Ask any first home buyer what is standing between them and a set of keys, and most will say the same thing: the first home buyer deposit. Not the interest rate, not the loan type, the deposit. It is the part of buying a home that takes the longest to sort out and the part where I get asked the most questions.
The good news is that a full 20 per cent deposit is not the only way in anymore, and it has not been for a while. There are several genuine options for Melbourne first home buyers in 2026, each with its own trade offs. Here is how I walk clients through them.
The number most people have in their head is 20 per cent, because that is the amount that lets you avoid Lenders Mortgage Insurance (LMI), a one off cost lenders charge when you are borrowing a larger share of the property’s value. On a $650,000 property, a 20 per cent deposit is $130,000, which is a genuinely difficult amount for most first home buyers to save while also paying rent.
What a lot of buyers do not realise is that lenders will generally accept a lower deposit, often as low as 5 per cent, provided you either pay LMI or qualify for one of the government backed schemes below that removes the need for it altogether. A smaller deposit is not a lesser path into home ownership, it is simply a different set of costs and conditions to understand upfront.
This is the scheme most people still refer to by its old name, the First Home Guarantee. It has since been rebadged as the Australian Government 5% Deposit Scheme, and it was expanded in late 2025 in ways that matter for anyone weighing up their options right now.
Under the current settings, eligible first home buyers can purchase with a deposit as low as 5 per cent (2 per cent for eligible single parents or guardians) without paying LMI, because the government guarantees part of the loan on your behalf. Three changes from the expansion are worth knowing about:
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To access it you generally need to be an Australian citizen or permanent resident, at least 18 years old, a genuine first home buyer (or someone who has not owned property in Australia in the past 10 years), buying a home priced at or below the price cap for your area, and planning to live in it as an owner occupier. You apply through a participating lender as part of your loan application, not directly through the government, which is where a broker earns their keep, matching you to a lender that participates and structuring the application properly the first time.
Separately from the federal scheme, the Victorian Government offers its own support that stacks on top:
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The grant is generally limited to new builds, off the plan purchases and substantially renovated homes, not established properties, so it is worth checking early which category your target property falls into. Combined with the stamp duty savings, this can meaningfully reduce the total cash you need at settlement, on top of whatever deposit scheme you are using.
Less well known, but genuinely useful for buyers who plan ahead: the First Home Super Saver Scheme lets you make voluntary contributions into your superannuation, which are taxed at the lower super rate rather than your regular income tax rate, then withdraw them later specifically to put toward your first home.
Current caps allow up to $15,000 in eligible voluntary contributions per financial year, up to a $50,000 lifetime limit per person, so a couple buying together can potentially access up to $100,000 combined. It takes discipline and lead time to be worthwhile, so this is one to start early rather than reach for in the final months before buying.
For buyers whose parents are in a position to help without physically handing over cash, a guarantor loan lets a family member use the equity in their own home as additional security. This can reduce or entirely remove the need for a cash deposit and avoid LMI, though it does put the guarantor’s property on the line, so it is a conversation worth having carefully and with full transparency about what everyone is agreeing to.
Whichever path you take, most lenders want to see genuine savings, generally deposit funds you have accumulated yourself over a period of around three months, rather than a lump sum that appeared the week before you applied. Regular pay deposits into a dedicated savings account, term deposits and shares you already held are usually accepted. A gift from family can often be used, but lenders typically want it clearly documented as a genuine gift rather than a loan you are expected to repay, since undisclosed debts affect your borrowing capacity.
Most first home buyers I work with end up combining two or three of these, a government scheme to reduce the deposit needed, the Victorian grant and stamp duty savings to cut settlement costs, and personal savings or super to cover the rest. None of it is one size fits all, and the right combination depends on your income, your timeline and the kind of property you are after.
If you want the full picture written down in one place, our First Home Buyers Guide walks through deposits, grants, the loan process and what to have ready before you apply. Or if you would rather talk it through directly, get in touch and we will map out what you are actually eligible for.
We would love to speak with you.
Feel free to reach out using the below details.
44 Lakeview Drive
Scoresby, VIC, 3179
44 Lakeview Drive Scoresby, VIC, 3179
We would love to speak with you.
Feel free to reach out using the below details.
44 Lakeview Drive
Scoresby, VIC, 3179
44 Lakeview Drive Scoresby, VIC, 3179
