Australian Government 5% Deposit Scheme

Buy your first home
with a 5% deposit.

The Australian Government's 5% Deposit Scheme (the First Home Guarantee) lets eligible first home buyers get in with just a 5% deposit and no Lenders' Mortgage Insurance — saving up to around $30,000 upfront. From 1 October 2025 the income caps, waitlists and place limits were removed. Here's how it works and who qualifies.

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Deposit you'd need

5% scheme vs saving the usual 20%.

Purchase price$650,000

Your deposit (5%)$32,500

A 20% deposit would be$130,000

The loan you take out$617,500

Deposit you save vs 20%$97,500

Illustrative only. Under the scheme there's no LMI on the 5% deposit — the government guarantees the shortfall. Property price caps apply and vary by location; your actual deposit, loan and eligibility depend on the lender and your circumstances.

The basics

What is the 5% Deposit Scheme?

The Australian Government 5% Deposit Scheme is the new name for the First Home Guarantee. Under it, the government guarantees part of your home loan — the slice a lender would normally insist you cover with a 20% deposit — so you can buy with as little as a 5% deposit and pay no Lenders' Mortgage Insurance.

It's not a cash grant and it's not shared equity — the government doesn't take a stake in your home or lend you money. It simply stands behind up to 15% of the loan so the lender waives LMI. You own 100% of the property and keep all of its future growth.

The scheme changed significantly on 1 October 2025: the income caps were removed, the annual place limits and waitlists were scrapped, and the property price caps were lifted — opening it up to far more first home buyers than before.

Step by step

How the 5% scheme works.

Four moving parts. The one that trips people up is that you apply through a lender, not the government — and each lender has a limited allocation of guarantees.

01

Check you're eligible

You must be an Australian citizen or permanent resident, buying your first home (or not having owned property here in the last 10 years), and buying under the price cap for your area to live in.

02

Save a 5% deposit

You need a genuine deposit of at least 5% of the price (2% for eligible single parents under the Family Home Guarantee). No Lenders' Mortgage Insurance is charged on the rest.

03

Apply through a participating lender

You can't apply to the government directly. A participating lender assesses you and reserves a guarantee through Housing Australia. A broker helps you reach one that suits your situation.

04

Buy, and own 100%

On approval you buy with your 5% deposit and a 95% loan, guaranteed but not owned by the government. You keep the full property and all of its future capital growth.

The 2026 numbers

What the scheme looks like now.

The headline figures after the 1 October 2025 expansion. Property price caps still apply and differ by state and region — the table below is a guide, and a broker can confirm the cap where you're buying.

5%

Minimum deposit

Just 2% for eligible single parents.

$0

Lenders' Mortgage Insurance

The guarantee saves up to ~$30,000 upfront.

No caps

Income limits & places

Removed from 1 October 2025 — no waitlist.

100%

Of your home is yours

No equity share; you keep all the growth.

The price caps

How much home you can buy.

The scheme has a maximum property price by location. Capital-city and major-regional-centre caps are higher than the rest of each state. These figures apply from 1 October 2025 and are indicative — some regional centres (like the Gold Coast, Newcastle or Geelong) use the higher capital-city cap.

State / territory

Capital city

Rest of state

New South Wales

$1,500,000

$800,000

Victoria

$950,000

$650,000

Queensland

$1,000,000

$700,000

Western Australia

$850,000

$600,000

South Australia

$900,000

$500,000

Tasmania

$700,000

$550,000

ACT

$1,000,000

—

Northern Territory

$600,000

—

Indicative caps only — always confirm the current cap for your exact location with a participating lender or broker before you make an offer.

Both sides of it

The upside — and the trade-offs.

Getting in with 5% is a real head start, but a bigger loan is still a bigger loan. A broker lays out the repayment numbers so you can decide with your eyes open.

What it can unlock

Buy with a 5% deposit — years sooner than saving the usual 20%.
No Lenders' Mortgage Insurance, which can save up to around $30,000 upfront.
You own 100% of the home and keep all of its future growth.
Since 1 October 2025 there are no income caps, no waitlists and no place limits.

What to weigh up

A smaller deposit means a bigger loan — higher repayments and more interest over time.
Property price caps apply and vary by state and region.
You still have to pass the lender's normal serviceability check, buffer and all.
Each lender has a limited allocation of guarantees, so timing and lender choice matter.

Worked example

Getting in years sooner, without the LMI bill.

Picture a couple renting while they try to save a deposit on a $650,000 first home. A 20% deposit would be $130,000 — years away at their savings rate — and on top of that they'd be quoted several thousand dollars in Lenders' Mortgage Insurance if they bought with less.

Under the 5% Deposit Scheme they'd need roughly $32,500 saved instead, with the LMI waived entirely because the government guarantees the shortfall. That's the difference between buying now and buying in three or four years' time — and they still own 100% of the home.

This is where a broker earns their keep: confirming they sit under the price cap for their area, checking their income comfortably passes the lender's serviceability buffer on the larger loan, and steering them to a participating lender with a guarantee still available. The scheme opens the door; the numbers behind it decide whether walking through makes sense.

This is an illustrative example, not a specific client. Every application is subject to individual circumstances, scheme eligibility and lender approval. This is general information within Australian Credit Licence scope and is not financial, tax or credit advice — seek advice suited to your own situation before proceeding.

Keep readingHelp to Buy vs the 5% deposit route — which suits you?

5% Deposit Scheme FAQs

Questions, answered.

It's the current name for the First Home Guarantee. The government guarantees part of your home loan so an eligible first home buyer can purchase with just a 5% deposit and pay no Lenders' Mortgage Insurance. It isn't a cash grant or a shared-equity arrangement — the government doesn't own any of your home, and you keep 100% of the property and its future growth.

You generally need to be an Australian citizen or permanent resident, at least 18, buying a home to live in, and either a first home buyer or someone who hasn't owned property in Australia in the last 10 years. Since 1 October 2025 there are no income caps and no place limits. You still have to buy under the price cap for your area and pass the lender's normal serviceability assessment.

Yes. Because the government guarantees the portion of the loan above 80% of the value, the lender doesn't charge Lenders' Mortgage Insurance. On a typical first home that can save up to around $30,000 upfront — one of the biggest advantages of the scheme.

The scheme caps the price of the home you can buy, and the cap varies by state and whether you're in a capital city or regional area — for example $1.5m in Sydney and $800,000 for the rest of NSW, or $1m in Brisbane and $700,000 for the rest of Queensland. Some major regional centres use the higher capital-city cap. Always confirm the current cap for your exact location with a lender or broker before making an offer.

Yes. You can't apply to the government directly — the scheme runs through participating lenders who reserve a guarantee through Housing Australia. A broker helps you check eligibility, confirm the price cap for your area, make sure your income passes the serviceability buffer on the larger loan, and reach a lender that still has guarantees available.

Neither is universally better and you generally can't use both. The 5% Deposit Scheme leaves you owning 100% of your home with a larger loan and higher repayments; Help to Buy is a shared-equity scheme where the government takes a stake so you borrow less, but you give up a share of future growth. The right choice depends on your deposit, income and priorities — which is exactly what a broker helps you compare.

Could you buy
sooner than you think?

Ask a licensed broker to check your eligibility for the 5% Deposit Scheme, confirm the price cap for your area, and point you to a lender with a guarantee available. No phone number, no obligation.

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Buy your first homewith a 5% deposit.