When to Use Government Schemes as a First Home Buyer

Most first home buyers in Bellevue Hill assume they need a 20% deposit to avoid lenders mortgage insurance. That assumption costs them time and delays their purchase unnecessarily.

The Australian Government 5% Deposit Scheme removes the LMI barrier entirely for eligible buyers. You can purchase with a 5% deposit, and Housing Australia guarantees the difference between your deposit and the 20% threshold. No annual place limits apply, and no income caps restrict access. Applications are made through a participating lender, not directly through Housing Australia.

For Bellevue Hill, the property price cap is $1,500,000 because the suburb falls within the Sydney capital city category under the scheme's postcode classifications. Both the purchase price and the lender's assessed value must fall within that cap.

New South Wales also offers stamp duty relief for first home buyers. A full exemption applies to properties valued up to $800,000, with a sliding concession for properties between $800,001 and $1,000,000. Given that most properties in Bellevue Hill sit well above the $1,000,000 threshold, the stamp duty concession will not apply to purchases in the immediate area. You may still access the federal 5% Deposit Scheme if the property falls within the $1,500,000 cap and you meet the eligibility criteria.

How the 5% Deposit Scheme Works in Practice

You need a 5% deposit plus enough cash to cover settlement costs. Settlement costs typically include legal fees, building and pest inspections, loan establishment fees, and conveyancing.

Consider a buyer purchasing an apartment in Bellevue Hill under the scheme. The property is valued at $1,450,000. The buyer provides a 5% deposit and covers settlement costs separately. Housing Australia guarantees the remaining 15% of the property value, which means no LMI is payable. The buyer accesses a variable rate loan with an offset account through a participating lender.

The scheme does not restrict loan features. Fixed rate, variable rate, and split loan structures may be available depending on the participating lender. Offset accounts and redraw facilities are typically offered. Confirm available features directly with your lender before proceeding.

Combining the 5% Deposit Scheme with State Concessions

The federal scheme can generally be used alongside state stamp duty concessions. If you are purchasing a property that qualifies for the New South Wales stamp duty exemption or concession, you can also access the 5% Deposit Scheme on the same purchase.

The First Home Owner Grant in New South Wales is $10,000 and applies only to new builds or substantially renovated homes valued up to $600,000, or land and build contracts up to $750,000. The grant does not apply to established homes. Given the property values in Bellevue Hill, most buyers in the area will not meet the FHOG eligibility criteria. The scheme remains relevant if you are considering a land and build project elsewhere or purchasing a new apartment in a nearby suburb where values fall within the cap.

You cannot combine the 5% Deposit Scheme with Help to Buy. Help to Buy is a shared equity program where the Australian Government contributes up to 30% of the purchase price for an existing home in exchange for a proportional equity stake. Income limits apply: $100,000 for individuals and $160,000 for joint applicants. If you exceed those income thresholds, Help to Buy is not available to you. If you are within the income limits, you need to decide whether a smaller deposit with shared equity or a 5% deposit with full ownership suits your circumstances.

Using Super Savings Through the First Home Super Saver Scheme

The FHSS Scheme allows you to make voluntary contributions into your superannuation fund and apply to release eligible amounts toward your deposit. You can release up to $15,000 of personal contributions from any one financial year, with a total cap of $50,000.

Concessional contributions are taxed at 15% rather than at your marginal income tax rate. If your marginal rate is 32.5% or higher, the tax saving is meaningful. Non-concessional contributions can also be released, though they do not attract the same tax benefit.

You need to obtain a determination from the ATO before signing a purchase contract. The determination confirms the amount you are eligible to release. The ATO processes the release after you provide a signed contract of sale. The released amount is paid to you, not directly to the seller or lender.

This scheme works alongside the 5% Deposit Scheme. Released super contributions can form part or all of your 5% deposit. First home buyers in our experience use the FHSS Scheme to build their deposit faster while reducing the tax paid on those savings.

Gift Deposits and Genuine Savings Requirements

Lenders assess whether your deposit is genuine savings or a gift from a family member. Genuine savings are funds you have saved over a minimum period, typically three months. Gifts from parents or other relatives are accepted by most lenders, though some require a portion of the deposit to be genuine savings.

Under the 5% Deposit Scheme, lenders apply their usual deposit source policies. If your entire deposit is a gift, some participating lenders will accept it. Others will require at least part of the deposit to be genuine savings. Confirm the policy with your lender before assuming a gifted deposit will be accepted.

If you are considering a guarantor loan instead, a parent or family member uses equity in their own property to support your borrowing. This removes the need for a cash deposit entirely in some cases. The guarantor arrangement can be structured so that the guarantor's exposure is limited to a specific amount or removed entirely once you have built sufficient equity in your own property.

Pre-Approval and the Application Process

Pre-approval gives you certainty about your borrowing capacity before you start searching for a property. A lender assesses your income, expenses, deposit, and credit history, then confirms the amount they are prepared to lend.

Pre-approval under the 5% Deposit Scheme follows the same process as a standard home loan application. You nominate the scheme as part of your application, and the lender confirms whether you meet the eligibility criteria. The lender also confirms whether the property you intend to purchase falls within the applicable price cap.

Pre-approval is typically valid for three to six months. If you find a property within that period, you proceed to formal approval. The lender conducts a valuation and confirms that the property value falls within the scheme cap. If the valuation comes in below the purchase price, the lender uses the lower figure to determine eligibility.

The application requires proof of income, identification, and evidence of your deposit. If you are self-employed, lenders typically require two years of tax returns and financial statements. Proof of residency status is also required because eligibility is restricted to Australian citizens and permanent residents.

When to Speak to a Broker

Not all lenders participate in the 5% Deposit Scheme. The list of participating lenders is published by Housing Australia, but loan features, interest rates, and deposit source policies differ between lenders. A broker compares the participating lenders and identifies which one offers the loan structure that suits your circumstances.

If you are using the FHSS Scheme, receiving a gifted deposit, or combining multiple funding sources, a broker structures the application so that all components align with lender requirements. Misalignment between the deposit source, the release timing from the ATO, and the lender's settlement date can delay or derail a purchase. A broker coordinates those elements before contracts are signed.

Bellevue Hill buyers often have more complex income structures, including investment income, trust distributions, or overseas earnings. Lenders assess these income types differently. Some lenders apply a discount to investment income or exclude certain components entirely. A broker identifies which lender treats your income most favourably and maximises your borrowing capacity.

Call one of our team or book an appointment at a time that works for you. We will review your deposit, income, and property preferences, confirm your eligibility for the 5% Deposit Scheme or other programs, and structure your application to match the lender best suited to your situation.

Frequently Asked Questions