to fully understand their obligations before proceeding.
Lenders Mortgage Insurance (LMI) is arranged as part of your home loan application when you borrow more than 80 percent of a property’s value. You do not apply for LMI directly. Instead, the lender submits your application to an LMI provider after assessing your loan and financial position. The insurer then reviews factors such as your income, employment stability, credit history, deposit size and the property being purchased.
If approved, the cost of LMI is calculated based on your loan amount and loan-to-value ratio. In most cases, the premium can be added to your loan rather than paid upfront, increasing your overall loan balance. Once LMI is approved and included, your loan can proceed to formal approval and settlement. A Yard Loan Consultant will explain how LMI applies to your situation and guide you through each step of the process.
You can get started in minutes by completing an online application here. A Yard Loan Consultant will reach out within 24 hours. Simply tell us about the property you’re purchasing or refinancing and provide a quick overview of your income, employment, assets, and expenses.
Once submitted, your dedicated Loan Consultant will review your requirements and guide you through the next steps. You’ll then upload your supporting documents through our secure portal, and we’ll assess your application. The assessment typically takes two business days, and once approved, you’ll receive and sign your loan documents online. We’ll then coordinate directly with your conveyancer to complete the settlement. Read more on how to apply for a Yard loan here.
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