Keystart vs Bank
Home Loan

What is Keystart?

Keystart is a WA Government initiative designed to help people who might not meet the deposit or income requirements of traditional bank loans. It offers home loans with deposits as low as 2 per cent and does not require Lenders Mortgage Insurance. Keystart has income limits and property value caps, which vary depending on your household size and location.

How Keystart compares to a bank loan

• Deposit — Keystart: as low as 2 per cent. Bank: typically 5 to 20 per cent (5 per cent with Home Guarantee Scheme, no LMI)
• LMI — Keystart: not required. Bank: required if deposit is under 20 per cent (unless using Home Guarantee Scheme)
• Interest rate — Keystart: typically 1 to 2 percentage points higher than competitive bank rates. Bank: lower rates available, especially through a broker
• Features — Keystart: limited features, no offset account. Bank: offset accounts, redraw facilities, flexible repayment options

The total cost difference

While Keystart gets you into a home sooner with less upfront savings, the higher interest rate adds up significantly over time. On a $400,000 loan, a 1.5 percentage point rate difference can mean paying an additional $100,000 or more in interest over a 30 year term. Many Keystart borrowers refinance to a bank loan once they have built sufficient equity, which can be a smart strategy.

Which should you choose?

If you have a 5 per cent deposit and qualify for the Home Guarantee Scheme, a bank loan with a competitive rate is likely the better long-term option. If you cannot save more than 2 to 3 per cent and need to get into the market quickly, Keystart provides a path that banks do not. A broker can compare both options side by side and show you the total cost over 5, 10, and 30 years. Read our full first home buyer guide for Perth for more on making this decision.

Frequently asked questions