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The 5% Deposit Scheme for first home buyers in 2026

Christian Tucker
Oct 5
6 min read

Updated: 2 days ago

Insights from AGFB · Checked 2 October 2026 · About 6 minutes

In brief

  • The Australian Government 5% Deposit Scheme lets eligible first home buyers purchase with a 5% deposit and no lenders mortgage insurance (LMI).

  • Since 1 October 2025 there are no income caps and no limit on the number of places.

  • Property price caps still apply. In Queensland the cap is $1,000,000 in Brisbane, the Gold Coast and the Sunshine Coast, and $700,000 elsewhere.

  • It is a guarantee to the lender, not a grant. You still pay purchase costs and must meet the lender's own assessment.

What is the 5% Deposit Scheme?

The Australian Government 5% Deposit Scheme helps eligible people buy a home with a smaller deposit. Housing Australia runs it for the Australian Government. Many people still know it as the Home Guarantee Scheme or the First Home Guarantee.

Under the scheme, the government guarantees part of your loan to the lender, up to 15% of the property's value. That lets a first home buyer borrow up to 95% without paying LMI.

Single parents and legal guardians have a separate stream with a minimum 2% deposit. They don't need to be first home buyers, but other conditions apply.

What changed on 1 October 2025?

The scheme was expanded and renamed on 1 October 2025. Income caps and the limit on places were removed, so there is no income test and no waitlist. Property price caps were also raised.

The separate Regional First Home Buyer Guarantee closed to new applicants, and regional buyers now use the first home buyer or single parent stream.

Who is eligible?

For the first home buyer stream, you need to be at least 18 and an Australian citizen or permanent resident. You must be a first home buyer, or not have owned property or land in Australia in the last 10 years. You can apply alone or with one other person, such as a partner or family member.

The home must be at or below the local price cap, and investment properties are excluded. You need to move in within six months of settlement and keep living there while the guarantee applies.

The loan must be an owner-occupier loan with principal and interest repayments, for up to 30 years (plus up to three years if you are building). It must come from one of the participating lenders, and you can't apply to Housing Australia directly.

What are the property price caps?

Both the purchase price and the lender's valuation must be at or below the cap for the location. If you are building under separate land and build contracts, the combined cost must fit under it.

In Queensland the cap is $1,000,000 in Brisbane, the Gold Coast and the Sunshine Coast, and $700,000 in the rest of the state. In New South Wales it is $1,500,000 in Sydney and listed regional centres such as Newcastle and the Central Coast, and $800,000 elsewhere. In Victoria it is $950,000 in Melbourne and Geelong, and $650,000 elsewhere.

In the other states, the ACT and the Northern Territory, caps range from $1,000,000 across the ACT down to $500,000 outside Adelaide. Check the official price cap table and postcode tool, and confirm with the lender, as some suburbs span more than one postcode.

How does it avoid lenders mortgage insurance?

LMI protects the lender, not you, if a loan can't be repaid. It is usually a one-off cost when you borrow more than 80% of the property's value, and under the scheme the government guarantee takes its place.

For example, on a hypothetical $650,000 Brisbane home, a 5% deposit is $32,500 rather than $130,000 for 20%. The loan would be $617,500, with no LMI under the scheme.

The guarantee usually ends once scheduled repayments bring the loan to 80% or less of the property's value as assessed when you bought it. It also ends if you sell, refinance to a lender outside the scheme, or rent the property out. If you stop meeting the conditions, your lender may require you to pay LMI or other costs.

What costs still apply?

There is no fee to use the scheme, but it doesn't cover purchase costs. You still pay transfer duty (stamp duty) unless a concession applies, conveyancing or legal fees, building and pest inspections, any lender fees, insurance and moving costs.

Transfer duty and first home concessions are set by each state and territory. In Queensland, an eligible first home buyer pays no transfer duty on a home valued at $700,000 or less, with a reduced concession below $800,000. A separate concession removes duty on an eligible new first home for contracts dated 1 May 2025 or later, with no value cap.

What the scheme does not do

It is not a grant. You receive no money, and you repay the full loan plus interest. The guarantee protects the lender, not you, if the home is sold and the sale doesn't clear the loan.

It doesn't change how a lender assesses you either. The lender still checks your income, expenses, debts and credit history, and being eligible for the scheme doesn't mean you will be approved. A 95% loan also means a bigger balance and usually more interest over time.

It can't be combined with the Australian Government Help to Buy Scheme.

Other help to check

Rules differ by state and territory, so check what applies where you are buying. In Queensland, the First Home Owner Grant is $30,000 for eligible buyers of a new home valued under $750,000, for contracts signed on or after 20 November 2023.

The First Home Super Saver Scheme lets you make voluntary super contributions, then have eligible amounts released toward a first home. You can contribute up to $15,000 a financial year and $50,000 in total. There are set steps and timeframes, so read the ATO guidance before you start.

A checklist before you apply

  • Check your eligibility with the official online tool.

  • Look up the price cap for each postcode you are considering.

  • Work out your deposit and purchase costs, after any state grant or concession.

  • Gather ID, proof of citizenship or residency, your Medicare number and income evidence.

  • Get pre-approval through a participating lender. You then have 90 days to find a home and sign a contract.

  • Test the repayment on the full loan against your budget, with room for higher rates.

Common questions

Can I use the scheme with the Queensland First Home Owner Grant?

Yes, if you meet the rules for both. The Queensland Revenue Office says eligibility for a national scheme doesn't affect your eligibility for the grant, which only applies to new homes valued under $750,000.

I owned a home years ago. Can I still use the scheme?

Possibly. You must not have owned property or land in Australia in the last 10 years, measured from the sale of your previous property to the date of your new loan agreement.

Can I rent the home out later?

If you rent it out while the guarantee applies, the guarantee ends and the lender may require you to pay LMI or other costs. Talk to your lender before your plans change.

Try the numbers

Use our Borrowing Capacity calculator for an indicative loan size, and the Property Fees calculator to estimate transfer duty and other purchase costs. If you are unsure where to start, Find Your Next Step asks a few short questions and points you to the right tool or enquiry. Our first home buyers page explains how Christian can help you compare participating lenders.

Talk it through

If you would like to check whether the scheme suits your plans, Christian can talk it through with you.

Sources

General information only. This article does not take into account your objectives, financial situation or needs. Your full financial situation and requirements must be considered before any offer or acceptance of a loan product. It is not tax or legal advice; speak with your accountant or adviser. All lending is subject to the lender's assessment and criteria, and fees and charges apply. Figures and rules are correct as at the checked date shown and can change.

Avantgarde Financial Brokerage Pty Ltd, Corporate Credit Representative 580346, authorised under Australian Credit Licence 389328 held by Connective Credit Services Pty Ltd.

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