WA's Keystart and SA's HomeStart are government-backed lenders that accept 2% deposit with no LMI. We compare both side by side, including income caps and property limits.
Two Australian states have done something most of the country hasn't: they've set up government-backed lenders that say yes to low-deposit buyers when the major banks say no. Western Australia's Keystart and South Australia's HomeStart are the two most important. If you live in WA or SA and have a 2-3% deposit, you should know about them — and ideally apply through them before considering a bank.
Keystart (WA)
Keystart is the Western Australian Government's low-deposit home loan program, established in 1989 to provide affordable housing finance to Western Australians who can't meet standard bank deposit requirements.
Key features
- Deposit: From 2% (no LMI)
- Loan size: Up to ~$700,000 (varies by region and property type)
- Income caps (indicative): $105,000 single, $130,000 couple, $115,000 sole parent. Verify with Keystart as caps are updated periodically.
- Eligible properties: Owner-occupier, in WA, up to a value cap. Established and new builds both qualify.
- Repayment terms: Up to 30 years, variable or fixed.
- Eligible borrowers: Australian citizens or permanent residents, 18+, first home buyers or previous owners who don't currently own property.
Source: Keystart — keystart.com.au
When to choose Keystart over a bank
Keystart generally makes sense when:
- You have 2-5% deposit and would otherwise need LMI on a bank loan
- Your income is below the bank assessment threshold (e.g. casual workers, contractors, recent migrants)
- You want to buy in regional WA, where bank lending criteria are tighter
- You don't qualify for the 5% Deposit Scheme (which would still be the first option if you do)
Keystart is also useful in combination with the 5% Deposit Scheme — Keystart's 2% deposit can be lower than the 5% scheme's 5% deposit, saving you deposit time.
HomeStart (SA)
HomeStart Finance is South Australia's government-backed low-deposit lender, providing loans to South Australians who can't meet standard bank requirements.
Key features
- Deposit: From 2% (no LMI)
- Loan size: Varies by region; lower in regional areas
- Income testing: Income-tested; varies by loan size and location
- Eligible properties: Owner-occupier, in SA. Established, new builds, and off-the-plan all eligible.
- Special products: HomeStart has a dedicated low-deposit new-build product that accepts 2% deposit with no LMI for new construction.
Source: HomeStart Finance — homestart.com.au
HomeStart's special new-build product
HomeStart's new-build loan is one of the most generous in Australia. As of 2025-26:
- From 2% deposit for new builds
- No LMI
- Available to all eligible South Australian buyers (subject to income and property price limits)
- Combines with SA's $15,000 FHOG for new homes
- Combines with the federal 5% Deposit Scheme (but not both for the same property — pick one)
How the state lenders fit into your stack
For most WA and SA buyers, the optimal stack looks like:
| Your situation | Best stack |
|---|---|
| First home buyer, 2-5% deposit, eligible income | Keystart/HomeStart + state FHOG + state stamp duty exemption + FHSS |
| First home buyer, 5% deposit, any income | 5% Deposit Scheme + state FHOG + state stamp duty exemption + FHSS |
| First home buyer, 5% deposit, income under $103K single / $165K joint | Help to Buy + state FHOG + state stamp duty exemption + FHSS |
| First home buyer, 2% deposit, single parent with dependent child | Family Home Guarantee + state FHOG + state stamp duty exemption + FHSS |
What they don't cover
- Investment properties — owner-occupier only
- Holiday homes
- Commercial property
- Pure land purchases without building (usually not eligible — check with the lender)
If you live in WA or SA, the state lenders should be your first port of call — even if you think a major bank will approve you. The application is free, the assessment is usually faster than a bank, and the rates are competitive. If they say no, you've lost nothing.