Government Home Loan Schemes: Everything You Need to Know

Federal Guarantees Remove the LMI Barrier for Coronet Bay Buyers

The Australian Government 5% Deposit Scheme lets eligible buyers purchase with a 5% deposit without paying Lenders Mortgage Insurance. Housing Australia provides a guarantee to the lender of up to 15% of the property value for first home buyers and up to 18% for single parents, enabling borrowers to reach a combined deposit and guarantee of 20% without paying LMI.

No income caps apply and no annual place limits apply. Applications are made through a panel of participating lenders, which expanded from 3 major banks to include 28 non-major lenders from October last year.

For buyers in Coronet Bay, the property price cap is $650,000 in regional Victoria outside Geelong. Both the purchase price and the lender's assessed value must fall at or below that cap. Consider a couple purchasing a property valued at $620,000. With a 5% deposit of $31,000 and the Housing Australia guarantee covering the gap to 20%, they avoid paying LMI, which would typically add $15,000 to $20,000 to their upfront costs. That saving can be redirected toward settlement costs or retained as a buffer after purchase.

The scheme applies to both new and established homes. Single parents or legal guardians can access the same guarantee with a deposit as low as 2%. If you're weighing whether this program suits your circumstances, a broker can confirm eligibility and connect you with a participating lender on the panel. You can explore more about the home loan application process and how guarantees fit within your overall borrowing strategy.

Help to Buy Offers Equity Partnership for Buyers with Limited Deposits

The Help to Buy scheme opened to applicants in December last year and allows the Australian Government to contribute up to 40% of the purchase price for a new home and up to 30% for an existing home in exchange for a proportional equity stake. A minimum 2% deposit is required.

From July this year, income limits are $103,000 for individual applicants and $165,000 for joint applicants or single parents, as shown on the ATO Notice of Assessment for the previous financial year. Property price caps vary by location and are confirmed using the postcode search tool on the first home buyers government website.

As an example, a single buyer earning $95,000 annually purchases an established home valued at $500,000 in Coronet Bay. The government contributes 30%, or $150,000, in exchange for a 30% equity share. The buyer provides a 2% deposit of $10,000 and borrows $340,000 from a participating lender. Monthly repayments are calculated on the smaller loan amount, not the full purchase price. When the property is sold or the buyer chooses to buy out the government's share, the government receives 30% of the sale price or valuation at that time. If the property sells for $600,000, the government receives $180,000.

Up to 10,000 places are available nationally in the current financial year. Tasmania joined the scheme in June, completing the national rollout. Applications are made through participating lenders, not directly to Housing Australia. You cannot combine Help to Buy with the 5% Deposit Scheme, but state-based concessions such as stamp duty exemptions or grants can generally be used alongside either federal program. Restrictions vary by jurisdiction, so confirming the interaction with your broker or lender is a necessary step before applying.

Using Super Contributions to Build a Deposit Through the FHSS Scheme

The First Home Super Saver Scheme allows first home buyers to make voluntary contributions into their superannuation fund and apply to release eligible amounts toward a deposit. You can contribute up to $15,000 per financial year, with a total cap of $50,000 across all years, plus deemed earnings on those contributions.

Voluntary concessional contributions, such as salary sacrifice, are taxed at 15% within the fund rather than at your marginal tax rate. When you apply to release the funds through the ATO, a release tax of up to 30% applies, minus a $1,680 offset. The combined tax treatment still leaves you ahead compared to saving the same amount in a standard bank account taxed at your marginal rate.

Consider a buyer who salary sacrifices $15,000 per year for two years. After tax within the fund and deemed earnings, they accumulate roughly $28,000 available for release. After the release tax and offset, they receive around $24,000 to put toward their deposit. That amount, combined with other savings, might be enough to reach the 5% threshold under the government guarantee scheme.

You must be over 18, never owned property in Australia, and intend to live in the property for at least six months within the first year of purchase. You can make the request to release funds once you have signed a contract or are ready to build. Only one withdrawal is permitted, so timing the request to align with your settlement date is important. The FHSS scheme can be used in combination with both the 5% Deposit Scheme and Help to Buy, provided you meet the eligibility criteria for each program.

Victoria's First Home Owner Grant Applies to New Builds Only

Victoria offers a First Home Owner Grant of $10,000 for eligible buyers purchasing or building a new home. The property must be valued at $750,000 or less. You must be over 18, an Australian citizen or permanent resident, and a first home buyer. You or your partner cannot have previously received the grant. You must move into the property within 12 months of completion or settlement and live there for a continuous period of 12 months.

The grant applies only to new homes, which includes a home purchased from a builder or developer that has not been previously occupied, or a home you build yourself on land you own. Established homes, including those that have been renovated, do not qualify. The grant is paid at settlement and can be used as part of your deposit or to cover other upfront costs.

Victoria also offers a stamp duty exemption for first home buyers purchasing a property valued up to $600,000, and a concessional rate for properties valued between $600,000 and $750,000. These concessions apply to both new and established homes, unlike the grant. For a buyer in Coronet Bay purchasing an established home valued at $580,000, the stamp duty exemption saves roughly $30,000. That buyer would not receive the $10,000 grant because the property is not new, but the stamp duty saving is substantially larger.

If you're comparing new builds with established properties, the grant and stamp duty settings should be factored into your total upfront cost, not just the sticker price. A $650,000 new build qualifies for both the grant and the stamp duty concession, whereas a $580,000 established home qualifies only for the concession. A broker familiar with the local market in Coronet Bay can model both scenarios with current pricing and help you understand the net position after all government support is applied.

Combining Federal and State Programs Without Overlapping Restrictions

You can generally use the 5% Deposit Scheme or Help to Buy alongside state-based stamp duty concessions and grants, but some combinations are not permitted. You cannot use both federal schemes simultaneously. If you apply for Help to Buy, you cannot also use the 5% Deposit Scheme guarantee on the same purchase.

State grants and concessions each carry their own eligibility requirements. Victoria's First Home Owner Grant requires the property to be new and valued at $750,000 or less. The stamp duty exemption and concession apply to properties up to $750,000 but cover both new and established homes. The federal schemes have separate price caps. In regional Victoria outside Geelong, the cap is $650,000 for the 5% Deposit Scheme. Help to Buy has its own cap confirmed by postcode.

A buyer using the 5% Deposit Scheme to purchase an established home in Coronet Bay valued at $640,000 would qualify for the federal guarantee and the state stamp duty exemption, but not the $10,000 grant because the home is not new. If the same buyer chose a new build valued at $640,000, they would qualify for all three: the federal guarantee, the state grant, and the stamp duty exemption. If the new build were valued at $680,000, they would exceed the federal price cap and lose access to the guarantee, but still qualify for the state grant and a concessional stamp duty rate.

Understanding which combination delivers the most support requires comparing your deposit size, the property type, the purchase price, and the applicable caps and thresholds across both levels of government. Running scenarios with actual numbers before committing to a property type or price range will show you where the value sits. If you're also considering refinancing an existing loan to fund part of the purchase, the interaction with these schemes changes again, and seeking advice before proceeding is the clearest way forward.

When Government Schemes Don't Apply and What Happens Next

Not every buyer qualifies for a government scheme, and not every property falls within the caps. If you've previously owned property, you're excluded from the 5% Deposit Scheme, Help to Buy, and most state grants. If your income exceeds the Help to Buy limits, that program is not available. If the property you want to purchase is above the applicable price cap, the guarantee or equity contribution does not apply.

In those situations, you're looking at a standard home loan structure. If your deposit is below 20% of the property value, you'll need to pay LMI unless you qualify for a professional waiver or have a family guarantee in place. If you have a 10% deposit on a $700,000 property in Coronet Bay, the loan amount is $630,000, and the LVR is 90%. LMI on a loan of that size typically ranges from $18,000 to $25,000, depending on the lender and your circumstances. Some lenders allow that premium to be capitalised into the loan rather than paid upfront, which preserves your cash but increases the amount you're borrowing.

Alternatively, waiting until you have a 20% deposit removes the LMI cost entirely. A 20% deposit on a $700,000 property is $140,000. If you currently have $70,000 saved and can add $15,000 per year, you'd reach the target in just under five years. Prices may rise during that period, which pushes the target further out. Whether you purchase now with LMI or wait to avoid it depends on your income stability, your timeline, and what's available in your target area.

Another pathway is using a guarantor, typically a parent, who offers equity in their own property as additional security. That can reduce or eliminate the LMI cost without requiring you to save a larger deposit. Guarantor arrangements carry obligations and risks for both parties, and not all lenders offer them on the same terms. Working through the detail with a broker who understands your family's position and the lender's criteria will show whether it's workable in your situation. You can also review your borrowing capacity to understand how lenders assess your income, expenses, and deposit when determining how much they'll lend.

Call one of our team or book an appointment at a time that works for you. We'll assess your eligibility for federal and state schemes, model the upfront costs across different property types and price points, and connect you with lenders whose programs align with your deposit, income, and timeline.

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