First Home Buyer Loans Australia 2026: The Best Path by Deposit and State

The best first home buyer loan in Australia isn't a product. It's whichever path matches the deposit you've actually saved. In 2026 the options fall into a handful of clear lanes: 2% through a state scheme, 5% through the federal guarantee, 5% with insurance, 20% at a major bank, or 0% with a guarantor. We don't sell loans here, so we can be blunt about which lane is cheapest for you.

Rate positions are relative, not quotes. Pricing moves with the market and each lender's policy, so check current rates before you apply.

First home buyer loans 2026, by deposit size and scheme

There's no single best first home buyer loan in Australia. The cheapest path depends on the deposit you've saved, anywhere from 2% through a state scheme to 20% at a Big Four. Below is each tier, what it really costs, and the catch nobody at a bank will mention.

2% deposit: state low-deposit lenders and the single-parent pathway

A true 2% deposit only works through a government-backed lender. National banks won't write a sub-5% loan to a first home buyer without a guarantor, so your options are deliberately narrow.

• Keystart (Western Australia only). A WA Government lender that takes deposits as low as 2% with no LMI. There's no national version of it, since Keystart only lends on WA property, with a property price cap around $860,000. Its variable rate sits near 7.85%, higher than the majors, because Keystart funds itself from the wholesale market rather than retail deposits. Income caps apply ($155,000 single / $228,000 couple in metro Perth, verified to April 2026). The idea is that you refinance to a mainstream lender within a few years once you've built equity. Read our full Keystart guide.
• HomeStart Finance (South Australia only). The SA equivalent of Keystart. It accepts deposits from 2% on its Graduate Loan (for Cert III+ holders and certain professions) or 5% on its standard product, with no LMI on the headline loan. Its variable rate is competitive but moves regularly, so check the current figure on the HomeStart site before you bank on it. SA property only.
• Australian Government 5% Deposit Scheme, single-parent pathway (formerly the Family Home Guarantee). Eligible single parents and single legal guardians can buy with a minimum 2% deposit through a participating lender, with the government guaranteeing the gap up to 20%. No LMI. Loan pricing and approval remain subject to the lender's own credit policy. See our single-parent pathway guide.

Outside WA and SA, and if you're not a single parent, a genuine 2% deposit purchase generally isn't on the table without a guarantor structure.

5% deposit (home loan with 5% deposit): the First Home Guarantee

For most first home buyers in 2026, a home loan with a 5% deposit through the First Home Guarantee is the strongest play. You put down 5%, the government guarantees the rest up to 20%, and you pay no LMI, at a mainstream bank on a mainstream rate.

The scheme is now called the Australian Government 5% Deposit Scheme (it was the First Home Guarantee, and before that the FHLDS). It's run by Housing Australia. Since 1 October 2025 there are no income caps and unlimited places, eligibility comes down to citizenship or permanent residency, first home buyer status, and the property price cap for where you're buying. The 2026 capital-city caps are:

• Sydney $1.5M · NSW regional $800,000
• Melbourne $950,000 · VIC regional $650,000
• Brisbane $1.0M · QLD regional $700,000
• Canberra and the ACT $1.0M
• Perth $850,000 · WA regional $600,000
• Adelaide $900,000 · SA regional $500,000
• Hobart $700,000 · TAS regional $550,000
• Darwin $750,000 · NT regional $600,000

The old Regional First Home Buyer Guarantee no longer runs as a separate scheme. From 1 October 2025 it was folded into the 5% Deposit Scheme, which is why the regional caps above are simply lower than the capital-city ones. Same lenders, same mechanics, one set of rules. The 5% Deposit Map shows which suburbs a 5% deposit unlocks. Check your exact suburb cap and whether you qualify with the first home buyer eligibility checker, and see current dollar amounts on the grants and schemes page.

5% deposit with LMI: standard bank low-deposit loans

If you can't use the guarantee, you're over the price cap, or you want a lender that isn't on the panel, you can still buy with 5% from a mainstream bank. You'll just wear Lenders Mortgage Insurance.

On a typical purchase with a 5% deposit, LMI usually runs into the tens of thousands. It's a one-off premium, and most people capitalise it onto the loan, which means you then pay interest on it for the life of the mortgage. The headline rate is similar to a guarantee-backed loan, but the all-in cost is worse because of that financed premium.

So the honest line is this: if you qualify for the 5% Deposit Scheme, take it. The only time a standard 5%-plus-LMI loan makes sense is when the home you want sits above the scheme's price cap. Want to see the actual LMI number for your situation first? The LMI calculator spells it out.

20% deposit: standard bank loans, full feature access

A 20% deposit usually gives you the broadest choice of lenders and products, avoids LMI entirely, and can improve your pricing. The cheapest available loan still depends on your circumstances and each lender's criteria, but this is the lane where you hold the most cards.

• The sharpest rates available, with the keenest digital lenders sitting a little below the majors (the gap is small and moves week to week, so treat any quoted figure as a snapshot).
• 100% offset accounts on package loans. Our offset account guide shows how much these can save you.
• Redraw, fixed-rate splits, and the freedom to refinance to a better rate whenever you like, without an LMI re-assessment.

At 20% you look like any other low-risk borrower on the bank's books. That's why pushing from 15% to 20%, even if it delays buying by six months, sometimes works out better than buying now with LMI. Sometimes. It depends on what prices do in those six months, which nobody can promise.

Guarantor loans: a no deposit home loan for first home buyers with parent equity

If your parents own property with spare equity, a guarantor home loan can get you in with no deposit at all, a genuine no deposit option for first home buyers. Your parents pledge part of their property as extra security, the bank treats that as your missing deposit, and you get a mainstream loan at a mainstream rate with no LMI.

The risk is real, and it sits with the guarantor. If you default, the bank can come after the guaranteed slice of their property. Most lenders cap the guarantee at the LMI-avoidance amount (around 20% of the price) rather than the whole loan, so the exposure is bounded, but it's still serious money. The guarantee usually lifts after a few years once your loan drops below 80% of the property's value. Don't go into this without everyone understanding what they're signing.

Your state changes which path wins

The federal schemes are national, but three state-level levers move the maths: the First Home Owner Grant, your stamp duty position, and whether your state runs its own low-deposit lender. The table shows the position for a first home buyer in each state.

Read it as a tiebreaker. In WA and SA the state lender makes the 2% lane real even if you don't qualify for the single-parent 2% pathway. In QLD and the NT the grants are big enough to swing a new-build decision. In TAS the duty break is gone, so the federal 5% Deposit Scheme does the heavy lifting. Check your exact duty bill on the stamp duty calculator, map every scheme you qualify for with the eligibility checker, then talk to a broker about which lender inside your lane suits your file.

How much can you borrow as a first home buyer?

As a rough guide, lenders will lend you around five to six times your household income, but that's a starting point, not a promise. Your real borrowing power comes down to a few things they assess carefully.

Income. Base salary plus regular overtime, bonuses and commission. If you're self-employed, most lenders want two years of tax returns and financial statements.

Existing debts, including HECS. This trips up a lot of first home buyers. Your HECS/HELP repayment counts as a monthly liability, which shaves down what you can borrow. Credit cards reduce borrowing power too. Even if you clear the balance every month, lenders count the full limit as a potential debt. Closing a card you don't use can lift your borrowing power overnight.

Living expenses. Many lenders benchmark your declared expenses against the Household Expenditure Measure or a similar index, with the exact assessment method varying by lender, and most will also look at your actual bank statements. If you spend more than the benchmark, they use your real number.

Dependants. Each child or dependant lowers your capacity, because the lender factors in the cost of supporting them.

One 2026 change worth knowing: from 1 February 2026, APRA capped how much banks can lend at high debt-to-income ratios. No more than 20% of a bank's new lending can go to borrowers borrowing at six times their income or more, measured each quarter. New builds and bridging loans are exempt. In practice it rarely bites first home buyers, who usually borrow below that level, but it's why a lender might say no to a stretch six-times-income loan it would have written a year ago.

Not sure you'd even qualify for the schemes above? The eligibility checker takes a couple of minutes and tells you which paths are open to you.

What deposit do you need?

The realistic minimum in 2026 is 5% with the federal guarantee, or 2% in WA and SA through state lenders (and 2% nationally for single parents, or via Help to Buy if you're eligible). The old "you need 20%" rule is out of date for first home buyers. Here's what each level actually means on a $600,000 home:

• 20% deposit, avoids Lenders Mortgage Insurance entirely and gets you the best rates. That's $120,000.
• 5% deposit, the minimum with the 5% Deposit Scheme. The government guarantees the gap, so you pay no LMI. That's $30,000.
• 2% deposit, possible through Help to Buy (shared equity), where the government takes a stake of up to 40% of a new build or 30% of an existing home.
• 0% deposit, possible with a guarantor home loan, using a parent's property as extra security.

The real question isn't "how much deposit do I need?" It's "how much can I save versus how much will LMI cost?" If LMI on your purchase would be, say, $12,000, but saving the extra deposit takes another two years during which prices might rise more than that, paying the LMI and buying sooner can come out ahead. It can also go the other way if prices stall. There's no universal right answer, only your numbers.

Run yours with the LMI calculator and the stamp duty calculator, keep your progress on track with the deposit tracker, and read our guide on how to save for a house deposit for the practical strategies.

Government help for first home buyers in 2026

There's genuine help available, and most of it stacks. Here's what's on the table this year.

First Home Owner Grant (FHOG). A one-off cash payment from your state or territory, typically $10,000 to $30,000. It's almost always for new builds or substantially renovated homes, not established ones, and each state sets its own amount, value cap and rules.

Australian Government 5% Deposit Scheme. The federal guarantee covered above. Buy with a 5% deposit (2% for single parents), no LMI, no income caps and unlimited places since 1 October 2025. Only the property price cap for your area still applies.

Help to Buy. Now live, applications opened in December 2025 and households have already moved in. The government takes an equity stake of up to 40% of a new build or 30% of an existing home, so you only need a 2% deposit. To qualify, your taxable income must be $103,000 or less as a single, or $165,000 or less for couples and single parents. You buy back the government's share over time or when you sell. Early on, only a couple of lenders offer it, so check who's currently on the panel.

Stamp duty concessions. These vary substantially by state, property type and price: some jurisdictions offer full exemptions for eligible first home buyers, others narrower concessions, and Tasmania's established-home exemption ended on 30 June 2026 (see the state table above). In NSW there's no stamp duty on homes up to $800,000; in Victoria the full exemption runs to $600,000. Depending on where and what you buy, this alone can save you $10,000 to $30,000 or more.

First Home Super Saver Scheme (FHSSS). You can withdraw up to $50,000 of voluntary super contributions to put towards a deposit. Because those contributions are taxed at 15% rather than your marginal rate, it works as a tax-smart way to save. Our FHSSS guide walks through the mechanics.

For the current dollar amounts, value caps and eligibility in your state, head to the grants and schemes page or pick your state directly.

What lenders look for when assessing your first home buyer mortgage

Knowing what a lender checks on a first home buyer mortgage helps you prepare and avoids the surprises that stall an approval.

Stable employment. Lenders like to see at least six months in your current role, ideally a couple of years in your field. On probation, recently switched jobs, or working casually? Some lenders won't count that income, but others will, which is exactly where picking the right lender matters.

Clean credit history. Your credit report can show credit applications, defaults, repayment history and certain court judgments. Enquiries, defaults and court judgments can remain for five years, while repayment history generally remains for two years. Even a missed phone bill can land on your file. Check yours for free before applying. You can get a free copy from each of the three credit bureaus: Equifax, Experian and illion.

Genuine savings. Most lenders want to see three months or more of steady saving in your account. It shows you can manage money. Gifts from parents are fine, but you'll usually need a signed letter confirming the money is a gift, not a loan.

Low debt-to-income ratio. The more of your income that's already going to repayments, the less you can borrow. Before you apply, it's worth paying down personal loans and trimming or closing credit cards you don't use.

Living expenses. Lenders read three months of bank statements. Heavy spending on gambling, buy-now-pay-later or luxuries can raise a flag. You don't need to live like a monk forever, but tidying up your spending for three to six months before you apply genuinely helps.

How to get approved on your first try

A declined application isn't recorded as a rejection on your credit file, but the enquiry associated with it can remain for five years and a run of enquiries makes the next lender warier, so it's worth getting it right the first time. Here's how.

1. Get pre-approval before you house-hunt. It tells you exactly what you can borrow, shows sellers you're serious, and surfaces any problems early, before you've fallen for a place and you're under pressure.

2. Use a mortgage broker. Brokers compare options across their panel of lenders (ask which lenders they can and cannot access) and know which ones suit your situation, whether you're self-employed, carrying HECS, working casually, or using a government scheme. They do the paperwork and chase the lender. Lenders generally pay brokers a commission, though some brokers also charge a fee of their own, which they must disclose upfront, so ask before you engage one.

3. Don't shotgun applications yourself. Every application leaves a credit enquiry. A cluster of them in a short window looks like you've been knocked back elsewhere, even if you were only shopping around. A broker can narrow the field before anything is lodged, which cuts the risk of unnecessary applications.

4. Have your documents ready. Expect to provide recent payslips (last two or three), tax returns (last two years if self-employed), three months of bank statements, photo ID, and details of any debts. Having them sorted upfront speeds everything up.

5. Know your numbers. Use the borrowing power calculator to understand where you stand, the LMI calculator to factor in insurance, and our guide to current interest rates so you know what repayments to expect. For the full picture of where a loan fits in the buying process, see your journey.

Frequently asked questions

What is the easiest home loan to get for first home buyers?

The most accessible is usually a loan backed by the Australian Government 5% Deposit Scheme: you only need a 5% deposit, there's no LMI, and most major and non-major lenders take part. Beyond the scheme, some lenders run dedicated first home buyer products with lower fees. If you're wondering which loan is best for a first time home buyer, the honest answer is "whichever matches your deposit", and a mortgage broker can match you with the lender most likely to approve you.

Can I get a home loan with a 5% deposit?

Yes. Through the 5% Deposit Scheme you can buy with a 5% deposit and no LMI, because the government guarantees the gap up to 20%. Without the scheme, a 5% deposit is still possible with most lenders, but you'll pay Lenders Mortgage Insurance, usually $10,000 to $25,000 depending on the loan size. A guarantor home loan is another way to avoid LMI with a small deposit.

How much do first home buyers need to earn to get a loan?

It depends on the property price, your existing debts and your living expenses. As a rough guide, a $500,000 loan typically needs around $80,000 to $100,000 in household income, and a $700,000 loan closer to $110,000 to $140,000. HECS, credit card limits and car loans all pull these figures down. The borrowing power calculator gives you a number based on your actual situation.

Should I use a mortgage broker as a first home buyer?

Yes, and it's especially worth it for a first home buyer. Brokers compare 30+ lenders to find the right rate and product, handle the paperwork and lender contact, and know which lenders work best with schemes like the 5% Deposit Scheme. Their service is free to you; they're paid by the lender, not you. Just as importantly, they send one targeted application to the right lender, avoiding the multiple credit enquiries that can dent your file.

What salary do you need for a $500,000 loan?

Roughly $90,000 to $110,000 in household income, but it genuinely depends on your debts and expenses. HECS, a car loan or high credit card limits can push the figure higher; no debts and lean spending can pull it lower. Lenders also stress-test you at a rate above the actual one, so two households on the same salary can get different answers. Check yours with the borrowing power calculator.

How much deposit do you need for a $700,000 house?

It depends on the path. With the 5% Deposit Scheme it's $35,000 (5%) and no LMI. To avoid LMI the conventional way you'd need $140,000 (20%). Through a state scheme or Help to Buy, if you qualify, it can be as little as $14,000 (2%). Use the deposit tracker to set your target and the LMI calculator to see what insurance would cost if you go below 20%.

What changed with the 5% Deposit Scheme on 1 October 2025?

Three big things. Housing Australia removed the income caps, removed the limit on the number of places, and lifted the property price caps. The scheme was also rebranded the Australian Government 5% Deposit Scheme (it was previously the First Home Guarantee, and before that the FHLDS), and the separate Regional First Home Buyer Guarantee was folded into it. In short: more people qualify, there's no waitlist, and you can buy a slightly pricier home than before.

Is the 5% deposit scheme worth it, or should I save 20%?

For most first home buyers, the scheme is worth it, because it gets you in years sooner with no LMI. But be clear-eyed about the trade-off: a 5% deposit means a much bigger loan and more interest over 30 years, and demand-side schemes can nudge prices up. Saving to 20% buys you a smaller loan and full lender choice, but every extra year you wait is a year prices might run. There's no one right answer, run both scenarios with the borrowing power and repayment calculators and let your own numbers decide.

What is a first home buyer loan?

A first home buyer loan is usually a standard home loan taken with the first home buyer concessions you qualify for, such as a low deposit guarantee or a state scheme, though some lenders also run dedicated first home buyer products with lower fees. The path that suits you is set by your deposit and your state.