The Australian Government 5% Deposit Scheme is a federal government program designed to support eligible first home buyers and single parents get into the property market sooner.

The program was launched as the Home Guarantee Scheme on 1 January 2020 and expanded on 1 October 2025 when it was rebadged as the Australian Government 5% Deposit Scheme. At that time, government guarantees had helped around 243,000 Australians secure home loans.

The Australian Government 5% Deposit Scheme, administered by Housing Australia, encompasses the former:

  • First Home Guarantee
  • Regional First Home Guarantee
  • Family Home Guarantee

Let's check what's involved.

What is the Australian Government 5% Deposit Scheme?

As the name suggests, the scheme offers eligible first home buyers the ability to buy a home with a deposit as low as 5% without the need to pay Lenders' Mortgage Insurance (LMI). LMI is generally levied when deposit amounts are less than 20% and can add thousands of dollars to the cost of taking out a home loan.

Essentially, this means the government provides the lender with a guarantee of up to 15% of the property's value.

Eligible single parents can secure a home loan with deposits as low as 2%, with the government guaranteeing up to 18% of the property's value.

The expanded 5% Deposit Scheme has seen the scrapping of previous caps on participants. It has also waived income caps (previously $125,000 and under for individuals and $200,000 and under for joint applicants), allowing wider access to the scheme.

How does the 5% Deposit Scheme work?

Essentially, the federal government acts as a guarantor for your home loan which must be taken out with a participating lender (see full list below).

To take part in the scheme as a first home buyer, you must have at least a 5% deposit and the government guarantee will be for a maximum amount of 15% of your property value.

Single parents must have at least a 2% deposit with the government guaranteeing a maximum 18% of the property value.

But the guarantee is not a cash payment, nor does it go towards your home loan deposit. Rather it is a legal arrangement between Housing Australia and your lender for the government to pay up to a certain amount should you ever default under the terms of your home loan and your lender must sell the property to recoup its debt.

As such, applications for the scheme can only be made through your lender (or a mortgage broker if you choose to use one).

The good news is the scheme can also be used in conjunction with other state and territory first homeowner grants and stamp duty concessions. Combined, this government assistance can take a considerable chunk from the cost of getting into your first home.

Calculate your costs with our First Home Buyers & Owners Grant Calculator

After verifying your eligibility, the process will generally be handled by your lender who'll submit your application to Housing Australia. Of course, you'll need to supply all the relevant documentation beforehand.

5% Deposit Scheme first home buyer eligibility

To access the scheme as a first home buyer, you need to meet eligibility criteria, including:

  • being an Australian citizen or permanent resident, at least 18 years old
  • have saved a minimum deposit of 5%
  • being a first home buyer or not having owned property of land in Australia in the last 10 years
  • buying a home in Australia priced at or below the location's price cap
  • planning to live in the home as an owner-occupier (no investment properties)
  • applying for an owner-occupier home loan with principal and interest (P&I) repayments from a participating lender, with a loan term up to 30 years (plus up to three years to build a new home)
  • applying on your own or jointly with one other person (partner, friend, or family member)

You must also meet your participating lender's credit policy and loan approval criteria. Even if you are eligible for the scheme, you may not get a home loan if you do not meet your participating lender's lending requirements.

Single parent eligibility

To access the scheme as a single parent, you need to meet eligibility criteria including:

  • being an Australian citizen or permanent resident, at least 18 years old
  • have saved a minimum of 2% deposit
  • being a single parent (with no spouse or de facto partner and must be divorced to be considered single)
  • being a single natural or adoptive parent or legal guardian of one or more dependent children (dependent child as defined by the Social Security Act)
  • having the child or children living with you and in receipt of a disability support pension (as defined by the Social Security Act)
  • not having any other property interest once your new home settles
  • buying a home in Australia priced at or below the location's price cap
  • planning to live in the home as an owner-occupier (no investment properties)
  • applying for an owner-occupier home loan with principal and interest (P&I) repayments from a participating lender, with a loan term up to 30 years (plus up to three years to build a new home)
  • applying on your own (no joint applications)

You must also meet your participating lender's credit policy and loan approval criteria. Even if you are eligible for the scheme, you may not get a home loan if you don't meet the lending requirements of your participating lender.

5% Deposit Scheme eligible properties

Under the scheme, a property must be considered a residential property to be eligible and can be either a new or existing home, including:

  • An existing house, townhouse, or apartment

  • A house and land package 

  • Off-the-plan purchases

  • Vacant land with a separate building contract

5% Deposit Scheme price caps

To be eligible for the scheme, the price of the property you purchase must be at or under the relevant price cap. These are set according to location. The property price caps, as at 1 October 2025, appear below:

States

Capital city and

regional centres*

Other areas

New South Wales

$1.5 million

$800,000

Victoria

$950,000

$650,000

Queensland

$1 million

$700,000

Western Australia

$850,000

$600,000

South Australia

$900,000

$500,000

Tasmania

$700,000

$550,000

*Regional centres are Illawarra, Newcastle, and Lake Macquarie in NSW; Geelong in Victoria, and the Gold Coast and Sunshine Coast in Queensland.

TerritoriesAll areas
Australian Capital Territory$1 million
Northern Territory$600,000
Jervis Bay & Norfolk Island$550,000
Christmas Island & Cocos (Keeling) Islands$400,000

For building a home on vacant land with separate contracts, the combined land price plus build costs need to come in at or under the cap.

If you're unsure of which price cap might apply, you can access a postcode search tool for specific locations.

Property value vs purchase price

It's worth noting that under the scheme, you must have saved a deposit of at least 5% of the property value for first home buyers and 2% for single parents.

Property value is assessed by your participating lender and may be different to the purchase price. It's best to speak to your participating lender to see how this may affect your application.

What is a guarantee and what does it cover?

It's important to understand a guarantee under the scheme is a legal arrangement between Housing Australia and the participating lender that provides you with a home loan. Housing Australia is not involved in you loan application, assessment, or approval in any way.

The guarantee effectively protects your participating lender, not you, should you default on your home loan. If this happens and your lender is forced to sell the property to recoup its loses, you will still be liable for any shortfall you owe on your mortgage after the government steps in to cover up to the pre-agreed amount.

The guarantee doesn't help with any missed payments or step in to prevent you from defaulting on your loan. Nor does it stop your lender from taking action against you over any default down the track.

5% Deposit Scheme requirements

Home buyers applying under the scheme need to have between 5% and 20% of the value of an eligible property saved as a deposit - or between 2% and 20% for single parents. You must use as much of your savings as possible for the deposit, based on your participating lender's policies and your own financial circumstances.

Home buyers will also need to check with their lender whether their deposit is required to be made up of genuine savings under their lending criteria and participation in the scheme. 

Home buyers should also confirm with their lender whether any cash grants received under other federal, state, or territory schemes or programs can be considered as part of their deposit savings.

Before taking up the scheme, first home buyers should discuss their individual financial circumstances with a participating lender or seek independent financial advice as to the implications of taking out a low deposit home loan.

5% Deposit Scheme participating lenders

There is a wide range of both major banks and smaller lenders that you can choose from according to which loan product will best suit your circumstances and objectives. Here's a list of participating lenders, correct at the time of writing:

Pros and cons of the 5% Deposit Scheme: first home guarantee

Pros

Avoid paying LMI

To avoid paying LMI, you typically need to have a 20% deposit. If your deposit is less than that, LMI generally applies.

See also: Which lenders offer low or no-cost LMI?

In practical terms, avoiding LMI can save tens of thousands of dollars. For example, according to Savings.com.au's LMI Calculator, a first home buyer purchasing a $700,000 property with a 5% deposit could be up for more than $36,000 in LMI.

One of the 5% Deposit Scheme's key drawcards is that you can avoid paying LMI and can put these funds towards paying for your property instead.

Purchase sooner

Research shows saving for a 20% deposit can take longer than a decade in some Australian locations. Buying a home with a deposit of just 5% can mean you are able to get into the property market sooner rather than watching home prices increase faster than your deposit savings balance.

See also: How to save up for a house deposit

Cons

Higher interest costs

There's no getting round it - a smaller deposit means you will need to borrow more to purchase your first home. This may see you paying more in interest than if you had waited until you had saved for a 20% deposit (but this can depend on many variables).

Property price falls

If property prices fall, you could find yourself in a situation of owing more on your home loan than what the property is worth. But this only becomes a problem if you have to sell it. Generally, if you are able to hold onto your property over the medium to longer term, you should be able to ride out any downturns in the property market.