How to Buy Your First Home in Perth With a 5% Deposit

If there’s one thing stopping most first home buyers in Perth from getting into the market, it’s the deposit — not the repayments. Saving 20% of a $650,000 property means finding $130,000 before you even start looking at stamp duty, conveyancing or moving costs. For most people in their twenties and thirties, that’s years away.

The Australian Government 5% Deposit Scheme (formerly called the First Home Guarantee) closes that gap. Since it was expanded on 1 October 2025, it’s become genuinely useful for a much wider group of Perth buyers — no income test, no waiting list, and a higher price cap than it used to have. Here’s exactly how it works and the steps to get there.

What the scheme actually does

You buy with as little as a 5% deposit, and the Government guarantees the difference between your deposit and the usual 20% — so the lender doesn’t charge Lenders Mortgage Insurance (LMI). It’s not a cash payment or a loan from the Government; it’s a guarantee sitting behind a completely normal home loan with a participating lender.

Step 1: Check you actually qualify

Before you get attached to a property, confirm the basics. To use the scheme you generally need to:

• Be an Australian citizen or permanent resident, aged 18 or over

• Not have owned (or part-owned) residential property anywhere in Australia in the past 10 years

• Intend to live in the property as your principal place of residence, usually within 6 months of settlement, and keep living there while the guarantee applies

• Apply as an individual or with another eligible person — not through a company or trust

There’s no income cap anymore, which is one of the biggest changes from the October 2025 update — buyers who would have missed out under the old $125,000 (single) / $200,000 (couple) limits can now apply regardless of income.

Step 2: Check your target property against the price cap

The scheme only applies below a set purchase price. For Perth metro, the cap is currently $850,000; for regional WA it’s $600,000. Both the contract price and the lender’s valuation need to come in under the cap for your area, so it pays to build in a buffer rather than bidding right up to the limit.

Step 3: Save your 5% — plus a bit more

The scheme removes the need for a 20% deposit, but you’ll still need cash for stamp duty (if applicable), conveyancing, building and pest inspections, and loan fees. As a rule of thumb, budget for 5–7% of the purchase price in total to cover the deposit and these costs comfortably, rather than stretching to the bare minimum.

Step 4: Get pre-approved through a participating lender

You can’t apply for the scheme directly with the Government — you apply for a home loan with a lender that participates in it, and they reserve a scheme place for you as part of your application. Not every lender on the market takes part, and policies on things like acceptable property types and servicing can vary between the ones that do. This is where using a broker earns its keep: I can tell you upfront which of my panel lenders participate and are actually the best fit for your situation, rather than you finding out after an application stalls.

Step 5: Stack the other first-home-buyer schemes on top

The 5% Deposit Scheme isn’t the only support on offer, and it can be combined with:

• The $10,000 First Home Owner Grant (FHOG) — but only for new homes (a new build, off-the-plan purchase, or house-and-land package). It doesn’t apply to established homes.

• The first-home-buyer transfer duty concession — this one's broader and can apply to established homes too, not just new builds, depending on the property’s value.

Whether these stack in your favour depends on your specific purchase, so it’s worth running the numbers on established versus new before you commit to a search strategy.

Step 6: Go unconditional and settle

From here it runs like any other purchase — finance approval, building and pest inspections, contract goes unconditional, and you settle. The main practical difference is that with only a 5% deposit down, your loan amount (and therefore your regular repayment) is larger than it would be with 20% down, so it’s worth stress-testing your budget against that before you sign, not after.

Step 7: Know the rules that apply after you move in

The guarantee doesn’t just disappear at settlement — it stays attached to your loan for as long as your loan balance sits above 80% of the property’s value, and for as long as it’s in place you need to keep living in the property as your home. If your plans change — you want to rent the property out, refinance, or buy again — talk to your broker first so you understand how it affects your position.

Common mistakes to avoid

• Assuming every lender participates — check before you fall in love with a rate

• Bidding right up to the price cap with no buffer for a valuation that comes in lower than expected

• Forgetting that a smaller deposit means a bigger loan — and bigger repayments to budget for, not just a lower savings target

• Assuming the FHOG applies to an established home — it doesn’t

Scheme eligibility, price caps and lender participation can change, so always confirm your specific position before making a decision.

.

This article is general information only and does not consider your objectives, financial situation or needs. Ian Freeman – Credit Representative Number 439731 of Australian Credit Licence 384704.