Everyone’s got an opinion on how to buy your first home right now. Half your feed is telling you to “just use the 5% deposit scheme” like it’s a cheat code, and the other half is panicking about prices climbing faster than anyone can save. Here’s what nobody selling you the dream is going to say out loud.. these schemes are genuinely useful for some buyers, and genuinely expensive mistakes for others, and the difference almost always comes down to numbers nobody bothered to run for you before you signed the contract.

I’m not here to talk you out of using them. I’m here to walk you through exactly where each one can work against you, so you go in with your eyes open instead of finding out at settlement, or worse, five years into a loan you didn’t fully understand.

The Three Schemes, Plainly

There are three main levers first home buyers can pull right now, and they do very different things.

The Australian Government 5% Deposit Scheme (formerly the Home Guarantee Scheme) lets eligible first home buyers get into the market with a minimum 5% deposit, or 2% for single parents and legal guardians, without paying Lenders Mortgage Insurance. As of the October 2025 changes, there are no income caps and no waitlists. Price caps apply depending on your location, and you must meet ongoing owner occupier requirements. The government is essentially guaranteeing part of your loan to the bank, not giving you money.

Help to Buy is a shared equity scheme. You need a minimum 2% deposit, and the government contributes up to 30% of the purchase price for an existing home or 40% for a new one. In return, the government owns that percentage of your home. When you sell or buy them out, they take that same percentage of the current value, not what they originally paid in. There are 10,000 places available each year, and indexed income caps apply.

The First Home Super Saver Scheme lets you make eligible voluntary contributions into your super up to $15,000 a year and $50,000 in total and later withdraw those contributions plus associated earnings to put toward your first home deposit, taking advantage of super’s concessional tax treatment along the way.

All three can genuinely help. None of them are free money, and that’s exactly the part worth slowing down on.

Where the 5% Deposit Scheme Can Backfire

A smaller deposit does not mean a smaller loan. It means a bigger one, and that bigger loan accrues interest for the entire life of your mortgage.

Here’s an illustrative example, modelled roughly at a 6% interest rate over a 30 year loan term. On a $700,000 property, a 5% deposit means borrowing around $665,000, while a 20% deposit means borrowing around $560,000. That $105,000 difference in loan size translates into more than $100,000 in additional interest paid across the life of the loan. The scheme gets you in the door years sooner, which has real value, but that earlier entry has a genuine, calculable cost attached to it.

This is not an argument against the scheme. It is an argument for knowing that number before you use it, so it is a decision you make on purpose rather than a detail you discover later.

Where Help to Buy Can Backfire

The part of Help to Buy that rarely gets explained properly is what happens when your home actually goes up in value, which is the likely outcome for many buyers.

Say the government contributes 30% toward your purchase. When you eventually buy back their share or sell the home, they don’t get back 30% of what they originally paid in; they get 30% of what the home is worth at that point in time. If your home’s value rises significantly, the dollar cost of buying back that equity share rises right along with it. The scheme can genuinely bridge a deposit gap, but the trade off is sharing in your own home’s growth with the government for as long as you’re part of the scheme.

The income caps are worth flagging too. With the indexed caps currently at $103,000 for individuals and $165,000 for single parents or joint applicants, a lot of dual-income couples in stable jobs will sit near that line. The crucial detail here is that eligibility is determined by your previous financial year’s Notice of Assessment (NOA) from the ATO. This means a sudden pay rise in the current financial year won’t automatically derail your initial application, provided last year’s NOA sits under the cap. However, you are required to participate in ongoing reviews and continue meeting the scheme’s obligations, so you need to discuss future income changes with your lender before applying.

The QLD New Build Trap

Queensland stacks two incentives on top of the federal schemes for buyers who choose a new build: the First Home Owner Grant (now $15,000 or $30,000 for eligible contracts) and a transfer duty concession. For contracts signed from 1 May 2025 onward, eligible buyers pay no transfer duty on new homes, with no property value limit. Established homes do not attract the grant, and their duty concession is capped (currently applying to homes valued under $800,000).

Add that up and a new build can look like the obviously smarter financial move. Sometimes it is. But I’ve seen buyers choose a new build in a less convenient location, further from work, family or transport, purely to chase the grant and the duty concession, and then feel the cost of that trade off every day for years in ways a spreadsheet never captured. The incentive should be one input into the decision, not the reason for it.

How to Model This Before You Commit

Before you commit to any scheme, run through this properly rather than relying on a lender’s quick estimate:

Work out your actual repayments at your real deposit size, not a rounded guess, and compare that against what you’d pay with a larger deposit if you kept saving for another year or two.

Where a scheme involves shared equity or a government guarantee, work out what it would cost to exit at a plausible future property value, not just today’s value.

Weigh any grant or duty concession against the total cost difference of the property choice it’s steering you toward, not in isolation.

Get an actual, personalised calculation done before you sign anything. Every one of these numbers changes based on your deposit, your income, your loan term and the specific property, so a general example like the ones above is a starting point for the conversation, not a substitute for it.

The Bottom Line

These schemes are tools, not shortcuts. Wealth isn’t built by finding the cheat code; it’s built by understanding exactly what you’re trading for what, and choosing on purpose. The right scheme for you depends on your income, your timeline, your risk tolerance and your actual life plans, not on which one grant is trending this month.

If you want to know what these numbers actually look like for your situation, book a time to talk it through before you speak to a lender. It’s a lot easier to make a good decision before you’ve signed anything than to unwind one after.

Important: This article provides general information only and does not take your individual objectives, financial situation, or needs into account. It is not personal credit, financial, tax, or legal advice. The illustrative loan calculation excludes fees, changes to interest rates, offset accounts, and other loan features. Eligibility for government schemes, grants, and concessions is subject to strict criteria and may change. Consider seeking professional advice before making financial decisions or entering into a credit contract.