From 1 October, the government’s expanded First Home Guarantee Scheme — now known as the Australian Government 5% Deposit Scheme — has made it easier for first-time buyers to get onto the property ladder.

Eligible buyers can now secure a home with as little as a 5% deposit, without paying lenders’ mortgage insurance (LMI). With around 70,000 first-home buyers expected to take advantage of the scheme in its first year, it’s a great time to consider making your move. 

But before you dive in, it’s important to understand the scheme and be aware of common mistakes first-home buyers often make. 

How the Australian Government 5% Deposit Scheme Works 

The scheme allows eligible buyers, regardless of income, to purchase a property with just a 5% deposit. The government acts as guarantor for an additional 15% of the loan, which means you won’t need to pay costly LMI. 

Some key updates include: 

• No cap on applicant numbers – anyone eligible can apply. 
• Higher property price limits – making it possible to buy in more expensive markets.
• Big savings on deposit size – for example:
  • A $1.5 million home in Sydney could be secured with a $75,000 deposit.
  • A $950,000 property in Melbourne would require just $47,500 upfront.

It’s an exciting opportunity, but there are still pitfalls to watch out for when buying your first home. 

4 Common Mistakes First-Home Buyers Make 

1. Underestimating the full cost of buying 

A deposit isn’t the only expense you need to plan for. Other upfront costs may include: 

• Stamp duty or transfer duty
• Legal or conveyancing fees
• Building and pest inspections
• Loan application or establishment fees
• Removalist and moving costs 

On top of that, you’ll need to budget for ongoing expenses such as council rates, utilities, strata fees, insurance and general maintenance. 

2. Letting emotions drive the purchase 

It’s easy to get swept away by a property’s style or location and forget to check whether it really suits your needs—or your budget. 

Try to stick to your must-have criteria and remember: if you miss out on one home, there will always be another opportunity.

3. Skipping pre-approval 

Getting pre-approval from a lender gives you a realistic idea of how much you can borrow. It: 

• Helps define your budget 
• Narrows your property search
• Strengthens your position when making an offer or bidding at auction

Pre-approval is usually valid for 90 days, giving you confidence to act quickly when you find the right place. 

4. Forgoing a building and pest inspection 

While it might seem like a way to save money, skipping an inspection can lead to major unexpected costs down the track. Issues like termites, asbestos, or structural damage can turn your dream home into a financial nightmare. 

Always arrange inspections before signing a contract to avoid costly surprises. 

Ready to Take the Next Step? 
Buying your first home is an exciting milestone, but having the right advice can make all the difference. 

As your Mortgage Broker, we can: 

• Review your financial situation and goals 
• Find the right home loan for your needs
• Check your eligibility for government incentives like the 5% Deposit Scheme

Get in touch today to start your journey with confidence.