One of the most significant barriers to home ownership is often gathering enough cash for a substantial deposit. With rising property prices over the past decade, a 20% deposit—which is usually required for avoiding potentially expensive lenders mortgage insurance (LMI)—now feels unattainable if you’re a first home buyer.
Recent research by Resolve Finance found that more than half of renters believe home ownership is out of reach for them. Awareness of available government assistance is low, with only 39% planning to use government assistance schemes that allow people to buy property with much smaller deposits. While the “Bank of Mum and Dad” has become a popular source of help, not all parents are in a financial position to assist.
Here are 3 options you could use to get into your first home that you may not have known about:
Government incentives
Across Australia, state governments offer grants to first-time home buyers, typically for new home purchases. The federal government also provides several options. The First Home Guarantee Scheme, for example, enables buyers to secure a home with just a 5% deposit while avoiding paying LMI*.
There is also a scheme for single parents that allows them to buy with just a 2% deposit.* These schemes have limited spots each year and come with conditions, including property price caps.
Shared Equity Schemes
Shared equity schemes involve governments or non-profits taking a stake in the home you purchase. This could lower your required deposit to as little as 2%, but the provider will share in any profit when you sell the home—unless you buy back their share earlier. Several state-based shared equity schemes are available, and a national Help to Buy scheme is expected to launch this year.
Team up
Increasingly, people are considering pooling their savings with others—often siblings—to jointly buy property. This approach can reduce individual deposit requirements, but it’s crucial to have strong agreements in place. Another trend among young adults is making their first home an investment property, living at home with parents while tenants help pay the mortgage.
Additionally, prospective buyers might consider seeking assistance beyond their parents, such as from grandparents or other relatives who might be willing to invest in a property. Navigating the journey to home ownership can be challenging, but understanding and utilising the available government options can make the dream more attainable. Luckily, we are here to help guide you every step of the way.