By Chaice Paterson, Founder, Low Deposit Homes
Both let you buy a first home with a small deposit, but they solve different problems. The 5% Deposit Scheme is for buyers whose blocker is the deposit; Help to Buy is for buyers whose blocker is income or serviceability. You can’t combine them, so the choice matters.
| 5% Deposit Scheme | Help to Buy | |
|---|---|---|
| Deposit | 5% | As little as 2% + costs |
| LMI | None | None |
| Government takes equity? | No — you own 100% | Yes — up to 40% share |
| Income caps | Removed entirely Oct 2025 (no income limit) | Under ~$160k household ($100k single) |
| Citizenship | Citizen or PR | Australian citizens only |
| Who it suits | Can service the loan, can’t save the deposit | Can’t borrow enough on income alone |
How the 5% Deposit Scheme works
Under the expanded Home Guarantee Scheme you buy with a 5% deposit and the government guarantees the gap to 20%, so you pay no Lenders Mortgage Insurance. Since October 2025 there are no income caps and no annual place limits — only property price caps remain (about $1,000,000 in Brisbane, the Gold Coast and Sunshine Coast, $700,000 regional, and about $950,000 in Melbourne and Geelong). You own 100% of the home, and on a new build you pay $0 stamp duty — which is what makes a typical $1,000,000 Queensland new build cost about $54,500 to get into rather than $122,000.
How Help to Buy works
Help to Buy is a shared-equity scheme: you contribute as little as 2% plus costs, and the government takes an equity share of up to 40% of the home. That shrinks the loan you have to service — so it can get you in when the bank says you can’t borrow enough. The trade-offs: income caps apply (around $160,000 household), it’s for Australian citizens only, and the government shares in the capital gain until you buy their share back.
Why you can’t have both
Help to Buy cannot be combined with the 5% First Home Guarantee — they’re two different doors. Pick the one that solves your actual blocker.
The verdict
If you can comfortably make the repayments but can’t save the deposit, the 5% Deposit Scheme is almost always the better choice — you own the whole home and keep all the future growth, and the $0 stamp duty on a new build is where the real saving sits. Choose Help to Buy when your real constraint is borrowing power, not the deposit: giving up some equity is the price of getting in at all.
Frequently asked questions
Can I use Help to Buy and the 5% Deposit Scheme together?
No. The two schemes can’t be combined — you choose one. The 5% Deposit Scheme keeps you owning 100% of the home; Help to Buy trades an equity share for a smaller loan.
Which is cheaper upfront, the 5% scheme or Help to Buy?
Help to Buy can be cheaper upfront because the deposit goes as low as 2% and the loan is smaller. But you give the government an equity share of up to 40%, so it can cost more over time as the home grows in value. The 5% scheme costs a little more deposit but you keep all the future gain.
Do I have to pay LMI under either scheme?
No. Both the 5% Deposit Scheme and Help to Buy let eligible first home buyers avoid Lenders Mortgage Insurance, which can save many thousands of dollars.
Which scheme is better for a single parent?
A single parent should also look at the Family Home Guarantee, which allows a 2% deposit with no LMI and isn’t limited to first homes. Compared with Help to Buy, it keeps you owning 100% of the property.
Find your path
The right answer depends on your numbers. Run your situation free, with no obligation, and we’ll map it out for you.
See if you qualify →Compare all the schemes →
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General information only — not financial or credit advice. Eligibility, caps and dates depend on individual circumstances and can change; figures current as at June 2026. Finance is arranged through licensed mortgage brokers and lenders. Low Deposit Homes operates under Winning Homes Australia Pty Ltd.