What is the Australian Government 5% Deposit Scheme?
The 5% Deposit Scheme, previously known as the First Home Guarantee Scheme, is a government initiative to help aspiring homebuyers. Eligible first homebuyers might be able to purchase a property under the scheme with a deposit as small as 5% without paying for lenders mortgage insurance (LMI). If you’re a single parent or legal guardian, the scheme might allow you to buy with just a 2% deposit and avoid LMI.
How does the 5% Deposit Scheme work?
The scheme sees the Government provide a guarantee for up to 15% of your home loan (18% for single parents or guardians). If you default on your home loan, your lender is covered for any potential losses, up to the guaranteed amount.
That means there’s no need for your lender to charge LMI premiums, because it removes most of the risk LMI insures it against.
Once your loan to value ratio (LVR) falls to below 80%, the guarantee no longer applies.
Am I eligible?
To be eligible for the first home guarantee scheme, you must:
- Be at least 18 years of age and an Australian resident or permanent resident
- Be buying a property to live in
Applicants are generally required to move in within six months of settlement and to live in the property as long as the loan is guaranteed under the scheme. - Have at least a 5% deposit
- Not have owned or part-owned a property anywhere in Australia in the past 10 years
You also must not have held interests in body corporate or company-owned properties. If you’re buying with a partner, this applies to both of you.
If you’re a single parent or guardian, you must:
- Be the parent or legal guardian of at least one dependent child
- Be at least 18 years of age and an Australian citizen or permanent resident
- Have a minimum 2% deposit
- Not currently own or have any interest in a property
- Be buying a home to live in
Income caps that previously applied to the scheme were abolished in 2025, so if you meet the above criteria, you could qualify, regardless of how much you earn.
What kind of property can I buy?
As long as you’re buying a property to live in that’s below the relevant price cap, you should be able to purchase under the scheme. That includes:
- Established or newly-built property
- Apartments or houses
- Vacant land (as long as you’ve also got a contract to build)
What are the property price caps?
The scheme imposes different price caps depending on where you’re buying. The price cap is based on the value as assessed by your lender, rather than what you pay.
These are the current price caps, effective from October 2025:
Maximum | |
|---|---|
Sydney, Central Coast, Coffs Harbour-Grafton, | $1,500,000 |
Rest of New South Wales | $800,000 |
Melbourne, Geelong | $950,000 |
Rest of Victoria | $650,000 |
Brisbane, Sunshine Coast, Gold Coast | $1,000,000 |
Rest of Queensland | $700,000 |
Perth | $850,000 |
Rest of Western Australia | $600,000 |
Adelaide | $900,000 |
Rest of South Australia | $500,000 |
Hobart | $700,000 |
Rest of Tasmania | $550,000 |
ACT | $1,000,000 |
Darwin | $750,000 |
Rest of Northern Territory | $600,000 |
Jervis Bay Territory and Norfolk Island | $550,000 |
Christmas Island & Cocos Islands | $400,000 |
Which lenders participate in the 5% Deposit Scheme?
To buy a property under the 5% Deposit Scheme, you’ll need to take out a home loan with a participating lender. There are currently over 30 lenders to choose from, including major banks, credit unions, and non-bank lenders, with the full list available here.
Participating lenders currently include:
- ANZ
- Bank Australia
- Bendigo Bank
- Commonwealth Bank
- Credit Union SA
- Defence Bank
- Indigenous Business Australia
- Liberty Finance
- NAB
- Newcastle Permanent
- Regional Australia Bank
- St George
- Westpac
If you’re in the market for your first home, you can compare home loans for first home buyers with Canstar.
How to apply for the 5% Deposit Scheme
If you’re looking to buy a property with the support of the 5% Deposit Scheme, here are the steps you might follow:
- Make sure you’re eligible
- Apply with a participating lender, who will make an application under the scheme on your behalf
- After you’re pre-approved, you have 90 days to find a property and sign a contract
- Once the house contract is settled you can move in, unless you’re still waiting on construction to finish
- While the guarantee applies, you’ll need to keep living in the property
How long do you have to move in?
How soon you have to move into the property you’re buying under the 5% Deposit Scheme depends on the type of home being purchased:
- Existing home: Move in within six months of settlement of your home loan.
- House and land package: Start building your home within 12 months and finish building it within 24 months of your home loan’s settlement date, moving into the property within six months of an occupancy certificate being issued.
- Separate contracts for land purchase and home construction: Enter into an eligible building contract within six months, start building your home within 12 months, and finish building your home within 24 months of the settlement date for your home loan. You must also move in within six months of an occupancy certificate being issued.
- Off-the-plan purchase: You must have signed the contract of sale before the settlement date for your home loan, and must move into the property within six months of the occupancy certificate being issued.
Other government incentives for first home buyers
The 5% Deposit Scheme can be combined with other first home buyer assistance from the federal and state or territory governments:
- There are First Home Owner Grants (FHOG) available in most states and territories, although different states offer different amounts and other eligibility criteria applies
- The First Home Super Saver Scheme (FHSSS) is available nationally, allowing eligible first home buyers to build a deposit inside their superfund
- Some states and territories also have stamp duty concessions available for first home buyers
