Smart ways to approach your first home purchase

Understanding the Australian Government 5% Deposit Scheme

The Australian Government 5% Deposit Scheme allows you to purchase with a 5% deposit without paying Lenders Mortgage Insurance. Housing Australia guarantees the difference between your deposit and 20% of the property value, which removes a cost that typically runs into thousands of dollars. The scheme has no income caps and no annual place limits, so applications remain open year-round through participating lenders.

For Queensland buyers, the property price cap is $1,000,000 in capital city and regional centres, which includes Mermaid Waters and the broader Gold Coast. Both the purchase price and the lender's assessed value must sit at or below that cap. Consider a buyer purchasing an apartment in Mermaid Waters. With a 5% deposit, they avoid LMI and can access home loan options including fixed, variable, or split structures depending on their participating lender. The scheme works alongside Queensland's stamp duty concessions, so you can layer both benefits into the one transaction.

Applications are made through your lender, not directly through Housing Australia. Your broker arranges the application as part of the standard loan process, and the guarantee sits in the background without requiring separate paperwork from you.

Queensland stamp duty concessions for new and established homes

Queensland offers two distinct stamp duty concessions depending on whether you purchase a new home or an established property. For new homes purchased under contracts signed from 1 May 2025, the first home new home concession reduces transfer duty to nil on the residential land component, with no price cap. For established homes, the first home concession deducts up to $17,350 from the calculated duty for properties valued up to $709,999, phasing out in $10,000 bands until it reaches nil at $800,000.

In Mermaid Waters, where canal-front apartments and established homes make up much of the market, the established home concession applies to most purchases. Duty is not eliminated entirely under this concession, but the reduction brings the upfront cost down considerably. A buyer purchasing an established unit does not pay the standard rate; they pay the home concession rate minus the first home concession deduction.

For contracts entered into from 1 August 2026, at least one applicant must be an Australian citizen, permanent resident, or specified foreign retiree. If you are purchasing with a partner, only one of you needs to meet that residency requirement.

The $15,000 First Home Owner Grant in Queensland

Queensland provides a $15,000 grant for new homes valued under $750,000, available for contracts signed from 1 July 2026. The grant does not apply to established homes. A new home includes a newly built house, a house and land package, or an apartment purchased off-the-plan where the property has not been previously occupied as a residence.

The grant was $30,000 for contracts signed between 20 November 2023 and 30 June 2026, but that higher amount no longer applies. If you signed a contract during that period, the $30,000 grant applies. If you sign now, the $15,000 grant is what you receive.

Mermaid Waters has limited new housing stock compared to areas further north on the Gold Coast, so most buyers in the suburb will not qualify for the grant. If you are considering a new apartment development or a knockdown rebuild, confirm the property meets the definition of a new home and check the contract date carefully.

Low deposit options and how they compare

The 5% deposit scheme is not the only option. You can purchase with a 10% deposit and pay LMI, or you can use a guarantor to avoid LMI altogether without needing a government guarantee. Each approach has trade-offs.

With a 10% deposit and LMI, you pay the insurance premium upfront or capitalise it into the loan. The premium varies depending on the deposit size and the lender, but it gives you access to a broader panel of lenders and more loan features. With the 5% deposit scheme, you are restricted to participating lenders, and not all lenders offer the same loan features under the scheme. Some participating lenders do not offer offset accounts or redraw facilities on loans written under the guarantee, so confirm the loan structure before you commit.

A guarantor arrangement involves a family member using their property as additional security. You avoid LMI and can borrow with a smaller deposit, sometimes as low as 5% or less. The guarantor's liability is limited to the portion of the loan that exceeds 80% of the property value, and the guarantee can be released once you build enough equity to refinance. We regularly see parents act as guarantors for buyers in Mermaid Waters, particularly where the buyer has stable income but limited savings.

Pre-approval and why it matters in a canal-side market

Pre-approval confirms how much you can borrow and gives you confidence to make an offer when the right property appears. In Mermaid Waters, where waterfront and near-water properties attract strong buyer interest, a pre-approval positions you to move quickly without waiting for finance approval after you sign.

A pre-approval is not a guarantee. Lenders reassess the application before final approval, and any change to your financial position between pre-approval and settlement can affect the outcome. That includes taking on new debt, changing jobs, or making large purchases on credit. Treat the pre-approval as conditional and avoid any financial changes until settlement is complete.

Pre-approval typically lasts 90 days, though some lenders offer 120 days. If you have not found a property within that period, the pre-approval lapses and you need to reapply. Interest rates, lending policies, and your financial position may have changed in that time, so the second pre-approval may differ from the first.

Fixed, variable, and split loan structures

A variable interest rate moves with the market, which means your repayments can increase or decrease depending on rate changes. A fixed interest rate locks in your rate for a set period, usually one to five years, after which the loan reverts to the variable rate unless you refinance or fix again.

A split loan divides your borrowing between fixed and variable portions. You lock in part of the loan for certainty and leave the rest variable for flexibility. This approach suits buyers who want stable repayments on part of their loan while retaining access to features like offset accounts and unlimited extra repayments on the variable portion.

In our experience, buyers in Mermaid Waters who expect their income to increase or who plan to make lump sum repayments tend toward variable or split structures. Buyers who prefer certainty and want to lock in their repayment amount for the next few years lean toward fixed rates. The decision depends on your financial position and how you expect that position to change over the life of the loan. If you are unsure which structure fits, your mortgage broker in Mermaid Waters can model each option with your specific numbers.

Using the First Home Super Saver Scheme to build your deposit

The First Home Super Saver Scheme allows you to make voluntary contributions into your superannuation fund and release up to $50,000 toward your deposit. Concessional contributions are taxed at 15% rather than your marginal tax rate, which can accelerate your savings if you are in a higher tax bracket.

You can release up to $15,000 of personal contributions from any one financial year, and the total amount you can release is capped at $50,000 across all years. You need to obtain a determination from the ATO before signing a purchase contract, and the released amount is paid to you rather than directly to the vendor or your lender.

The scheme works well for buyers who have a stable income and can afford to salary sacrifice or make personal contributions over several years. It does not suit buyers who need to purchase within the next few months, as building a meaningful balance takes time. If you have already started contributing, check your super fund's records and confirm the contribution amounts before applying for the determination.

Offset accounts, redraw, and loan features that matter

An offset account is a transaction account linked to your home loan. The balance in the offset account reduces the loan balance used to calculate interest, which lowers the interest you pay without requiring you to make extra repayments. A redraw facility allows you to access extra repayments you have made on the loan, but access is controlled by the lender and may be restricted depending on the loan terms.

Offset accounts offer more flexibility because the funds remain in your account and are not locked into the loan. You can access the balance at any time without needing lender approval. Redraw facilities are common on variable loans but are rarely available on fixed loans, and even where they are offered, the lender may limit how much you can redraw or how often.

If you plan to park savings in an offset account or make irregular lump sum repayments, confirm the loan structure supports it before you apply. Some first home buyers assume all loans come with these features, but that is not the case. Lenders apply different terms depending on the loan product, and loans written under the 5% deposit scheme may have more restrictions than standard loans.

What happens after you apply for a home loan

Once you submit your application, the lender assesses your income, expenses, credit history, and the property you are purchasing. The lender orders a valuation to confirm the property is worth at least the purchase price, and they review your supporting documents to verify the information in your application.

If the lender identifies any issues, they issue a list of conditions. These might include updated payslips, an explanation for a credit enquiry, or additional information about the property. You respond to each condition, and once the lender is satisfied, they issue formal approval.

Formal approval is also called unconditional approval. It means the lender has agreed to provide the loan and you can proceed to settlement. Between formal approval and settlement, avoid making any financial changes. Do not apply for new credit, change jobs, or make large purchases. Any of those actions can trigger a reassessment, and if your financial position has changed materially, the lender can withdraw the approval.

Call one of our team or book an appointment at a time that works for you. We will walk you through the deposit schemes, stamp duty concessions, and loan structures that apply to your situation, and we will arrange the application with a participating lender that matches your needs.

Frequently Asked Questions