Preparing financially
Australian Government 5% Deposit Scheme
Buy your first home with a 5% (or 2%) deposit and no Lenders Mortgage Insurance, under a Government guarantee to your lender — eligibility, price caps, how to apply and the risks.
- Eligible first-home buyers can purchase with a 5% deposit (2% for eligible single parents or legal guardians) without paying LMI — the guarantee protects the lender, not you.
- The first-home-buyer stream generally requires not having owned Australian property or land in the previous 10 years; you can apply alone or with one other eligible person.
- From 1 October 2025 the Scheme has no income caps or waitlists for eligible applicants.
- You apply through a Participating Lender, not directly to Government, and generally have 90 days after conditional pre-approval to find a property and sign a contract.
- A smaller deposit usually means a larger loan, more total interest, and less room for a valuation shortfall or rate rise — test it against a realistic budget, not just the maximum on offer.
How does the Scheme actually work?
Formerly known as the Home Guarantee Scheme, this lets eligible first-home buyers purchase with a minimum 5% deposit (Housing Australia / Australian Government, verified 29 Jul 2026) (2% for eligible single parents or legal guardians), with Housing Australia guaranteeing part of the loan to a Participating Lender so Lenders Mortgage Insurance isn't charged. It doesn't give you cash, reduce your loan balance or take an ownership share — you own the property and remain responsible for the full loan, interest and fees, including any shortfall after a default or sale. From 1 October 2025 the Scheme has had no income caps or waitlists for eligible applicants (Housing Australia / Australian Government, verified 29 Jul 2026). It's different from the Government's shared-equity Help to Buy program, and the two can't be used for the same purchase — see the government support guide for a comparison.
What would a 5% purchase look like?
Say the contract price and the lender's assessed value both come to $700,000: a 5% deposit is $35,000, leaving an indicative loan of $665,000 before fees. Currently-published guidance describes the guarantee as covering up to around 15% of the property's value for the 5% stream and up to around 18% for the 2% single-parent stream, though the participating lender confirms the exact figure that applies. That guaranteed portion isn't paid to you or deducted from your loan — it's the part of the property value Housing Australia stands behind with the lender. You'd still need to fund conveyancing, inspections, registration and lender fees separately — see complete buying costs. If the lender values the property below your agreed price, you may need a larger deposit or smaller loan; the scheme doesn't require a lender to accept the contract price as the value.
Who can use the Scheme?
There are two streams. The first-home-buyer stream (5% deposit) requires that you haven't owned property or land in Australia in the 10 years before your loan — so someone who owned a home well in the past can still qualify. You can apply alone or jointly with one other eligible person. The single-parent or legal-guardian stream (2% deposit) applies to eligible single parents or guardians of at least one dependent child, applying individually; they may have owned property before but generally can't hold another property interest at settlement — see preparing financially as a single parent. Both streams generally require you to be at least 18, an Australian citizen or permanent resident, buying an eligible property under the applicable price cap as your principal residence, and approved by a Participating Lender against its own credit, income and serviceability requirements. Meeting the scheme's rules doesn't guarantee the lender approves your loan, and a lender can still ask for more than the minimum deposit under its own policy.
How do the price caps and eligible loans work?
The maximum eligible price depends on the property's postcode and whether it's a capital city, regional centre or other regional area — both the price you agree to pay and the lender's assessed value generally need to be within the cap. Caps change, so Delora hasn't reproduced a static table here — check the postcode with Housing Australia's current tool before making an offer. Eligible loans are generally principal-and-interest, owner-occupied, through a Participating Lender, with a maximum term of around 30 years (extendable during an eligible construction period). Rates, fees and features still differ between participating lenders, so the first eligible loan isn't necessarily the cheapest — see comparing home loans.
How do you apply?
You can't apply directly to Housing Australia. Check your eligibility and the postcode price cap, then compare and apply through a Participating Lender — it assesses both your scheme eligibility and your home loan together. Once conditionally pre-approved, you generally have 90 days to find an eligible property and sign a contract, and pre-approval still isn't final approval — the lender must value the specific property and complete its own assessment before you make an unconditional offer or bid at auction. See home-loan pre-approval. You generally need to move in within six months of settlement (or of an occupancy certificate for a new build) and keep living there as your home.
Can the guarantee end?
Yes — it doesn't necessarily stay attached for the full loan term. It can end if the property is sold, the loan is repaid, you refinance outside the scheme's permitted arrangements, you borrow more against the property, you stop living there without an accepted exemption, or Housing Australia or the lender decides you no longer meet the ongoing obligations. If the guarantee ends while your loan is still at a high loan-to-value ratio, the lender may require LMI or impose other conditions — ask before refinancing, moving out or increasing your loan.
Practical checklist
Before assuming the Scheme suits your purchase
- Confirm which stream applies to you, and check the 10-year ownership rule if relevant
- Check the current property price cap for your specific postcode
- Ask a Participating Lender to confirm your eligibility as part of a loan application
- Test the resulting repayment against a realistic budget, not the lender's maximum
- Understand what could end the guarantee before you refinance, move out or borrow more
Questions for a professional
- Am I likely to be eligible for the 5% Deposit Scheme based on my ownership history?
- What is the current property price cap where I'm looking to buy?
- What deposit, guarantee percentage and fees actually apply to my situation?
- What could cause the guarantee to end, and what would that cost me?
Official resources
Sources and methodology
- Australian Government 5% Deposit Scheme — Housing Australia / Australian Government (retrieved 29 Jul 2026)
Figures on this page are drawn from Delora's local knowledge graph, refreshed from these primary sources and checked for changes on a regular schedule. If a figure here looks out of date, the official source above is always the authority — please let us know.