Saving a deposit in 2026 is still hard, but it is no longer only about saving 20%. Here are five practical ways first home buyers can buy sooner, from the 5% Deposit Scheme to FHSS and family guarantees.
The reality for first home buyers in 2026
Saving a deposit in 2026 still feels like a long game, and the numbers explain why. PropTrack’s April 2026 Home Price Index put the median capital-city home value at $1,017,000. On that number, a traditional 20% deposit is about $203,400. Even a 5% deposit is still roughly $50,850 before you add stamp duty, conveyancing and the rest of the upfront costs.
The backdrop may improve a little over time: the May 2026 Budget says investor tax changes are intended to shift more housing toward owner-occupiers, but those reforms start from 1 July 2027, so they are a medium-term tailwind rather than an instant affordability reset.
1. The Australian Government 5% Deposit Scheme
The first lever to understand is the Australian Government 5% Deposit Scheme. Since 1 October 2025, it has become much broader than many buyers realise.
There are now no income caps and no waitlists for first home buyers using the scheme, and the current eligibility settings cover Australian citizens and permanent residents aged 18 or over who either have never owned property or have not owned property or land in Australia in the past 10 years.
Buyers need at least a 5% deposit, must buy below the location price cap, and must take out an owner-occupier principal-and-interest loan through a participating lender. Joint applications are allowed with one other person, including a partner, friend or family member.
It also matters that the lender panel is now broad. Housing Australia says the scheme is available through more than 30 participating lenders, including ANZ, Commonwealth Bank, NAB, Westpac, St.George, Bendigo Bank, Great Southern Bank and several customer-owned and regional lenders.
In practice, this means buyers should check scheme eligibility early rather than assuming they need to save a full 20% deposit first.
2. The First Home Super Saver Scheme (FHSS)
The second lever is the First Home Super Saver Scheme, which is still underused.
The ATO says you can make voluntary super contributions and later apply to release up to $50,000 of eligible contributions across all years, subject to an annual cap of $15,000 counted per financial year toward the scheme.
The tax advantage is the reason many buyers use it. Concessional contributions are generally taxed at 15% inside super, which is often lower than a person’s marginal tax rate. Assessable FHSS amounts also receive a 30% FHSS tax offset.*
For release calculations, 100% of non-concessional contributions and 85% of concessional contributions count, along with associated earnings.
Once you request a release, you generally have 12 months to sign a contract to buy or build, and you must notify the ATO within 90 days of signing.
3. Family guarantor structures
The third lever is a parental or family guarantee, and it helps to strip away the myths.
A guarantor is not simply “helping with the deposit”. They are making a legal promise to cover the guaranteed part of the debt if the borrower cannot meet repayments.
A limited guarantee usually covers only a portion of the loan, often enough to bridge the gap to a 20% deposit and help avoid lenders mortgage insurance (LMI). A full guarantee can expose the guarantor to the entire debt plus interest.
The important distinction is risk. A guarantor is putting real equity on the line, which can affect their future borrowing capacity and financial flexibility. In some situations, the guarantee can later be removed once the borrower’s loan falls below around 80% of the property value.
For some families, this is a smart short-term strategy. For others, it creates unnecessary pressure. The structure matters.
4. Genuine savings still matter
The fourth lever is genuine savings.
A common lender benchmark for higher-LVR lending is around 5% in genuine savings with roughly three months of demonstrated history. Some lenders may also accept a strong rental history as evidence of savings behaviour.
The easiest way to strengthen an application is to keep things simple. Use a separate savings account, automate regular transfers into it, and avoid constantly moving money between accounts.
From a lender’s perspective, clean and consistent savings behaviour is easier to assess than irregular deposits scattered across multiple accounts.
5. Look where the market is softer
The fifth lever is where you search.
For many buyers, that means outer-ring suburbs, regional cities, smaller dwellings or selected off-the-plan stock where your deposit stretches further.
Affordable outer-suburban markets and selected regional areas continue to attract strong first home buyer demand because they offer a lower entry point without completely sacrificing infrastructure or lifestyle.
Off-the-plan purchases can also help some buyers enter the market sooner because they may secure today’s price while continuing to save during construction. The trade-off is that delays or falling valuations can create finance issues at settlement.
The best buying location is rarely the one everyone else is chasing at the same time.
Final thoughts
Every deposit strategy has a fit-for-purpose answer. The fastest way to find yours is a quick chat with one of our brokers.
*This article contains general information only and does not take your personal financial or tax circumstances into account. Fundd does not provide tax advice. Before making decisions about deductions, loan structures or EOFY strategies, speak with a registered tax agent or qualified financial professional.
