How First Home Buyers Can Get Into the Market Sooner With the 5% Deposit Scheme

For many first home buyers, saving a deposit can feel like trying to catch a train that keeps pulling away from the platform. Just when the goal looks close, property prices rise again, making it even harder to buy a home with a 5% deposit.

That has made the path to homeownership more difficult, especially over the past decade. While plenty of buyers aim for a 20% deposit, that target can take years to reach, and during that time, the market may not sit still.

That is why options that shorten the wait deserve a proper look. A new report by Domain points to one pathway that could help some buyers purchase much sooner, in some cases by more than five years.

Rising home prices are stretching out deposit timeframes

Across Australia’s capital cities, home values rose by 9.9% over the past year, according to Cotality. That is already a hefty jump, but it does not tell the whole story for buyers at the entry level.

Domain found that in some markets, entry-priced homes have increased by more than 20% over the past 12 months alone, calling it an extreme rate of price growth. For first home buyers trying to save while prices climb, that can turn a tough task into a drawn-out one.

Its figures show that the time needed to save a 20% deposit now ranges from 2 years and 7 months for an entry-priced unit in Darwin to 7 years and 7 months for an entry-priced house in Sydney. That is a long time to stay on the sidelines while prices keep shifting.

Over the past five years, Domain says the price of entry-level homes has risen 68%. In other words, many buyers are not just saving for a deposit. They are chasing a moving target.

What could the first home buyer 5% deposit scheme change?

For eligible borrowers, the first home buyer 5% deposit scheme may offer a way to bring those plans forward. The federal government’s 5% deposit scheme allows eligible buyers to purchase with a deposit of 5%, or even 2% for single parents, without paying the lender's mortgage insurance.

There are property price caps that apply, so not every property will qualify. Even so, there are no caps on personal income, and there is no limit on how many people can apply each year.

That is what makes the first home buyer deposit scheme worth exploring. Domain’s analysis found it could help first home buyers looking to purchase a house in Sydney get into the market 5 years and 7 months sooner.

The gains were also significant elsewhere. In Brisbane and Adelaide, the scheme can cut more than four years off the time needed to save a deposit, while in every other capital city it can bring buying plans forward by more than three years.

Can you buy a home with a 5% deposit and still manage the loan comfortably?

Yes, some eligible buyers may qualify under the first home buyer 5% deposit scheme, but the deposit is only one part of the picture. Lenders still need to see that you can comfortably afford the repayments over time.

That matters because a smaller deposit usually means borrowing more. Higher loan amounts can mean higher monthly repayments, so it is important to make sure the loan still fits your budget.

This is where early advice can make a big difference. Looking at likely repayments, borrowing power, and the type of loan that suits your circumstances can help you move ahead with more confidence and fewer surprises.

Talk to Osinski Finance About Your Options

The 5% deposit scheme has already helped more than 240,000 Australians into home ownership, and for the right borrower, it could be the shortcut that makes buying possible years earlier than expected.

At Osinski Finance, we help with home loans, guide first home buyers, and assist homeowners with refinancing. If the 5% deposit pathway could help you buy sooner, we can explain how it works, check whether you may be eligible, and compare loan options that suit your budget and goals. Contact us today to talk through your next move with confidence.

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