If you're still grinding away trying to save a 20% deposit, you're playing 2010's game in 2026. The buyers actually getting keys this year are using 5%, 10% or 15% deposits, stacking government schemes, and skipping LMI entirely. Here's how it actually works.
The 20% myth, busted
A 20% deposit was the old benchmark because anything less triggered Lenders Mortgage Insurance (LMI), often tens of thousands of dollars. That maths still holds for most buyers. But first home buyers now have four legitimate workarounds that either remove LMI, top up the deposit, or do both.
The four levers worth knowing:
- First Home Owner Grant (FHOG) — a state-based cash grant for new builds.
- First Home Guarantee (FHBG) — federal scheme letting you buy with 5% and no LMI.
- First Home Super Saver (FHSS) — save your deposit inside super at a lower tax rate.
- Parent guarantor / family pledge — use a parent's equity to skip LMI entirely.
None of these are new. What's new is how aggressively buyers are stacking them in 2026.
The 5% deposit buyer: First Home Guarantee
The First Home Guarantee (FHBG) is the heaviest hitter on this list. The government guarantees the gap between your 5% deposit and 20%, which means no LMI, no waiting, no parent involved.
Example. Sarah, 28, buying a $650,000 unit in Brisbane:
- 5% deposit: $32,500
- Stamp duty: typically waived or concessional for FHBs under most state thresholds
- LMI saved: roughly $25,000+
- Loan: $617,500
She needed about $35-40k all-in instead of $130k. That's 3-4 years off her timeline.
The catches: there are place caps each financial year, property price caps by region, and income tests ($125k single / $200k couple). If you qualify, this is usually the cleanest path.
The 5% deposit + cash grant buyer: FHBG plus FHOG
Going new build? Stack FHBG with your state's First Home Owner Grant. Grants vary: $10,000 in NSW, $10,000 in QLD (recently expanded for new builds), $10,000 in VIC, up to $30,000 in WA depending on the program.
Example. Jack and Priya buying a $720,000 house-and-land package in regional QLD:
- 5% deposit: $36,000
- FHOG: $30,000 (current QLD new build grant)
- Effective cash needed from them: ~$36k plus costs, with the grant offsetting stamp duty and settlement costs
This is why new builds and duplex builds are getting so much first home buyer attention right now.
The 10% deposit buyer: FHSS Super Saver
If you earn a decent salary and you're 2-3 years out, the First Home Super Saver (FHSS) is the most underused lever in Australia.
You salary-sacrifice up to $15,000 per year (max $50,000 total) into super, then withdraw it for your first home. Because contributions are taxed at 15% instead of your marginal rate (often 32.5% or 37%), you effectively get a 17-22% boost on every dollar saved.
Example. Mia, 30, earning $95,000. She salary-sacrifices $15,000/year for 3 years:
- Saved in super: $45,000 (after contributions tax)
- Equivalent post-tax saving outside super: ~$30,000
- Effective bonus: ~$15,000
Combine that with a 10% deposit and the FHBG isn't even necessary, you've sidestepped LMI through deposit size alone on some lenders.
The 15% (or zero) deposit buyer: parent guarantor
If your parents own a home with equity, a family pledge guarantee lets them use a portion of their equity as security against your loan. You can borrow up to 100% of the purchase price plus costs, no LMI, no FHBG cap to worry about.
This suits buyers who:
- Earn well but can't save fast enough against rising prices
- Want to buy above FHBG price caps (inner Sydney, Melbourne, Brisbane)
- Have parents with an unencumbered or low-debt home willing to help
The guarantee is usually released within 3-5 years once you've paid down the loan or the property has grown in value. Parents aren't gifting cash, they're lending security.
Which strategy suits which buyer?
- Saving slowly, modest income, flexible on location → FHBG + FHOG on a new build
- Strong salary, 2-3 years to go → FHSS inside super, then 10% deposit purchase
- Buying above the price caps or in a capital city → Parent guarantor
- Stuck on serviceability, not deposit → Consider HomePay to get 12 months of zero repayments and breathing room
What to do next
The right combination depends on your income, your timeline, your state, and whether you're buying new or established. Get it wrong and you leave $20-50k on the table. Get it right and you're in the market 2-4 years earlier than you thought.
We map this out for first home buyers every week. Book a strategy call or learn more about our first home buyer service and we'll show you exactly which levers to pull for your situation.