Saving a 20% deposit for a home in Perth has become one of the biggest financial challenges facing buyers today. With the city’s median house price now well above $800,000 in many suburbs, a 20% deposit means saving $160,000 or more before you can even start. For most people paying rent, that figure keeps moving further out of reach.
The good news is that buying with a 5% deposit or even less is genuinely possible in Perth in 2026. Several government schemes and lending options exist specifically to help buyers enter the market with a smaller deposit, and in some cases without paying Lenders Mortgage Insurance at all. This guide explains how each option works, who qualifies, and what to watch out for.
Why Do Lenders Normally Require 20%?
The 20% deposit threshold is not arbitrary. It represents the point at which your loan-to-value ratio (LVR) falls to 80%, which lenders consider the boundary between standard risk and higher risk lending. When you borrow more than 80% of the property’s value, lenders require Lenders Mortgage Insurance (LMI) to protect themselves in the event of a default.
LMI is a significant cost on a $700,000 property with a 5% deposit, LMI can easily run to $20,000 or more. However, several pathways exist to help buyers access the market with less than 20% while avoiding or minimising this cost.
Option 1: The Federal Home Guarantee Scheme
The Home Guarantee Scheme (HGS) is a federal government initiative that allows eligible buyers to purchase a property with as little as a 5% deposit, with the government acting as guarantor for the remaining portion. This means buyers avoid paying LMI entirely, which can save tens of thousands of dollars.
The scheme operates through participating lenders and has three streams: the First Home Guarantee for first home buyers, the Regional First Home Buyer Guarantee for buyers purchasing in eligible regional areas, and the Family Home Guarantee for eligible single parents with at least one dependent child, who can buy with as little as a 2% deposit.
As of October 2025, the scheme was significantly expanded. The income caps were removed, there are now no limits on the number of available places, and the property price cap in the Perth metro area was increased to $950,000. This makes the scheme accessible to a much wider range of buyers than previously.
For Perth buyers, the expanded Home Guarantee Scheme combined with the First Home Owner Grant and stamp duty concessions creates one of the most supportive first home buyer environments in years. Learn more about first home buyer options in Perth.
Option 2: Keystart Home Loans (WA Only)
Keystart is a Western Australian Government initiative that offers low-deposit home loans with as little as a 2% deposit and no LMI requirement. It is available exclusively to WA residents and is one of the most accessible pathways into homeownership for Perth buyers who do not meet the deposit requirements of mainstream lenders.
As of 2026, the income limits are $148,000 per year for singles and $218,000 for couples and families. The property price cap for the Perth metro area is $800,000. Keystart is a transitional lender, meaning it is designed to get you into a home rather than to keep you there permanently. Most borrowers refinance to a mainstream lender once they have built sufficient equity.
You can read a detailed breakdown of how Keystart works, including the updated 2026 limits, on our Keystart home loans page.
Option 3: Guarantor Home Loans
A guarantor loan allows a family member most commonly a parent to use the equity in their own property as additional security for your loan. This reduces or eliminates the need for LMI and can allow you to purchase with a very small deposit, or in some cases with no deposit at all.
Guarantor loans can be a powerful option for buyers who have strong income and serviceability but have not yet saved a large deposit. The guarantee can be limited to a specific portion of the loan, which means the guarantor’s entire property is not necessarily at risk. However, it is a serious financial commitment for both parties and requires careful consideration and independent legal advice.
Find out more about how guarantor and family assist loans work and whether this option might suit your situation.
Option 4: Low Deposit Loans with LMI
If none of the above schemes apply to your situation, it is still possible to buy with a 5% to 10% deposit through a mainstream lender by paying LMI. While LMI is an added cost, it may make sense if property prices are rising and waiting to save a larger deposit would mean paying significantly more for the same property.
LMI can sometimes be capitalised into the loan rather than paid upfront, which reduces the immediate cash requirement. The total cost of LMI varies depending on the lender, the loan amount, and your LVR. Some lenders are more competitive on LMI pricing than others, which is another reason to compare options across the market rather than going directly to a single bank.
What Is the Real Cost of Buying with 5%?
Buying with a 5% deposit does not mean your only upfront cost is 5% of the purchase price. You still need to cover stamp duty (unless you qualify for a first home buyer concession), conveyancing fees, building inspections, and other settlement costs. As a general guide, first home buyers in Perth should have at least 7% to 8% of the purchase price saved to comfortably cover the deposit plus all upfront costs, depending on their eligibility for concessions.
Use our Stamp Duty Calculator to understand your specific stamp duty obligation based on your purchase price and buyer status.
How to Choose the Right Low Deposit Option
The right pathway depends on your income, employment type, the property you want to buy, whether you are a first home buyer, and whether you have family in a position to act as guarantor. Each option has different eligibility requirements, property price caps, and long-term financial implications.
This is exactly the kind of decision where working with an experienced mortgage broker makes a genuine difference. Rather than spending weeks researching each scheme separately and then applying to lenders one at a time, a broker can assess your full situation, identify which options you qualify for, and guide you through the most suitable path at no cost to you.
Our team at Central Lending Solutions has helped hundreds of Perth buyers get into the market with smaller deposits. Contact us today to find out which low deposit option is the right fit for your situation.
Frequently Asked Questions
Can I use the First Home Owner Grant as part of my 5% deposit?
The First Home Owner Grant (FHOG) of $10,000 is available to eligible WA buyers purchasing or building a new home. It can be counted toward your deposit or used to cover upfront costs. However, most lenders require you to demonstrate that the deposit funds are genuinely saved rather than entirely gift or grant-sourced, so it is important to check with your lender or broker about how the FHOG can be applied in your specific situation.
Is the Home Guarantee Scheme available to non-first home buyers?
The First Home Guarantee stream is limited to first home buyers. However, the Family Home Guarantee is available to eligible single parents who may have previously owned a property. The Regional First Home Buyer Guarantee is also for first home buyers purchasing in eligible regional locations. A mortgage broker can help you identify which stream, if any, you qualify for.
What happens if property values fall after I buy with a small deposit?
If property values decline after you purchase with a small deposit, you could find yourself in negative equity where you owe more than the property is worth. This is a genuine risk with low deposit lending, though it is more relevant in falling markets. In the current Perth environment, property values have been rising strongly, which reduces but does not eliminate this risk. It is important to buy within your means and maintain a financial buffer.
Can I buy an investment property with a 5% deposit?
Low deposit schemes like the Home Guarantee Scheme and Keystart are generally designed for owner-occupiers, not investors. Most investment property lenders require a minimum of 10% to 20% deposit depending on the lender and property type. However, if you already own a home, you may be able to use the equity in your existing property to fund an investment purchase with a smaller cash contribution.
How long does it take to get approved for a low deposit home loan?
The approval timeline depends on the scheme and lender involved. A straightforward application through a participating Home Guarantee Scheme lender typically takes two to four weeks from application to formal approval. The timeline can be shorter or longer depending on how quickly documents are submitted and the lender’s current processing capacity. A mortgage broker who manages the application on your behalf can help keep the process moving efficiently.
Ready to Explore Your Low Deposit Options in Perth?
Our team at Central Lending Solutions knows the Perth market and the full range of low deposit options available to buyers in 2026. We compare lenders and schemes on your behalf, identify what you qualify for, and guide you through every step at no cost to you. Book a free consultation today.