How Much Deposit Do You Really Need? The 5% Deposit Scheme and Keystart Explained
Buy a Perth home with a 5% deposit and no LMI? See how the 5% Deposit Scheme and Keystart work, and which may suit you.
The short version
- You do not always need a 20% deposit. The Australian Government 5% Deposit Scheme (formerly the First Home Guarantee) lets eligible buyers purchase with as little as 5% and without paying lenders mortgage insurance (LMI).
- Income caps for the scheme were removed and places are now unlimited, so more people qualify than before.
- The Perth price cap is $850,000.
- WA’s own Keystart loans are another route, with their own limits.
Saving a 20% deposit can take years, and prices often rise while you save. That is why so many first home buyers ask the same question: can I buy sooner with less? For many people in Perth, the answer is yes. Here are the two main options.
Option 1: the 5% Deposit Scheme (formerly the First Home Guarantee)
This is a federal government scheme. It does not hand you cash. Instead, the government acts as a guarantor for part of your loan, so a lender can lend you more than 80% of the home’s value without charging you LMI.
Since 1 October 2025, the income caps have been removed and the number of places is unlimited. You still need to be an eligible first home buyer, buy an eligible property, and use a participating lender. You must also live in the home.
When your deposit is under 20%, lenders normally charge LMI. It protects the lender, not you, and it can add thousands of dollars to your costs. Avoiding it is one of the biggest savings the scheme offers.
Option 2: Keystart
Keystart is the Western Australian Government’s home loan lender, set up to help people get into their first home with a smaller deposit. It has several products, and each has its own price and income limits. As at 15 April 2026:
| Keystart product | Property price limit | Good to know |
|---|---|---|
| Low Deposit | $860,000 | Income limits apply: $155,000 for a single borrower, $228,000 for couples |
| Urban Connect | $800,000 | Check Keystart for the areas and property types that qualify |
| Shared Ownership | $720,000 | You buy part of the home with the state, then buy more over time |
Keystart’s rules and limits change from time to time. Check the Keystart website for the current details before you decide.
Which one is better?
There is no single answer. It depends on your income, the price of the home, where you want to buy and how much you have saved. Some things to think about:
- Price. The 5% Deposit Scheme cap is $850,000 in Perth. Keystart’s Low Deposit limit is $860,000. If you are looking near those numbers, the details matter.
- Income. The 5% Deposit Scheme has no income cap now. Keystart does.
- Lender choice. The 5% Deposit Scheme is offered through participating lenders, so you can compare rates and features. Keystart is a single lender.
- Your plans. Think about whether you might want to refinance in a few years, and how each option would handle that.
Do not forget the other costs
Even with a 5% deposit, you still need money for stamp duty (which may be nil for first home buyers on homes up to $600,000), legal and settlement fees, inspections and moving. Work out the full number before you start looking.
Get the WA First Home Buyer Playbook
See how the 5% Deposit Scheme, Keystart, grants and stamp duty fit together, with a simple worksheet for your own numbers.
Send me the playbookWe will email it straight to you.Your next steps
- Check your eligibility for the 5% Deposit Scheme and Keystart.
- Know your price range, and keep it under the relevant cap.
- Talk to a broker who can compare participating lenders for you.
- Get your pre-approval before you start making offers.
Sources and when we checked
Figures checked on 16 October 2026. Sources: Australian Government 5% Deposit Scheme (firsthomebuyers.gov.au), formerly the First Home Guarantee, including the changes from 1 October 2025; Keystart (product limits as at 15 April 2026). Rules, rates and thresholds can change, so confirm with the official sources or a broker before you act. This article is general information only and is not personal advice.
Want to talk it through?
Book a chat with Richard. He will listen first, then explain your options clearly. No pressure, no jargon.
This article is general information only and does not take into account your personal financial situation, needs or objectives. Consider whether it is appropriate for you before acting on it. Figures and rules can change, so always check the latest details with the relevant authority.
Richard Morris is a Credit Representative (CRN 570376) of Strategic Mortgages Perth (ACR 570592), authorised under Connective Broker Services Pty Ltd (Australian Credit Licence 389328). This is not tax or legal advice. Please speak to your accountant or solicitor about your own situation.