Key takeaways:
Buying with a 5% deposit is becoming more common, with around three in 10 first home buyers in this dataset appearing to purchase through a proxy for the Australian Government's 5% Deposit Scheme.
Most properties held their value or increased, although this reflects one recent cohort of buyers and does not indicate future outcomes.
A smaller deposit isn't the only consideration, with borrowing power, upfront costs and ongoing affordability all playing an important role.
Understanding your options early canhelp you determine whether a 5% deposit purchase could be achievable based on your circumstances.
For many Australians, buying a first home feels like a waiting game.
Not because they haven't found the right property, but because they're still chasing what they've always believed is the magic number: a 20% deposit.
It's one of the most common assumptions Aussie Brokers hear.
Many buyers spend years trying to reach that milestone before they even consider speaking to a lender or broker, only to discover they may have had other options available much earlier.
New Aussie analysis suggests around three in 10 first home buyers purchased with a 5% deposit using the Australian Government's 5% Deposit Scheme (formerly known as Home Guarantee Scheme) between October 2025 and April 2026. Because Scheme participation isn't recorded in loan application data, the analysis identifies likely participants using lending characteristics such as owner-occupied purchases with loan-to-value ratios above 95%.
The analysis also provides an early snapshot of what happened after those buyers entered the property market.
For this group, most properties are estimated to be worth more than when they were purchased. While that doesn't guarantee the same outcome for future buyers, it suggests a smaller deposit didn't automatically translate to weaker short-term property value outcomes for this group.
The bigger takeaway isn't that buying with 5% is always the right choice.
It's that many Australians may have more pathways into home ownership than they realise.
At a time when affordability remains one of the biggest barriers to home ownership, understanding the options available may help some buyers enter the market sooner than they expected, provided it's the right fit for their circumstances.
Why the 20% deposit myth is proving hard to shake
For decades, saving a 20% deposit has been seen as the traditional milestone for buying a home.
There are good reasons why many buyers aim for a 20% deposit. A larger deposit generally means borrowing less, paying less interest over time and, in many cases, avoiding lenders mortgage insurance (LMI) if you're not using an eligible government support scheme.
But as property prices have generally increased over the years, reaching that target has become much harder for many aspiring buyers.
As a result, some Australians delay looking altogether, assuming they simply aren't ready yet.
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Abbie Ffrost, an Aussie Broker in Toowoomba, says that's something she sees regularly.
“Often people come in thinking they're just here to have a chat and get some information,” she said.
“They don't realise how close they actually are because they've heard they need a 20% deposit, or they have to pay off their car loan first, or they can't have a credit card.
“There are all kinds of urban legends out there. They might be true for one particular individual, but they're not true for everyone.”
Rather than focusing on percentages, Ffrost says she prefers helping buyers understand what the numbers actually look like.
“We don't talk about deposit percentages. We just talk about the purchase price, how much they've saved, what the costs are and what the loan amount will be,” she said.
For many buyers, that simple conversation can completely change how achievable home ownership feels.
An Aussie Broker can help you understand how much deposit you may need, estimate your borrowing power and explain whether government support schemes could be available based on your circumstances.
Buying with a smaller deposit doesn't mean the same thing for everyone
While the 5% Deposit Scheme may allow eligible buyers to purchase a home with as little as a 5% deposit without paying LMI, a smaller deposit is only one part of the home buying equation.
Lenders still assess whether borrowers can comfortably afford the loan based on their income, living expenses, existing debts and overall financial position. These factors also influence how much you may be able to borrow.
There are also other upfront costs to consider, depending on where you're buying.
Nathan Misell of Aussie Mt Barker says recent changes to the scheme have made it far more relevant for buyers in his part of South Australia.
“It became relevant again when they lifted our cap to $900,000. There was a point where our market had outpaced the scheme,” he said.
The higher property price cap means more buyers in his region may now be able to access the scheme than before, although eligibility requirements still apply.
State/Territory | Capital city and regional centre* | Rest of state |
|---|---|---|
NSW | $1,500,000 | $800,000 |
VIC | $950,000 | $650,000 |
QLD | $1,000,000 | $700,000 |
WA | $850,000 | $600,000 |
SA | $900,000 | $500,000 |
TAS | $700,000 | $550,000 |
ACT | $1,000,000 | N/A |
NT** | Darwin: $750,000 | Rest of NT: $600,000 |
Jervis Bay Territory & Norfolk Island | $550,000 | $550,000 |
Christmas Island & Cocos (Keeling) Islands | $400,000 | $400,000 |
Source: Australian Government 5% Deposit Scheme Property Price Caps
*Property price caps vary depending on where you're buying. Eligibility criteria also apply.
However, he notes that buyers should still understand all the costs involved.
“We still have stamp duty on first purchases here, so it's not a genuine 5% in South Australia… Ours is actually more like 11% by the time you include stamp duty on an established property,” he added.
The experience can differ across Australia depending on local property prices, government concessions and individual circumstances. An Aussie Broker can help explain how the 5% Deposit Scheme works based on where you live, estimate your upfront costs and determine whether you may be eligible before you start searching for a property.
What happened after these buyers bought their first home?
One of the biggest concerns prospective buyers have is whether entering the market with a small deposit leaves them more exposed if property values fall.
The Aussie analysis provides an early snapshot, although it's important to remember it reflects one recent cohort of buyers rather than predicting future market performance.
What happened after these buyers purchased? | |
|---|---|
Estimated value increased | 75.3% |
Estimated value unchanged | 4.9% |
Estimated value decreased | 19.8% |
Median increase (where values rose) | +$33,000 |
Median decrease (where values fell) | -$20,000 |
Source: Aussie analysis of likely 5% Deposit Scheme purchases lodged between October 2025 and April 2026. Figures compare estimated property values at submission with current automated valuations and represent a matched sample, not all scheme participants.
Among the properties analysed, around three quarters are now estimated to be worth more than they were when purchased, while around one in five are estimated to have declined in value. Where values did fall, the median decline was relatively modest.
The analysis compares estimated property values at the time of purchase with current automated valuations. It also represents a matched sample of buyers rather than every participant in the scheme.
Automated valuations are computer-generated estimates of a property's value based on recent sales, market trends and property characteristics, rather than a physical inspection.
That distinction matters because changes in property values don't necessarily reflect a homeowner's equity position. Equity can also increase as borrowers make loan repayments over time, while individual property values may move differently depending on local market conditions.
The findings shouldn't be interpreted as evidence that buying with a 5% deposit leads to property price growth or that today's buyers will experience the same outcomes.
Instead, the findings suggest many first-home buyers purchased in parts of the market where property values generally held up over the period analysed. While every market is different, the results show that a smaller deposit didn't automatically lead to poorer property value outcomes for this group of buyers.
Perhaps the biggest takeaway is that your deposit is only one piece of the puzzle.
Whether you're considering buying with a 5% deposit or waiting until you've saved more, understanding your borrowing power can help you make a more informed decision. An Aussie Broker can help you compare different deposit scenarios, estimate your repayments and explore what may be achievable based on your circumstances.