The Australian Government 5% Deposit Scheme is designed to make home ownership more achievable by reducing the amount buyers need to save before entering the property market. First home buyers can purchase with a minimum 5% deposit, while single parents or legal guardians may qualify with as little as 2%. More than 240,000 Australians have already used the Scheme.
Key Features
- Minimum deposit: 5% for first home buyers, 2% for single parents or legal guardians
- No Lenders Mortgage Insurance
- Applies to a wide range of property types
- Unlimited places available, no waiting list
How It Works
Eligibility – The buyer must meet Scheme eligibility requirements.
Deposit – Buyer saves a minimum deposit (5% or 2%).
Government Guarantee – Government guarantees up to 95% or 98% of the home’s value to a Participating Lender.
Home Loan – Lender issues a home loan without charging LMI.
Purchase – Buyer purchases an eligible property and moves in.
Instead of requiring a large deposit or Lenders Mortgage Insurance, the Government provides a guarantee to authorised lenders. This guarantee allows lenders to issue loans of up to 95% or 98% of a home’s value, depending on the applicant’s category. As a result, the upfront cost of purchasing a property is reduced, making it possible to enter the market sooner.
Eligibility Criteria
Applicants must:
- Be an Australian citizen or permanent resident, aged 18 or over
- Be a first home buyer or have not owned property or land in Australia in the past 10 years
- Have saved the required minimum deposit
- Purchase a property priced within the set caps for the location
- Apply for a Principal and Interest owner-occupier loan (up to 30 years, plus up to three years for new builds) from a Participating Lender
- Intend to live in the home as an owner-occupier
Applications can be made individually or jointly with one other person (partner, family member, or friend). Buyers must also meet the lending criteria of their Participating Lender.
Check the eligibility tool here
Eligible Properties
The Scheme applies to a wide range of residential property types, including existing homes, new builds, house and land packages, off-the-plan purchases, and vacant land combined with a building contract. Each property must fall within the price cap set for its location. In New South Wales, for example, the cap is $1.5 million in Sydney and major regional centres, and $800,000 in the rest of the state. Victoria’s limit is $950,000 in Melbourne and $650,000 elsewhere, while in Queensland the cap is $1 million in Brisbane and $700,000 across the rest of the state. Other states and territories have their own adjusted limits.
Consult the Home Buyer Declaration here
Price Caps (2025)
| NSW | $1,500,000 | $800,000 |
| VIC | $950,000 | $650,000 |
| QLD | $1,000,000 | $700,000 |
| WA | $850,000 | $600,000 |
| SA | $900,000 | $500,000 |
| TAS | $700,000 | $550,000 |
The Scheme can also be used for new construction. A buyer can either enter into a house and land package or purchase vacant land with a separate building contract. Conditions include signing a building contract within six months of loan settlement, starting construction within twelve months, and completing the home within thirty-six months. The buyer must then move in within six months of receiving the occupancy certificate.
Consult Property Price Caps here
Consult Participating Lenders here
Important Details About the Guarantee
It is important to understand the role of the Government guarantee. It only applies if the borrower defaults on the loan and the property is sold, and only after the sale proceeds and other available funds have been applied. The guarantee does not cover missed repayments during the normal course of the loan, nor does it prevent lenders from enforcing their rights in cases of default.
Applying for the Scheme involves confirming eligibility, working with a participating lender, and submitting required documentation, including proof of identity, proof of citizenship or residency, and a signed Home Buyer Declaration. Once approved, the applicant has ninety days to find and sign a contract for a property within the price limits. After settlement, the buyer must move into the home within six months.
Scenario 1. First Home Buyer
Alex, aged 28, is purchasing his first apartment in Brisbane valued at $650,000. He has saved a $32,500 deposit, which is 5% of the purchase price. His participating lender issues a loan for the remaining 95% without charging Lenders Mortgage Insurance. The guarantee reduces his upfront costs by about $20,000, and he is able to settle and move into his apartment within the required time frame.
Scenario 2. Single Parent
Maria, aged 36, is a single parent living in Melbourne. She is buying a townhouse priced at $700,000. With a $14,000 deposit, representing 2% of the property value, her lender issues a loan for the remaining 98% under the Scheme. She secures the property with significantly lower upfront costs and moves in with her child as an owner-occupier.