Can You Buy a Home With a 5% Deposit in NSW? A South Coast Guide

If you have been saving towards a home and the twenty per cent deposit goal keeps drifting further away, you are not alone. It is one of the most common conversations we have over coffee here in Berry. Prices move, life happens, and the finish line can feel like it keeps shifting.

Here is the good news. For many first home buyers in NSW, a twenty per cent deposit is no longer the only way in. You may be able to buy with a deposit as small as five per cent, without paying Lenders Mortgage Insurance. Let's walk through how that works on the South Coast.

What is the 5% Deposit Scheme?

The Australian Government 5% Deposit Scheme is the current name for what many people still know as the First Home Guarantee or the Home Guarantee Scheme. It was renamed and expanded on 1 October 2025.

Under the scheme, eligible first home buyers can purchase with a deposit of as little as five per cent. Single parents and legal guardians may be able to buy with as little as two per cent. The government provides a guarantee to your lender for the gap up to twenty per cent, so the lender treats your loan as though you had the full deposit. That is what removes the need for Lenders Mortgage Insurance.

One point worth being clear about. This is a guarantee to your lender, not a cash payment to you. You still borrow up to ninety five per cent of the property value, and you own one hundred per cent of your home from settlement. The government does not take a share.

Why skipping LMI matters

Lenders Mortgage Insurance is a cost you would usually pay when your deposit is under twenty per cent. On a typical purchase it can run into the tens of thousands of dollars. Avoiding it can free up money for the things that actually help you settle in, like moving costs, furniture, or simply keeping a sensible buffer in the bank.

What changed in October 2025

The October 2025 update made the scheme far more open than it used to be. There are now no income caps, so earning above the old thresholds no longer rules you out. There are no longer limited places each year, so there is no waitlist to miss out on. The property price caps also went up.

The price caps on the South Coast

This is where local knowledge counts. The price cap depends on where you are buying.

The Illawarra, around Wollongong, is treated as a regional centre and shares the higher cap of $1.5 million, the same as Sydney. Much of the wider South Coast and Shoalhaven sits under the standard regional NSW cap of $800,000. Because caps can vary by postcode, and some suburbs carry more than one postcode, it is always worth confirming the figure for the exact street you are looking at before you fall in love with a place.

Who can use the scheme?

The general eligibility points are straightforward. You need to be an Australian citizen or permanent resident, at least eighteen years old, and either a first home buyer or someone who has not owned property in Australia in the past ten years. You will need a deposit of at least five per cent, you must intend to live in the home as an owner occupier, and the loan needs to be a principal and interest loan from a participating lender. You can apply on your own or with one other person, such as a partner, friend or family member.

A few things to weigh up

A smaller deposit is a real advantage, and it is still worth going in with your eyes open. A smaller deposit means a larger loan and higher repayments, and less of an equity buffer early on. None of that is a reason to wait forever. It is simply a reason to map it out properly and make sure the numbers sit comfortably for your situation. There is usually more than one way to achieve a goal, and the right path is the one that fits your life.

How a broker helps

You cannot apply for the scheme directly. It is accessed through a participating lender, and not every lender is on the panel. This is where having someone in your corner makes a difference. We can confirm your eligibility, check the price cap for your specific postcode, compare loans across a panel of participating lenders, and look at whether you can pair the scheme with NSW first home buyer stamp duty concessions to reduce your upfront costs further.

If you have been wondering whether a five per cent deposit could be your way in, the honest answer for many South Coast buyers is yes.

It starts with a coffee. Reach out and we will map out what is possible for you.