By Chaice Paterson, Founder, Low Deposit Homes
Most first home buyers in Australia aren’t blocked by their income. They’re blocked by a small set of fixable misunderstandings — about deposits, credit, grants and which scheme applies to them. After six months of close qualification calls with first home buyers, the pattern is hard to miss: the people who think they’re years away are usually far closer than they believe.
Here’s the number that proves it. In Queensland, a first home buyer can get into a brand-new home for around $54,500 — not the $122,000 an established home of the same $1,000,000 price would demand. That gap of roughly $67,500 comes from paying $0 stamp duty (about $30,850 saved at the owner-occupier duty rate) and no Lenders Mortgage Insurance on a new build under the 5% Deposit Scheme. Same house price, about $67,500 less cash to get through the door. (We set out the full deposit maths in our Deposit Report 2026.)
So if the money is closer than people think, what actually stops them? These six barriers — and the one feeling that sits on top of all of them.
The six barriers at a glance
| # | Barrier | What it really is | How it’s resolved |
|---|---|---|---|
| 1 | The deposit myth | Thinking you need ~$120k when it’s nearer ~$54.5k | Run the real numbers for a new build |
| 2 | Borrowing power, not deposit | The bank won’t lend enough — deposit isn’t the blocker | Help to Buy / a co-applicant lifts serviceability |
| 3 | “My savings don’t count” | Money exists but isn’t recognised as genuine savings | Combine savings + FHSS + gifts + leave |
| 4 | A credit default | A small, old, fixable mark on file | Identify it early and clear it — a step, not a wall |
| 5 | A partner who owned before | Assuming it kills first-home benefits | The 10-year rule / not-on-title often rescues it |
| 6 | Not knowing the scheme stack | Complexity causes people to self-disqualify | Get the right combination mapped for your situation |
Barrier 1 — The deposit myth
Most first home buyers think they need roughly double the deposit they actually do. Ask someone what a deposit costs and they’ll picture the old 20% rule — about $200,000 on a $1,000,000 home — decide it’s impossible, and stop looking. But under the 5% Deposit Scheme you buy with a 5% deposit and pay no LMI, and on a new build you pay $0 stamp duty. That brings a typical $1,000,000 Queensland new build down to around $54,500 to get into (about $37,500 in Victoria). The deposit people “can’t reach” is usually far closer than they think — they’ve just been quoting themselves the wrong number.
Barrier 2 — Borrowing power, not the deposit
For a lot of buyers the real blocker isn’t the deposit at all — it’s how much the bank will lend. This is the most under-discussed barrier in the market. Someone can have the deposit sorted and still be told they can’t borrow enough to buy where they want. The fix isn’t more savings — it’s a structure that lifts serviceability: Help to Buy, where the government takes an equity share of up to 40% so you only service your portion of the loan, or bringing in a co-applicant. Knowing whether your blocker is the deposit or the borrowing power is the single most important thing to get right, because the solution is completely different depending on the answer.
Barrier 3 — “My savings don’t count”
Plenty of buyers have enough money — it’s just sitting in forms a lender doesn’t automatically recognise as genuine savings. Gifts from family, money in superannuation, accrued leave, KiwiSaver, an asset that could be sold — these are real, usable funds that people write off because they don’t look like a term-deposit balance. The work is assembling them properly: own savings, plus the First Home Super Saver scheme (you can withdraw up to $50,000 of voluntary super contributions toward a deposit — though only $15,000 of voluntary contributions count per financial year, so it rewards planning ahead), plus family gifts handled the way lenders accept them. Most “I can’t save fast enough” stories are actually “no one has helped me count what I already have.”
Barrier 4 — A credit default
A credit default is one of the most common specific reasons first home buyers think they can’t buy — and one of the easiest to actually fix. It’s usually a small, old, half-forgotten telco or utility mark, not a financial catastrophe. Left undiscovered it derails an application at the worst moment; found early, it’s often straightforward to clear before you ever present finance. The mistake is assuming a default is a permanent wall. It’s almost always a step — one you deal with up front so it never surprises you.
Barrier 5 — A partner who’s owned before
One applicant having owned a home in the past is wrongly assumed to wipe out first-home benefits for the couple — and often it doesn’t. This stops people who’d otherwise qualify. Depending on the scheme and the timing, a prior owner who hasn’t owned property for the relevant period can re-qualify, and structuring around who’s on the title can preserve the first-home position. It’s exactly the kind of detail that decides outcomes — and exactly the kind people get wrong when they self-assess and quietly rule themselves out.
Barrier 6 — Not knowing which scheme stack applies
The schemes aren’t hard to use — they’re hard to choose between, and that complexity alone stops people. Between the 5% Deposit Scheme, Help to Buy, the Family Home Guarantee, the First Home Owner Grant, stamp-duty concessions and the First Home Super Saver, most buyers can’t tell which they qualify for or how they combine — so they do nothing, or they self-disqualify on a rule they’ve misread. The schemes stack in specific, sometimes mutually-exclusive ways (you can’t combine Help to Buy with the 5% scheme, for instance). Mapping the right combination for one person’s situation is most of the value — and it’s why so many “I don’t think I qualify” buyers turn out to qualify for more than they realised. (See our first home buyer schemes compared guide.)
The seventh thing: fear
Sitting on top of all six is the one that isn’t really a barrier of its own — it’s the feeling the others create. “It’s too good to be true.” “There must be a catch.” That disbelief causes more paralysis than any single rule, and it’s downstream of the other six: it’s what people feel when no one has shown them the real numbers. It shifts the moment the maths becomes concrete — when “we can’t” turns into “how soon.”
That’s the through-line of this whole report: six of these are knowledge-and-structure problems, not income problems, and the seventh is the fear they cause. Most first home buyers who feel stuck aren’t short on income — they’re short on the right information, in the right order.
Frequently asked questions
How much deposit do I really need to buy a first home in Queensland?
Far less than 20%. On a typical $1,000,000 Queensland new build, a first home buyer needs around $54,500 to get in — versus about $122,000 for an established home of the same price — because new builds attract $0 stamp duty and no LMI under the 5% Deposit Scheme. In Victoria the entry cost is around $37,500.
Is there an income limit for the first home buyer 5% deposit scheme in 2026?
No. On 1 October 2025 the income caps on the First Home Guarantee (the 5% Deposit Scheme) were removed entirely — there is no upper income limit at all, and the old $125,000 single / $200,000 couple caps were scrapped. Place limits were removed too. Property price caps still apply (around $1,000,000 in metro Queensland, $700,000 regional, and $950,000 in Melbourne and Geelong).
Does a credit default stop me from buying a house?
Usually not permanently. Most defaults that surprise first home buyers are small, old telco or utility marks that can be identified and cleared before you apply. The key is finding it early rather than discovering it mid-application — it’s a step to deal with, not a wall.
Can I still be a first home buyer if my partner has owned a home before?
Often, yes. Depending on the scheme and how long ago they owned, a prior owner can re-qualify, and structuring around who is on the title can preserve the first-home position. It’s worth getting your specific situation checked rather than assuming it rules you out.
Is the bank not lending me enough a deposit problem or a different problem?
It’s a different problem — borrowing power, not deposit. If you have the deposit but can’t borrow enough, more savings won’t fix it. Help to Buy (a shared-equity scheme where the government takes up to a 40% stake so you service a smaller loan) or adding a co-applicant addresses serviceability directly.
What is Help to Buy and who can use it?
Help to Buy is a shared-equity scheme: you buy with as little as a 2% deposit and the government takes an equity share of up to 40%, which shrinks the loan you have to service. It’s for Australian citizens only, with income caps of $100,000 for singles and $160,000 for couples and single parents, and it can’t be combined with the 5% Deposit Scheme.
Can I use my super for my first home deposit?
Yes — the First Home Super Saver scheme lets you withdraw up to $50,000 of voluntary super contributions toward a deposit. Only $15,000 of voluntary contributions count per financial year, so it works best when you start early, and you release the money via an ATO determination.
Why do people who can afford the repayments still not buy?
Because the blocker usually isn’t affordability — it’s a fixable misunderstanding: thinking the deposit is twice its real size, not knowing their savings count, an old credit default, a misread eligibility rule, or simply not knowing which scheme applies. Six of the seven things that stop first home buyers are information problems, not income problems.
Run your own numbers
If any of this sounds like you, the fastest way to find out where you actually stand is to run your situation — it’s free, with no obligation. Most people are surprised how much closer they are than they thought. See how much deposit you actually need, or book a free call.
Methodology & notes
The barriers in this report are drawn from six months of Low Deposit Homes’ own first-home-buyer qualification calls across Queensland and Victoria — what genuinely stops people, in their own words. It’s a qualitative pattern from our client conversations, not a national survey, and it reflects the buyers who reach out to us. Deposit, grant, scheme and cap figures reflect the Australian Government 5% Deposit Scheme, Help to Buy, and Queensland and Victorian first home buyer settings as at June 2026; eligibility, caps and dates change and depend on individual circumstances — always confirm current settings for your situation. Queensland’s $30,000 First Home Owner Grant carries a $750,000 price cap that most new house-and-land packages exceed (and is locked in at $30,000 until mid-2030), so for most Queensland buyers it isn’t the deciding lever — the saving comes from $0 stamp duty and no LMI. Victoria’s $10,000 grant is usable at Victorian price points. This report is general information, not financial or credit advice. Low Deposit Homes operates under Winning Homes Australia Pty Ltd.