The Australian Government 5% Deposit Scheme lets eligible first home buyers purchase with a deposit from 5% without paying lenders mortgage insurance (LMI). Housing Australia guarantees part of the loan to the participating lender, while the buyer remains responsible for the entire debt.
What the 5% Deposit Scheme Does and How It Works
The 5% Deposit Scheme reduces the deposit needed to avoid LMI by giving the lender a government guarantee. With a 5% deposit, the guarantee can cover up to 15% of the property’s value. It fills the security gap between the buyer’s deposit and 20% equity.
The lender supplies the loan and assesses the borrower. Housing Australia provides the guarantee. The government does not pay the missing deposit into the buyer’s account or acquire a share of the home.
This is the government’s low deposit home loan scheme commonly called the first home buyers scheme or First Home Guarantee. The official scheme overview explains its two pathways, including the 2% deposit option for eligible single parents.
Who is Eligible for the 5% Deposit Scheme
A first home buyer must meet the scheme’s personal eligibility rules and pass the participating lender’s credit assessment. Use these tests before comparing loan products:
- Each applicant must be at least 18 when signing the home loan agreement.
- Each applicant must be an Australian citizen or permanent resident.
- Each must be a first home buyer or have held no property in Australia during the previous 10 years.
- The deposit must meet the minimum 5% requirement. A buyer with more savings can be required to contribute more.
- The property must be a home the buyer will live in, within the applicable price cap.
- For an existing home, the buyer must move in within six months of settlement and remain an owner-occupier while the guarantee applies.
For a new build, the move-in period runs from the occupancy certificate. Construction also has separate contract and completion timeframes.
There is no scheme income cap and places are unlimited. Income still determines borrowing capacity. Existing debts, expenses and the lender’s assessment rate can prevent approval even when the client meets every scheme test.
Two people can apply jointly, including partners, friends or relatives. Both must qualify. A partner who sold their Australian property more than 10 years ago can meet the ownership test. A joint applicant who owned property more recently cannot.
A partner who is neither a citizen nor a permanent resident cannot qualify as a joint applicant. Assess the proposed ownership and borrowing structure before the client signs a contract. The official eligibility information explains the joint application rules.
Property Price Caps by State and Territory
Both the purchase price and the lender’s assessed property value must fall within the location’s scheme cap. For separate land and building contracts, the combined land price and construction cost must fit the cap.
| State or territory | Capital city and eligible regional centres | Other areas |
|---|---|---|
| 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 |
| Australian Capital Territory | $1,000,000 | $1,000,000 across the territory |
| Northern Territory | $750,000 | $600,000 |
The official property price caps and postcode tool identify the boundary for each location. Eligible regional centres include Geelong in Victoria and the Gold Coast and Sunshine Coast in Queensland. NSW has several eligible coastal regional areas.
Search the exact suburb and postcode, then have the lender confirm the result for the property. A contract above the cap is ineligible even if the buyer contributes a larger deposit.
Combining the Guarantee With State Support
A federal guarantee can sit alongside an eligible state grant or duty concession. Each program applies its own ownership, residence and property rules. Approval for the guarantee does not establish eligibility for state assistance.
In NSW, the First Home Buyers Assistance Scheme provides duty exemptions or concessions for eligible buyers. The federal expansion in 2025 did not raise NSW’s separate duty thresholds. A purchase can therefore qualify for the federal guarantee while attracting full NSW duty.
Victoria’s first home buyer assistance includes duty relief and a grant for eligible new homes. Queensland has separate duty concessions for first buyers of new homes, alongside its grant program.
WA’s first home owner grant and duty assistance have their own transaction rules. SA’s first home buyer relief covers eligible new homes and vacant land for building. The federal scheme also covers established homes, so the property type can change the state benefit.
Use the First Home Owner Grant guide for grant amounts. Clients releasing eligible super contributions can also consider the First Home Super Saver Scheme when assembling their deposit.
The Family Home Guarantee for Single Parents
The Family Home Guarantee pathway lets an eligible single parent or single legal guardian buy with a deposit from 2%, without LMI. The government guarantee can cover up to 18% of the property value. The applicant can have owned a home before.
The single parent information guide requires the applicant to meet these conditions:
- Be at least 18 and an Australian citizen or permanent resident.
- Be single, with no spouse or de facto partner. Being separated while still legally married does not qualify.
- Be the natural parent, adoptive parent or legal guardian of at least one dependent child who meets the scheme definition.
- Apply individually and contribute at least a 2% deposit.
- Have no other property interest once the new home settles.
- Buy a home to occupy and meet the scheme’s ongoing residence requirements.
The same property caps apply. This pathway also has no income cap or limit on places. Where someone qualifies for both pathways, the official guide directs them to apply through the single parent pathway.
For a client asking about a single parent home loan or single mum home loan, this is the scheme’s main deposit pathway. The lender still assesses repayment capacity. Ask how its credit policy treats child support and Family Tax Benefit, including evidence requirements and the remaining payment period.
LMI Savings and the Risks of a 5% Deposit
The scheme removes the LMI premium on an eligible guaranteed loan, but a smaller deposit leaves the client with more debt.
Consider this hypothetical purchase at $600,000, with the lender valuing the home at the same amount. A 5% deposit is $30,000 and the loan is $570,000 before other costs. A 20% deposit is $120,000 and the loan is $480,000. The smaller deposit therefore leaves $90,000 more to repay.
The guaranteed loan has no LMI premium. The dollar saving equals the premium the lender would otherwise charge for that borrower and property. Obtain that quote for a fair comparison, including whether the premium would be added to the loan. The LMI guide explains premiums and refund rules.
The larger loan means higher repayments and interest when the rate and term are the same. A thin equity buffer also exposes the borrower to falling values. If the example home falls to $540,000 before meaningful principal reduction, a $570,000 balance exceeds its value by $30,000. That is negative equity.
When the Guarantee Ends
Housing Australia’s first home buyer information guide explains that selling or fully repaying the loan ends the guarantee. Moving out without an exemption, renting out the home or increasing the borrowing can also end it. Scheduled principal repayments reducing the balance to 80% of the original property value end the guarantee too.
Refinancing to a non-participating lender removes the guarantee. Refinancing between participating lenders can retain scheme support under conditions, including restrictions on increasing the balance or extending the term. Do not assume every refinance loses the guarantee.
If scheme support ends while the loan-to-value ratio (LVR) remains above 80%, LMI or other lender costs can apply. Compare those costs before recommending a refinance. Where repayments are the obstacle, compare the Help to Buy shared equity alternative separately. The two schemes cannot be combined.
Participating Lenders and Broker Access
Only lenders on Housing Australia’s panel can provide a guaranteed loan. Use the current participating lender panel to identify available institutions.
Before presenting a lender to the client, confirm your accreditation and that it accepts scheme applications through the broker channel. Membership of the government panel alone does not establish broker access.
Compare credit policy alongside scheme eligibility. Check the lender’s acceptable property types, construction arrangements and off-the-plan settlement requirements. Review genuine savings evidence and the price of the actual loan product, including fees. An eligible property can still fail the lender’s security assessment.
Keep those checks in the lender comparison. If the client cannot use a guarantee, assess other low deposit home loan options before changing their purchase budget.
How Brokers Lodge a 5% Deposit Scheme Loan
A buyer applies through a participating lender or a broker authorised by that lender. Buyers cannot lodge a scheme application directly with Housing Australia.
- Confirm the pathway and eligibility. Record ownership history, applicant status, deposit funds and the property’s cap.
- Choose a participating lender. Complete the credit assessment and confirm broker access for the proposed property and loan.
- Gather the application documents. Collect identity and citizenship or permanent residency evidence, income documents, expenses and deposit records. Include the completed Home Buyer Declaration and dependent-child evidence for the single parent pathway.
- Submit to the lender. The lender assesses the application and requests the scheme reservation and pre-approval from Housing Australia.
- Record the pre-approval conditions. The official application process gives an approved buyer 90 days to find a home and sign a contract.
- Submit the contract and satisfy final approval conditions. Confirm the valuation, funds to complete and guarantee arrangements before settlement.
- Settle and record the residence obligation. Give the client the applicable move-in deadline and explain when a later change must go to the lender.
Before treating the file as complete, reconcile the lender’s approval with the contract price, valuation and client’s cash contribution. Include duty, legal fees and other acquisition costs in funds to complete.
Commission and Early Refinance
Upfront and trail commission follow the lender and aggregator agreement for the loan. Upfront is paid for the settled loan, while trail is ongoing commission calculated under the applicable schedule. The government guarantee does not establish a universal commission rate or remove clawback terms.
An early refinance discharges the original loan. If that occurs within its contractual clawback period, the lender can recover upfront commission under its schedule. Trail on the discharged loan also ends. Assess the client’s benefit and any guarantee or LMI consequences separately from the broker’s remuneration.
Former Names and Scheme History
The scheme began in 2020 as the First Home Loan Deposit Scheme, administered by the National Housing Finance and Investment Corporation (NHFIC). NHFIC is now Housing Australia. First Home Guarantee became the familiar name for its first home buyer pathway.
The New Home Guarantee added support for new construction. Housing Australia’s scheme history report records that it closed to new applications in 2022.
The Family Home Guarantee added a pathway for single parents, while the Regional First Home Buyer Guarantee supported eligible regional buyers. The Home Guarantee Scheme was the umbrella name for these guarantees.
The Albanese Labor government’s expansion in 2025 renamed the umbrella the Australian Government 5% Deposit Scheme. It removed income and place limits and raised property caps. The Regional First Home Buyer Guarantee closed to new applicants, with regional buyers using the first home buyer or single parent pathway instead.
Loans issued under an older name retain the obligations attached to their guarantee. A renamed program does not release the borrower from those conditions. For an existing borrower considering a move, refinance or investment use, establish the loan’s guarantee terms before changing it.
