Beginner's Guide to Government Home Loan Schemes

The Australian Government runs two schemes that can help you buy a home with a smaller deposit or less cash upfront.

The Australian Government 5% Deposit Scheme lets eligible buyers purchase with as little as 5% down without paying lenders mortgage insurance, while Help to Buy allows the government to contribute up to 40% of the purchase price in exchange for an equity stake. Both schemes are designed to make home ownership more accessible, and both are available in Busselton and across regional Western Australia.

How the 5% Deposit Scheme Reduces Your Upfront Costs

The Australian Government 5% Deposit Scheme allows eligible first home buyers to purchase with a 5% deposit without paying lenders mortgage insurance. Housing Australia provides a guarantee to the participating lender of up to 15% of the property value, bringing the combined deposit and guarantee to 20%. Without the scheme, a buyer with less than 20% down would typically pay LMI, which can add thousands to the upfront cost.

Consider a buyer purchasing in Busselton under the regional Western Australia property price cap of $600,000. With a 5% deposit of $30,000, the government guarantee covers the shortfall to 20%, and the lender waives the LMI premium. That same buyer purchasing outside the scheme with a 5% deposit would face an LMI premium that could run into several thousand dollars depending on the lender and loan structure.

The scheme has no income cap, which sets it apart from other government programs. Your eligibility is based on being a first home buyer, an Australian citizen or permanent resident, and purchasing within the property price cap for your area. In Western Australia, the cap is $850,000 in Perth and regional centres and $600,000 in other areas. Busselton falls under the $600,000 cap.

What Help to Buy Offers and How It Differs

Help to Buy is a shared equity scheme where the Australian Government contributes up to 40% of the purchase price for a new home and up to 30% for an existing home. You need a minimum 2% deposit, and the government takes an equity stake equivalent to its contribution. You remain the homeowner and live in the property, but when you sell or refinance, the government receives its proportional share of the sale price or valuation.

Income limits apply. From 1 July 2026, individual applicants must earn no more than $103,000 and joint applicants or single parents no more than $165,000, based on your most recent ATO Notice of Assessment. Property price caps vary by location and are set separately from the 5% Deposit Scheme. Up to 10,000 places are available nationally in the current financial year. Applications are made through participating lenders, not directly through Housing Australia.

In a scenario where a buyer purchases an existing home valued at the Busselton area median with a government contribution of 30%, the buyer's deposit and loan amount are both significantly reduced. The government's equity stake rises and falls with the property value, so if the property increases in value, the government's share increases as well. If you sell after five years and the property has appreciated, you repay the government based on its percentage share of the new market value.

Can You Use Both Schemes Together?

You cannot combine the Australian Government 5% Deposit Scheme with Help to Buy. You must choose one or the other. However, state and territory grants and stamp duty concessions can generally be used alongside the 5% Deposit Scheme. Help to Buy can in most jurisdictions be used alongside applicable state and territory grants and duty concessions, though restrictions vary by jurisdiction and program.

In Western Australia, eligible first home buyers can access the $10,000 First Home Owner Grant for new homes valued up to $750,000, along with the First Home Owner Rate, which provides a full duty exemption on homes valued up to $430,000 with a phase-out at $530,000. For transactions from 21 March 2025, concessions apply up to $700,000 in the Perth Metropolitan and Peel regions and up to $750,000 outside those regions.

If you are buying an established home in Busselton under the 5% Deposit Scheme, you will not be eligible for the First Home Owner Grant, which applies to new homes only, but you may be eligible for the duty concession depending on the purchase price. If you are buying a new home, you can access both the grant and the duty concession in addition to the 5% Deposit Scheme, provided you meet the eligibility criteria for each.

Applying Through a Participating Lender

Both the 5% Deposit Scheme and Help to Buy are accessed through participating lenders, not directly through Housing Australia. The lender assesses your home loan application under their usual serviceability criteria, including income verification, credit history, and the serviceability buffer. The government guarantee or equity contribution does not change the lender's obligation to assess whether you can afford the repayments.

The panel of participating lenders has expanded since the schemes were introduced. At the time of the October 2025 expansion, the panel comprised three major bank lenders and 28 non-major lenders, with Housing Australia continuing to expand the panel through 2026. Not all lenders participate in both schemes, so confirming which lenders offer which program is part of the application process.

In our experience, buyers in Busselton often assume they need to apply to Housing Australia first or that they need pre-approval from the government before approaching a lender. The process runs the other way around. You apply for finance through a participating lender, and the lender coordinates the guarantee or equity arrangement with Housing Australia as part of the settlement process.

Deciding Which Program Suits Your Situation

The 5% Deposit Scheme works well when you have a 5% deposit saved and want to avoid LMI without giving up any equity in your home. You own the property outright from day one, subject to your mortgage, and any future capital growth is yours. Refinancing is straightforward because there is no government equity stake to manage.

Help to Buy suits buyers who have a smaller deposit or want to reduce their loan amount and repayments by sharing the equity with the government. The trade-off is that the government takes a proportional share of any capital gain when you sell or refinance. If the property increases in value, you will need to repay the government based on its percentage share of the appreciated value, not the original contribution amount.

If you are buying in Busselton with a long-term view and expect property values to rise, the 5% Deposit Scheme may align better with your goals. If reducing your repayments in the short term is the priority and you are comfortable with the government holding an equity stake, Help to Buy may be the better fit. The choice depends on your deposit size, income, borrowing capacity, and how long you plan to hold the property.

Call one of our team or book an appointment at a time that works for you. We can walk you through both schemes, confirm your eligibility, and connect you with participating lenders who operate in the Busselton area.

Frequently Asked Questions