By Chaice Paterson, CEO & Founder, Low Deposit Homes | Updated June 2026
The two biggest Federal Government programs for first home buyers in 2026 — the 5% Deposit Scheme and Help to Buy — solve the same fundamental problem (low deposit, no LMI) but they work in completely different ways. The 5% Deposit Scheme lets you buy with 5% down and pay zero Lenders Mortgage Insurance while owning 100% of your home. Help to Buy lets you buy with just 2% down while the government takes up to 40% shared equity in your property. You can’t use both — you pick one. For most Low Deposit Homes clients in 2026, the right scheme depends on three factors: income, future flexibility, and what you value more (full ownership vs lower weekly repayments). This guide compares both schemes side-by-side using real numbers on real properties.
What’s the Headline Difference Between 5% Deposit Scheme and Help to Buy?
The two schemes solve the deposit problem differently:
- 5% Deposit Scheme: Standard mortgage with 5% deposit; government acts as guarantor to eliminate LMI; you own 100%
- Help to Buy: Shared equity arrangement; 2% deposit; government takes up to 40% ownership; you own 58–62%
5% Deposit Scheme = full ownership, slightly higher deposit, no government share of capital growth.
Help to Buy = lower deposit, smaller loan, lower weekly repayments — but you share future capital growth with the government.
For the official sources: Housing Australia Home Guarantee Scheme and Housing Australia Help to Buy.
How Do They Compare on a $1M Property?
For a $1,000,000 new build in metropolitan Queensland — let’s run both schemes side by side:
5% Deposit Scheme — $1M new build:
| Item | Amount |
|---|---|
| Property price | $1,000,000 |
| Your deposit (5%) | $50,000 |
| Stamp duty | $0 (FHB new build exemption) |
| LMI | $0 (scheme guarantee) |
| Land transfer + legal + fees | ~$4,400 |
| Total cash on hand needed | ~$54,500 |
| Your loan | $950,000 |
| Weekly repayment (6%, 30yr) | ~$1,260/week |
| Your ownership | 100% |
Help to Buy — $1M new build:
| Item | Amount |
|---|---|
| Property price | $1,000,000 |
| Your deposit (2%) | $20,000 |
| Government equity (40%) | $400,000 |
| Stamp duty | $0 |
| Land transfer + fees | ~$3,500 |
| Total cash on hand needed | ~$23,500 |
| Your loan | $580,000 |
| Weekly repayment (6%, 30yr) | ~$770/week |
| Your ownership | 60% |
The headline trade-offs:
- Help to Buy needs $31,000 less cash on hand ($23.5K vs $54.5K)
- Help to Buy weekly repayments are $490/week lower ($770 vs $1,260)
- 5% Deposit Scheme gives you 100% ownership (vs 60% under Help to Buy)
- 5% Deposit Scheme captures 100% of future capital growth (vs 60% under Help to Buy)
Over a 10-year hold with conservative 3% annual capital growth, the property worth $1M today becomes worth roughly $1.34M. The 5% Deposit Scheme buyer captures all $340K of capital growth. The Help to Buy buyer captures 60% = $204K. The Help to Buy government share receives 40% = $136K.
That $136K of capital growth shared with the government is the long-term cost of the lower weekly repayments. For some buyers it’s worth it. For others it isn’t.
Who Qualifies for Each Scheme?
The eligibility rules are meaningfully different:
| Eligibility | 5% Deposit Scheme | Help to Buy |
|---|---|---|
| Citizenship | Citizen or PR | Citizen only |
| First home buyer required | Yes (or no property in past 10 years) | No (first-time or returning homeowner both eligible) |
| Income cap (single) | None | $100,000 |
| Income cap (couple / single parent with dependant) | None | $160,000 |
| Minimum deposit | 5% | 2% |
| Property cap (Brisbane / Gold Coast / Sunshine Coast / Beaudesert) | $1,000,000 | $1,000,000 |
| Property cap (Melbourne / Geelong) | $950,000 | $950,000 |
| Property cap (regional QLD) | $700,000 | $700,000 |
| Property cap (regional VIC) | $650,000 | $650,000 |
| Place caps | Uncapped (since Oct 2025) | 10,000 per year (40,000 over 4 years) |
| Off-the-plan / house and land packages | Eligible | Eligible |
| Must live in property | Yes (6mo+) | Yes (cannot rent out at all) |
The key differences:
- Citizenship. 5% scheme accepts permanent residents. Help to Buy requires citizenship. This excludes some PR holders from Help to Buy entirely.
- First home buyer status. The 5% Deposit Scheme requires you to be a first home buyer (or not have owned property in Australia in the past 10 years). Help to Buy is more flexible — it’s open to first-time buyers AND returning homeowners, so previous property owners who don’t currently own can still apply.
- Income caps. 5% scheme has no income limits. Help to Buy is income-capped at $100K single / $160K couple-or-single-parent-with-dependant. Higher earners qualify for the 5% scheme only.
- Place limits. 5% Deposit Scheme is uncapped (no allocation limit since October 2025). Help to Buy is capped at 10,000 places per year — 40,000 over four years. As of mid-2026, more than a quarter of the annual allocation has already been claimed.
- Future flexibility. Under the 5% scheme, you can convert the property to an investment after meeting the minimum residency period. Help to Buy prohibits renting out at any point.
“Help to Buy is brilliant for the right buyer — the income-constrained couple in Pakenham who can own a brand-new home for the same weekly cost as renting. It’s the wrong scheme for someone whose job might require relocation, or someone above the income caps, or someone who wants to eventually convert to an investment. We assess that on every discovery call.” — Chaice Paterson, founder of Low Deposit Homes
Which Scheme Suits Which Buyer?
Across hundreds of Low Deposit Homes discovery calls, the right scheme typically comes down to four buyer profiles:
Profile 1: Higher-income couple, want full ownership → 5% Deposit Scheme
- Combined income $170K+ (above Help to Buy cap)
- Plan to stay long-term or eventually convert to investment
- Comfortable with higher weekly repayments
- Want all the capital growth
Profile 2: Income-constrained couple, prioritise weekly affordability → Help to Buy
- Combined income under $160K
- Want lowest possible weekly repayments
- Committed to long-term residence (not converting to investment)
- Willing to share future capital growth
Profile 3: Permanent resident (not citizen) → 5% Deposit Scheme
- Help to Buy isn’t an option (citizenship required)
- 5% scheme accepts PR holders
- Standard structure applies
Profile 4: Defence force or job requires potential relocation → 5% Deposit Scheme
- Help to Buy’s “must live in it” rule creates risk if you’re posted elsewhere
- 5% scheme allows conversion to investment after minimum residency
- One of our recent defence force clients had to withdraw from Help to Buy after a posting — the 5% scheme would have given him flexibility
Real Decision Example: Couple Earning $145K Combined, Looking at $1M New Build in Ipswich
Let’s walk through a real comparison.
Couple stats:
- Combined income: $145,000
- Savings: $55,000
- Eligible for Help to Buy (under $160K cap, first-time or returning homeowner)
- Eligible for 5% Deposit Scheme (no income cap, FHB or no property in past 10 years)
- Buying a house and land package during construction (so Boost to Buy not available — CO not yet issued)
Option A — 5% Deposit Scheme:
- Cash on hand: ~$54,500 (they have it)
- Weekly repayment: ~$1,260/week
- Required income to service: ~$155K
- Ownership: 100%
- 10-year capital growth captured: 100% of ~$340K = $340K
Option B — Help to Buy:
- Cash on hand: ~$23,500
- Weekly repayment: ~$770/week
- Required income to service: ~$95K (much more comfortable for $145K combined)
- Ownership: 60%
- 10-year capital growth captured: 60% of ~$340K = $204K
- Capital growth shared with government: $136K
For this specific couple, the maths comes down to: do they value full ownership and maximum capital growth (5% Scheme), or maximum cash flow flexibility now and willingness to share future growth (Help to Buy)?
This is exactly the kind of analysis we run on every discovery call.
Frequently Asked Questions
Can I use both the 5% Deposit Scheme and Help to Buy?
No. You can use one or the other, not both. They’re mutually exclusive — both deliver no LMI on a low deposit but through completely different mechanisms (one is a guarantee, one is shared equity). We assess which one delivers the better outcome for your specific situation on the discovery call.
Which scheme gives me lower weekly mortgage repayments?
Help to Buy almost always delivers lower weekly repayments because the loan size is dramatically smaller (the government takes up to 40% of the property as equity, so your loan is only 58–60%). On a $1M new build, Help to Buy weekly repayments are around $770 versus around $1,260 under the 5% Deposit Scheme — a difference of approximately $490/week.
Which scheme builds more wealth over time?
The 5% Deposit Scheme typically builds more wealth long-term because you keep 100% of capital growth. Over a 10-year hold with 3% annual growth on a $1M property, the 5% Scheme buyer captures the full $340K of growth. The Help to Buy buyer captures 60% = $204K. The trade-off is weekly cash flow — Help to Buy has dramatically lower repayments.
Can I convert Help to Buy or 5% Deposit Scheme to an investment property later?
The 5% Deposit Scheme allows conversion to investment property after you’ve met the minimum residency period (typically 6–12 months). Help to Buy does NOT allow renting out at any point while the government holds equity. If you anticipate potentially converting to investment, the 5% Deposit Scheme is the right choice.
What if my income is above the Help to Buy cap but I want low weekly repayments?
For buyers above the Help to Buy income caps ($100K single / $160K couple-or-single-parent-with-dependant), the 5% Deposit Scheme is the primary path. The 5% Scheme has no income limits, but you take out a larger loan (95% LVR) with correspondingly higher weekly repayments. Strategies to manage this include choosing a lower price point, paying a larger deposit than the minimum 5%, and using an offset account from day one to reduce interest charged.
Ready to Work Out Which Scheme Suits You?
Book a free 15-minute consultation with Low Deposit Homes — Book your free call | Call 1800 920 172
We’ve helped 1000+ families navigate the choice between the 5% Deposit Scheme, Help to Buy, Boost to Buy (QLD), and the Family Home Guarantee. The right scheme depends entirely on your income, your goals, and what you value — and we’ll run the comparison on YOUR numbers in 15 minutes.
Low Deposit Homes operates under Winning Homes Australia Pty Ltd (ACN 633 321 758). All deposit calculations are indicative and based on general scenarios. Individual circumstances may vary. Government grant eligibility is subject to assessment by the relevant authority. This guide is for informational purposes and does not constitute financial advice.