First home buyers
Budget 2026 for first home buyers: the 5% deposit, shared equity & what to actually do
The Budget expanded the 5% deposit scheme and topped up shared-equity support. Here is how to use it without paying the ‘scheme premium’ at the auction.
For first home buyers, the 2026–27 Budget is unambiguously good news. The 5% deposit scheme is no longer rationed to a small annual cap, LMI is waived for eligible buyers, and a national shared-equity contribution can cover up to 30%–40% of a new home for income-tested applicants.
5%
Minimum deposit, scheme eligible
$0
Lenders mortgage insurance payable
Up to 40%
Govt shared equity on new homes
Who actually qualifies
- Australian citizens 18+ buying their first home as an owner-occupier
- Income test (singles and couples) indexed annually — check current thresholds with your broker
- Property price cap by capital city and regional zone
- Must move in within the required occupancy window
The trap: the ‘scheme premium’
Every time a deposit scheme is widened, vendor agents in the eligible price brackets get bolder at auction. We routinely see properties sitting at $719k transact at $738k once buyers realise they qualify with 5% down. That is the scheme premium — and it eats most of the LMI saving in one bid.
The scheme is a financing tool, not a buying strategy. If it changes what you buy, you are paying for it twice.
Illustrative cost of getting in early via 5% deposit ($700k purchase)
$ over 10 years
How to use the changes well
- Decide between own-home and rentvest first. The scheme is generous for owner-occupiers, but if your goal is wealth creation, rentvesting may still win — model both before you pick.
- Get a broker who has done the scheme before. The participating lender list matters, and so does sequencing.
- Choose the suburb on fundamentals, not the price cap.A property at the very top of the cap in a weak corridor is the classic scheme mistake.
- Stress-test for rate moves. A 95% LVR loan at 6% is fragile at 7.5%. Build a 12-month buffer.
What to do in the next 30 days
Pull your last two years of payslips, get a borrowing-capacity assessment under both the standard and the scheme criteria, and shortlist three suburbs that pass our owner-occupier-ratio and infrastructure screens. If all three fail, do not buy — extend your search radius before you compromise on the asset.
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FAQ
Frequently asked
- Can I use Help to Buy and the First Home Guarantee together?
- No — they're alternative pathways. Help to Buy reduces your loan size via government equity; the First Home Guarantee reduces your deposit requirement. Most buyers benefit more from Help to Buy if eligible.
- What happens with Help to Buy when I sell?
- The government takes its proportional share of the sale proceeds (including any capital growth on its share). You can also 'buy out' the government stake at market value at any time.
Written & reviewed by
The NOVAQ founders
Every NOVAQ article is written or reviewed by our founders — both Chartered Accountants who actively invest in Australian property. Not journalists, not interns.
Shreyas Doshi
Co-Founder · Chartered Accountant
15+ yrs in international tax, compliance, structuring and advisory across Deloitte, PwC and a large multinational mining company. Multi-state personal portfolio under different structures.
Yuvraj Kapadia
Co-Founder · CA, CPA, SMSF Specialist
ASIC-registered SMSF Auditor, Tax Agent, licensed Finance & Mortgage Broker and Buyer's Agent. Multi-state personal portfolio under different structures.
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