First Home with Australian Government 5% Deposit Scheme

Saving for a home deposit can feel like running a marathon where the finish line seems totally unreachable. Between rising property prices, everyday expenses and the time it takes to save for a deposit, home ownership can feel like a distant dream. Therefore, the Australian Government 5% Deposit Scheme for eligible Australians can help make your first step achievable.

Formerly known as the Home Guarantee Scheme, this government initiative helps eligible first home buyers purchase a property with a deposit of just 5%, without paying lenders mortgage insurance (LMI). Eligible single parents and legal guardians may also be able to enter the property market with a deposit as low as 2%.

In this guide, we’ll explain how the scheme works, who may qualify, which properties are eligible and what to consider before applying. Because getting the keys sooner is exciting, but making sure the repayments remain manageable is what helps you stay there.

Living overseas doesn’t mean you can’t buy property in Australia. Check out our Australian expat home loan and mortgage guide to learn more.

What is the Australian Government 5% Deposit Scheme?

The Australian Government 5% Deposit Scheme is designed to help eligible home buyers enter the property market without having to save a traditional 20% deposit. Instead of waiting years to build a larger savings balance, eligible buyers may be able to purchase a home with a smaller deposit and avoid lenders mortgage insurance (LMI).

Basically, the government provides a guarantee to a participating lender for part of an eligible home loan. This reduces the lender’s risk and allows eligible buyers to borrow with a lower deposit without paying LMI while the guarantee applies.

Please remember that the guarantee is not a cash grant but a contribution towards your deposit, or a discount on your property purchase. You still need to contribute your own savings, meet the lender’s lending criteria and make your regular loan repayments.

Did you know investment property depreciation allows eligible property investors to claim deductions for the gradual decline in value of certain parts of a property and its assets?

How is It Different from the First Home Owner Grant?

The first home owner grant (FHOG) provides a one-off payment to eligible buyers in certain circumstances, with the amount and conditions depending on the state or territory. Whereas the 5% deposit scheme works differently, it supports your borrowing rather than putting cash in your bank account.

For example, if you’re purchasing a $600,000 property through the first home buyer pathway, a 5% deposit would be $30,000, compared with $120,000 for a 20% deposit. That’s a substantial difference in the amount you need to save before buying.

However, the deposit is only part of the equation. You’ll also need to consider stamp duty, conveyancing costs, inspections, lender fees and other purchase expenses. Your borrowing capacity and repayment affordability matter just as much as the money you have saved.

From a mortgage broker’s perspective, the real benefit is that the scheme may help eligible buyers purchase a home without paying LMI. While keeping the focus on choosing a suitable home loan and repayments that can be comfortably managed, the Australian Government 5% Deposit Scheme is able to fulfill homeownership dreams sooner.

Confused whether to rent or buy in Australia? Find out what offers more stability for your future plans.

What Has Changed Under the Expanded 5% Deposit Scheme?

The biggest change to the Australian Government 5% Deposit Scheme came into effect on 1 October 2025, when the Albanese Government expanded the former Home Guarantee Scheme to help more Australians enter the property market. The changes removed several barriers that previously prevented eligible buyers from accessing support. Here’s what the expanded scheme means for aspiring home buyers:

No Income Caps

Previously, applicants had to earn within specified income limits to qualify. Those income caps have now been removed, allowing eligible buyers to apply regardless of their income, provided they meet the other scheme requirements and the lender’s borrowing criteria.

Discover the best tips to negotiate a home purchase.

No Limits on Available Places

The scheme previously operated with a limited number of places, meaning some buyers could miss out when allocations filled up. The expanded scheme has unlimited places, with no waitlists for eligible applicants which makes it easier to explore your options without worrying about a limited annual allocation.

Higher Property Price Caps

Property price caps have been increased across Australia. This gives eligible buyers access to a broader range of properties, rather than restricting their search to lower-priced homes that may not suit their needs. However, higher caps do not automatically mean you can borrow more because your income, existing debts, living expenses, savings and the lender’s assessment will still influence how much you can afford.

Continued Support for Single Parents and Regional Buyers

Eligible single parents and legal guardians can still apply through the dedicated pathway with a minimum 2% deposit, formerly the family home guarantee scheme. Meanwhile, the former Regional First Home Buyer Guarantee has closed to new applicants, with eligible regional buyers now able to apply through the first home buyer or single parent pathways, depending on their circumstances.

While the expanded scheme makes a smaller deposit a more realistic starting point for many eligible buyers, access to the scheme and home loan approval are two different things. As a mortgage broker, we recommend looking beyond the minimum deposit. Before you start house hunting, it’s worth assessing your borrowing capacity, estimating your repayments at different interest rates and allowing for upfront purchase costs. A smaller deposit can help you enter the market sooner, but the right property and a manageable loan are what make that move sustainable.

Refinance your home loan to get better rates or features.

Who is Eligible for the Australian Government 5% Deposit Scheme?

The Australian Government 5% Deposit Scheme has two main pathways: one for eligible first home buyers and another for eligible single parents and legal guardians. While both can help buyers enter the property market with a smaller deposit, the eligibility requirements differ.

Secure your dream property without an upfront deposit through deposit bonds.

Eligibility For First Home Buyer

To qualify through the first home buyer pathway, you’ll generally need to meet the following requirements:

• Be at least 18 years old and an Australian citizen or permanent resident.
• Have a minimum 5% deposit based on the property’s lender-assessed value.
• Be a first home buyer or meet the scheme’s rules for applicants who have not owned a home or land in Australia during the previous 10 years.
• Purchase an eligible residential property within the applicable property price cap.
• Intend to live in the property as your principal place of residence rather than purchase it as an investment.
• Apply individually or jointly with one other eligible applicant, subject to the scheme’s rules.
• Obtain approval for an eligible owner-occupier loan with principal and interest repayments from a participating lender.

Eligibility for Single Parents and Legal Guardians

The single parent pathway may allow eligible single parents and legal guardians to purchase a home with a deposit as low as 2%. Applicants generally need to meet the following conditions:

• Be at least 18 years old and an Australian citizen or permanent resident.
• Have at least one dependent child or meet the applicable legal guardian requirements.
• Apply individually rather than jointly with another borrower.
• Meet the scheme’s deposit and property price requirements.
• Intend to occupy the property as their home.
• Generally, not own another property or retain another property interest when the new home settles.
• Obtain approval from a participating lender.

This pathway can be particularly valuable for eligible single parents and guardians who have the income to support a home loan but find it difficult to accumulate a larger deposit while managing household expenses.

How Can a Mortgage Broker Help You Check Eligibility?

At Nice Loans, we can help you assess your circumstances against the scheme’s requirements, review your savings and borrowing capacity, and compare suitable home loan options from participating lenders. We can also help identify potential issues before you apply, such as a deposit shortfall, an ownership history concern or repayments that may stretch your budget.

The key is to check both your scheme eligibility and your ability to service the loan. That way, you can approach the property market with a clearer understanding of what you can afford, rather than relying on the minimum deposit alone.

Can You Qualify If You Have Owned a Property Before?

It is possible. The first home buyer pathway generally considers whether you have owned a home or land in Australia during the previous 10 years, rather than simply whether you have ever purchased property. Your circumstances and ownership history matter, so previous ownership does not automatically rule you out in every situation. The single parent pathway has its own property ownership restrictions, which should be checked separately.

What Types of Property Can You Buy Under the 5% Deposit Scheme?

Finding a property you love is one thing, but making sure it qualifies under the Australian Government 5% Deposit Scheme is another. The good news is that eligible buyers can consider several types of residential property, provided the purchase meets the scheme’s requirements and the participating lender approves the home loan.

Eligible property types may include:

• Existing Homes: Established houses, townhouses, units and apartments.
• New Homes: Newly built residential properties that meet the scheme’s conditions.
• House and Land Packages: Packages involving the purchase of land and construction of a home under eligible contracts.
• Off-the-plan Properties: Homes purchased before construction is complete, subject to applicable contract and timing requirements.
• Vacant land with a building contract: Land purchases accompanied by an eligible fixed-price contract to build a home.

Please note that the Australian Government 5% Deposit Scheme is designed to support home ownership and not property investment. You must intend to live in the property as your principal place of residence, so purchasing a property solely to rent it out is generally not permitted.

Rent where you love and invest where you can afford by rentvesting.

What Should You Check Before Signing a Contract?

From a mortgage broker’s perspective, timing is especially important when buying off the plan or building a new home. Construction milestones, settlement dates, and the time you have to move into the property may affect whether the purchase meets the scheme’s requirements.

Before committing, it’s worth confirming:

• If the property falls within the relevant price cap.
• If the contract and property type meet the scheme’s rules.
• Whether your lender accepts the property and proposed purchase structure.
• Whether you have sufficient funds for your deposit and other purchase costs.
• If your finance arrangements and contract deadlines are realistic.

A little preparation goes a long way. The right property is not just one you can afford to buy, but one that meets the scheme’s conditions and supports your longer-term home ownership goals.

How Does the Australian Government 5% Deposit Scheme Work?

The Australian Government 5% Deposit Scheme can help eligible buyers enter the property market without waiting to save a traditional 20% deposit. However, there are a few important steps involved between checking your eligibility and collecting the keys to your new home.

Check Your Eligibility

Start by confirming whether you qualify for the first home buyer pathway or the single parent pathway. Check your residency, age, property ownership history, available deposit and the requirements that apply to your circumstances. You should also check the property price caps for your preferred location before deciding how much you need to save.

Prepare Your Deposit and Finances

Eligible first home buyers generally need a minimum 5% deposit, while eligible single parents and legal guardians may qualify with 2%. Remember that your deposit is not the only upfront expense. You may also need funds for conveyancing, inspections, stamp duty where applicable and other fees and charges. Keeping some savings aside for unexpected expenses can also help protect your project budget after settlement.

Apply Through a Participating Lender

You cannot apply directly to Housing Australia for the guarantee. Instead, you need to approach a participating lender or work with a mortgage broker who can help you explore suitable options. Your lender will assess your income, expenses, debts, credit history and ability to meet the proposed repayments. It will also check whether your application and intended property purchase meet the scheme’s requirements.

Obtain Loan Approval and Find an Eligible Property

Once your finances have been assessed, you can work towards loan approval and identify a suitable property within the applicable price cap. If you’re using a broker, they can help you compare loan options, understand the lender’s conditions and coordinate the finance process. Before signing a contract, make sure the property and purchase arrangements meet the scheme’s requirements, and your lender is satisfied with the proposed transaction.

Complete Settlement and Move In

After the necessary approvals and contractual requirements are met, your purchase can proceed to settlement. Your lender provides the approved loan funds, ownership transfers to you, and your regular loan repayments begin. You must also comply with the scheme’s owner-occupier requirements, including the applicable rules about living in the property.

How Do Property Price Caps Work Under the Australian Government 5% Deposit Scheme?

Under the Australian Government 5% Deposit Scheme, the maximum property price you can purchase depends on where the property is located. These limits, known as property price caps, determine whether a home qualifies for the scheme.

Following the expansion on 1 October 2025, the caps increased in many areas to better reflect local housing prices. However, just because a property falls within the limit doesn’t mean it will fit your budget or that your lender will approve the loan.

The following are the published price caps for the Australian Government 5% Deposit Scheme:

If you’re considering a property outside these locations, the lower cap for other areas may apply. Always check the specific suburb and postcode rather than relying on a broad regional classification.

Understand fixed rate vs variable rate home loans before committing to avoid large expenses.

Other Government Home Buyer Assistance Programs

The Australian Government 5% Deposit Scheme isn’t the only form of support available to aspiring home buyers. Depending on where you live, your financial circumstances and whether you’re purchasing your first property, other government programs may help you save a deposit, reduce upfront costs or make home ownership more achievable.

First Home Owner Grant (FHOG)

The First Home Owner Grant is a one-off payment offered under state and territory government schemes to eligible first home buyers. It generally supports people purchasing or building a new home, although the grant amount, property value limits and eligibility requirements vary by jurisdiction.

Unlike the 5% Deposit Scheme, which provides a guarantee to the lender, the FHOG provides financial assistance directly to eligible applicants under the relevant state or territory rules. If you’re considering a new build, check your state’s current grant requirements before signing a contract. Buying property in VIC? Check out everything you need to know about the first home buyers grant VIC.

First Home Super Saver (FHSS) Scheme

Saving a deposit can take years, but the First Home Super Saver Scheme may help eligible buyers build their savings through voluntary superannuation contributions. The scheme allows eligible individuals to withdraw qualifying voluntary contributions and associated earnings to put towards their first home. Under the current rules, eligible contributions are subject to an annual limit of $15,000 and an overall limit of $50,000, with tax treatment depending on the contribution type.

The FHSS Scheme may be useful if you’re planning ahead and want to build your deposit while potentially benefiting from the tax treatment of superannuation. However, the rules are specific, so check the requirements with the Australian Taxation Office before making additional contributions.

Combine multiple debts into one home loan through debt consolidation for lower interest costs and simple finances.

Help to Buy Scheme

The Australian Government’s Help to Buy Scheme offers a different approach through shared equity support. Rather than relying solely on a smaller deposit and a larger mortgage, eligible buyers can receive a government contribution towards the purchase price in exchange for an equity share in the property.

Under the scheme, the government contribution can be up to 40% of the price of a new home or 30% of an existing home, subject to eligibility and other conditions. Eligible applicants may be able to purchase with a deposit as low as 2%.

However, Help to Buy has its own income limits, property price caps and participation requirements. Because the government retains an equity interest, you should also understand how that arrangement may affect future decisions, including selling the property or buying back the government’s share.

Find out how to use home equity to buy investment properties.

Stamp Duty Concessions and Exemptions

Stamp duty can add thousands of dollars to the upfront cost of buying a property. Fortunately, some state and territory governments offer eligible first home buyers full or partial exemptions or concessions. The amount of assistance available depends on your location, the property’s value and whether you meet the relevant first home buyer requirements. Some concessions apply only below specified property value thresholds, so checking the current rules is essential.

Can You Combine these Programs?

Some programs can definitely be used together, while others can have restrictions that prevent applicants from receiving overlapping assistance. For example, the First Home Super Saver Scheme may help you build your deposit before purchasing under another eligible program. At the same time, Help to Buy also permits certain grants and stamp duty concessions, but it cannot be combined with some other government-backed guarantees or shared equity arrangements.

Ready to Explore Your Home Loan Options?

Saving a large deposit shouldn’t be the only thing standing between you and your home ownership goals. With the Australian Government 5% Deposit Scheme, eligible buyers may have a way to enter the property market sooner without paying lenders mortgage insurance (LMI).

Choosing the right home loan means understanding your borrowing capacity, comparing interest rates and home loan features, and making sure your repayments remain manageable over the long term.

At Nice Loans, we help aspiring home buyers navigate these decisions with practical guidance tailored to their circumstances. As an Australia-wide mortgage broker, we can help you assess your eligibility, explore participating lenders and compare low-deposit home loan options that align with your financial goals.

Whether you’re a first home buyer building your savings or an eligible single parent looking for a more accessible path to home ownership, we can help you understand your options and the steps involved in applying.

FAQs