The Australian Government 5% Deposit Scheme lets eligible first home buyers buy with a 5% deposit and no Lenders Mortgage Insurance (LMI). Since 1 October 2025 there’s no income cap and no limit on the number of places. The property price caps were last updated on 1 July 2026, and in NSW the cap is $1.5 million in Sydney and the larger regional centres.
If you’re saving for your first home, you’ve probably heard a few different versions of how this works, because the rules have changed twice in the past year. Here’s where it stands now, including the parts that tend to catch people out after they’ve bought.
How the scheme works
It’s one of the main tools we use with first home buyers. Normally, if you borrow more than 80% of a property’s value, the lender charges LMI. Under this scheme the government guarantees part of your loan instead, so a lender can lend you up to 95% without charging it.
Single parents and legal guardians can buy with a 2% deposit, which means borrowing up to 98%.
You may still see it called the Home Guarantee Scheme, which was its old name. The separate Regional First Home Buyer Guarantee is closed to new applicants now, because regional buyers can use the main scheme with unlimited places.
Who qualifies?
You need to:
- be an Australian citizen or permanent resident when you sign the loan
- be at least 18
- be a first home buyer, or not have owned property in Australia in the last 10 years
- buy a home to live in, move in within six months of settlement, and keep living there
- take a principal and interest loan of up to 30 years.
You can apply on your own or with one other person, and it doesn’t have to be your partner. Siblings, friends, or a parent and child can apply together, as long as you both meet the rules. Single parents using the 2% option apply on their own.
There’s no income cap. That was removed on 1 October 2025, so a high income doesn’t rule you out.
What are the property price caps?
Both the purchase price and the lender’s valuation need to be at or under the cap. If you’re building, the land and the build count together.
| State or territory | Capital city and regional centres | Rest of state |
|---|---|---|
| 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 | |
| Northern Territory | $750,000 (Darwin) | $600,000 |
In NSW, the regional centres on the higher cap are the Central Coast, Coffs Harbour and Grafton, Illawarra, the Mid North Coast, Richmond and Tweed, and Newcastle and Lake Macquarie. Elsewhere, Geelong and the Gold Coast and Sunshine Coast are also on their state’s higher cap.
What changed on 1 July 2026?
Two things:
- Darwin got its own cap of $750,000, up from $600,000.
- Four more NSW regions moved onto the $1.5 million cap: the Central Coast, Coffs Harbour and Grafton, the Mid North Coast, and Richmond and Tweed.
Some lenders have also changed how much of your savings you can keep after settlement. Westpac and St.George now let you keep about six months of living costs plus six months of repayments, and ANZ moved to a similar calculation in August. If you’ve got more saved than that, expect to put the rest in.
What does it look like in dollars?
Let’s say you’re buying a $900,000 unit in Sydney. Here’s an illustrative comparison at 6.50% over 30 years:
| 5% deposit with the scheme | 20% deposit | |
|---|---|---|
| Deposit | $45,000 | $180,000 |
| Loan | $855,000 | $720,000 |
| Monthly repayment | about $5,404 | about $4,551 |
| LMI | none | none |
With the scheme you need $135,000 less in savings before stamp duty and costs. Putting away $1,000 a week, that’s more than two and a half years of saving you don’t have to do.
I’d be doing a bad job if I didn’t mention the other side of it. The repayment is about $850 a month higher, and with only 5% in, you have very little equity if prices fall. Make sure the bigger repayment is one you can live with, not just one the bank will approve.
What can end the guarantee?
The guarantee ends if you:
- stop living in the home, or rent it out
- increase the loan, for example to renovate
- refinance to a lender that isn’t part of the scheme
- sell the property.
It also ends once your loan falls to 80% of the property’s value through your scheduled repayments, which is the outcome you want. If it ends early while you still owe more than 80%, your lender may charge LMI at that point.
You can refinance to another lender in the scheme and keep the guarantee, as long as the loan amount and term don’t go up.
A few more rules to know
- If you have 20% saved, you can’t use it. The scheme is for people with less than that, and you’re expected to put in as much of your savings as you can.
- Once your place is approved, you have 90 days to sign a contract.
- Not every lender takes part. The official list has over 30, including the major banks.
What if the scheme doesn’t fit?
If the place you want is over the cap, or you’d rather not stretch to a 95% loan, there are other ways in with a small deposit. A parent can go guarantor and back part of your loan with the equity in their home, and some lenders will drop LMI for certain buyers. Our low deposit home loans page goes through the options side by side.
Do I still pay stamp duty?
Yes, stamp duty is a state charge and the scheme doesn’t cover it. In NSW, first home buyers may pay less or none, depending on the price. Our stamp duty calculator shows what you’d pay.
The bottom line
- Check the cap for the exact area you’re buying in, especially in regional NSW.
- Get pre-approved with a lender that takes part in the scheme before you start bidding.
- Work out whether you’re comfortable with the higher repayment, not just whether you can get it. Our borrowing power calculator is a good place to start.
If you’d like us to check whether you qualify and how much you could borrow, get in touch. This article is general information only and doesn’t take your personal circumstances into account. Figures are illustrative. Scheme rules and lender policies change, so check the current rules before you apply.