Should you use Keystart or a bank for your first WA home?

If you are trying to buy your first home in WA, you have probably heard all the stories. Someone got in with almost no deposit through Keystart. Someone else used the government’s 5 per cent scheme and paid no lenders mortgage insurance at a bank rate. A third had their parents guarantee the loan and skipped the deposit conversation entirely. All three stories are true, because these are the three real paths into a first home in WA, and they solve different problems. The right one depends on which problem is yours.

What is Keystart, and how is it different from a bank?

Keystart has been around since 1989 and exists for one reason: West Australians who can afford repayments but cannot save a big deposit while paying rent. The headline features are real. A deposit as low as 2 per cent. No lenders mortgage insurance at all. And assessment criteria built for people the banks find awkward, including some with an imperfect credit history.

The trade is the rate. Keystart typically prices above the sharper bank rates, because it is carrying borrowers the banks will not yet take. It is honest about the deal: Keystart describes itself as transitional and actively encourages borrowers to refinance to a mainstream lender once they have built equity. Think of it as a paid bridge, not a destination. Eligibility runs on caps: as at April 2026, Perth metro income limits sit at $155,000 for singles and $228,000 for couples and families, with a metro property price cap of $860,000, and regional WA runs its own limits.

How does the federal 5 per cent deposit scheme work?

This is the scheme most first home buyers should look at first, and it got dramatically better recently. From 1 October 2025 the income caps were removed entirely, the yearly quota of places was scrapped, and the property price caps were lifted. In WA the caps now sit at $850,000 for Perth and $600,000 for regional WA. You need a 5 per cent deposit, you buy under the cap for your area, and you borrow through a participating lender, which now includes the majors and dozens of others.

What you get is the best of both worlds on paper: a bank rate from day one and no lenders mortgage insurance, which on a 95 per cent loan can save tens of thousands. Eligible single parents have their own stream at a 2 per cent deposit. The catches are practical rather than hidden: the price cap rules some properties out, the lender’s normal credit assessment still applies, and the deposit itself still has to satisfy the lender’s rules, which is where genuine savings and its substitutes come back into the picture. One more that surprises people: you cannot stack this scheme with Keystart on the same loan. It is genuinely pick-a-lane.

How does a family guarantee compare?

The family guarantee is the path with no government in it. A close family member, usually a parent, puts a slice of their own property’s equity up as additional security. Done properly it can take the deposit requirement close to zero, remove lenders mortgage insurance, and sidestep every scheme cap, income test and price limit, all at a mainstream rate. For buyers whose family has equity and is willing, it is often the cheapest path in pure dollars.

The price is paid in risk sitting on the guarantor. If the loan goes bad, their property is on the hook for the guaranteed slice, which is why lenders require the guarantee to be limited to a portion, and why guarantors should get independent advice before signing. The guarantee is also designed to be temporary: once your equity grows past the threshold, it gets released and your parents are out. Families who treat the release date as a plan, the same way Keystart borrowers should treat the refinance-out, get the benefit without the lingering exposure.

How do the three paths stack up side by side?

When does each path win?

Run it as three questions. First: can you get to a 5 per cent deposit that passes a lender’s rules, and is the property under $850,000 in Perth or $600,000 in the regions? If yes to both, the 5 per cent scheme is usually the value pick: bank rate, no LMI, no income test anymore. Second: is there family equity and genuine willingness behind you? Then the guarantee competes hard, especially above the price caps or when even 5 per cent is out of reach, and it is worth an honest family conversation before you commit anywhere. Third: if neither is available, or your credit history needs a lender built for it, Keystart is the door that opens now, and paying its higher rate for a few years usually beats paying rent while prices move without you.

The scheme is the value lane, the guarantee is the family lane, and Keystart is the door that opens when the others will not. The only mistake is standing outside for years insisting on a fourth option.

How do you actually decide?

Start with the barrier audit: how much deposit you genuinely hold and whether it passes a genuine savings test, where your income sits against Keystart’s caps, whether your target property fits under the scheme caps, and whether family help exists as a guarantee or a gift. That audit usually points at one lane quickly. Then pressure-test it: repayments at each rate, what the guarantee release or Keystart refinance-out looks like at realistic equity, and what happens to each lane if your target suburb moves.

This is the three-lane conversation we have with WA first home buyers every week, and it is worth having before you fall in love with a property one lane cannot reach. Bring the hard questions. Scheme settings and caps move, so current numbers are always confirmed against Keystart and the Australian Government’s scheme page at the time you apply. The conversation takes about twenty minutes and covers all three lanes properly.

From the desk: the buyers who do best out of all three lanes are the ones with an exit plan on day one. Scheme buyers build a repayment buffer, guarantee buyers put a release date on the fridge, and Keystart buyers treat the refinance-out as an appointment, not a someday. Every one of these paths is a fine place to drive through and a poor place to park.