What is the 5% Deposit Scheme (First Home Guarantee)?

The Australian Government 5% Deposit Scheme (formerly the Home Guarantee Scheme) is a federal government initiative that has helped hundreds of thousands of home buyers get into their own homes. It's administered by Housing Australia and works in conjunction with more than 30 participating home lenders.

It sees the federal government acting as a guarantor for a portion of a loan taken out by eligible buyers who don't have the 20% deposit typically required to secure a home loan.

The scheme helped more than 240,000 Australians enter the property market since its 2020 inception. Over financial year 2024-25, more than one in three first-time home buyers leant on what is now the 5% Deposit Scheme in order to purchase their first dwelling.

There are currently two types of buyers able to turn to the 5% Deposit Scheme:

• First home buyers with a deposit of at least 5%

• Single parents with a deposit of at least 2%
  Previously, single parents may have been eligable for the Family Home Guarantee

5% Deposit Scheme: What you need to know

The 5% Deposit Scheme helps eligible first home buyers to secure a home loan with a deposit as small as 5%, without needing to pay Lenders' Mortgage Insurance (LMI).

LMI is an insurance product that borrowers are generally required to take out on behalf of their lender if their deposit is less than 20% of their property's value. It can add considerably to the cost of taking out a loan – sometimes costing tens of thousands of dollars.

In practical terms, the 5% Deposit Scheme means you can borrow up to 95% of a home's value, with the federal government providing your lender a guarantee for up to 15% of the sale amount.

That means that, if you default on your loan, the government could step in and minimise your lender's loss, thereby reducing the risk you might represent (at least on paper).

Unlike previous iterations, the 5% Deposit Scheme is offered to an unlimited number of eligible purchasers each year.

Are you eligible for the 5% Deposit Scheme?

Here's the list of eligibility criteria applicants hoping to be supported by the 5% Deposit Scheme must meet:

• All applicants must be first home buyers or must not have owned property in Australia for at least 10 years prior

• All applicants must be at least 18 years old

• All applicants must be Australian citizens or permanent residents

• Applicants must be intending to live in the property

• Applicants must have a deposit of between 5% to 20% of the property's value

• The property must be an acceptable property type and within property price thresholds

Nowadays, any two people buying a first home together can jointly apply for the scheme. Spouses, siblings, friends, and other family members can be joint applicants and access the guarantee.

Income caps previously imposed on the scheme were removed on 1 October 2025.

5% Deposit Scheme eligible properties

The guarantee can be used to buy Australian residential properties only, with acceptable property types including:

• An existing house, townhouse, or apartment

• A house and land package

• Land and a separate contract to build a home

• An off-the-plan apartment or townhouse

Be aware, under the scheme, there may be timeframes and different criteria that apply to different property types.

This requirement mainly affects land purchases with building contracts. Building work may need to begin within a certain deadline for a property to qualify. Your lender or mortgage broker will be able to advise you of the particulars according to your individual circumstances.

There are also price caps on the value of properties covered under the scheme, as below:

State	Capital city or regional centre	Rest of state or territory
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	$600,000
Jervis Bay Territory & Norfolk Island	$550,000
Christmas Island & Cocos (Keeling) Islands	$400,000

Newcastle and Lake Macquarie, Illawarra, Geelong, the Gold Coast, and the Sunshine Coast are classed as regional centres.

Price caps are determined according to the financial year in which you make a reservation for the scheme through your lender.

How to apply for the 5% Deposit Scheme

Applications for the 5% Deposit Scheme can only be made through a participating lender or their authorised representative (e.g. a mortgage broker) at the time you're applying for your home loan.

The paperwork will generally be handled by your lender as part of your home loan application, but you'll have to provide any relevant documents.

First up, they'll likely check your eligibility for the scheme, and you'll need to provide proof of citizenship or permanent residency.

You'll also have to provide proof you haven't owned or held an interest in a property in Australia in the past ten years.

If you meet the eligibility requirements for the scheme, your lender will submit your application to Housing Australia on your behalf.

Other requirements

To be eligible for the 5% Deposit Scheme, you'll need to move into the property within six months of purchasing your home and continue to live in the property for as long as your home loan has a guarantee under the scheme.

5% Deposit Scheme for single parents: A guide

The 5% Deposit Scheme is also open to eligible single parents or eligible single legal guardians of at least one dependent who have a deposit of at least 2%.

Like first home buyers, single parents turning to the scheme won't face a limited number of places or income caps.

Unlike first home buyers, single parents can have owned a property in the past. However, an applicant can't intend to own a separate property to the one they're intending to buy with the guarantee's help. This means you can sell another property before purchasing under the scheme or buy out a former partner in a previously shared property.

The eligibility criteria are largely the same as for the other schemes, except home buyers can only apply as an individual and must be an eligible single parent or eligible single legal guardian.

Find out more about the 5% Deposit Scheme for single parents and guardians

5% Deposit Scheme: Pros and cons

Pros

• You can avoid paying Lenders' Mortgage Insurance

• You can become a home owner much faster
  You'll be able to enter the market much sooner as you won't need to save the 20% deposit generally required by home lenders. This can be a particular advantage in a rapidly rising property market.

• Wider choice of properties
  Many state and territory First Home Owner Grant schemes apply only to newly built homes. The federal government's Home Guarantee Scheme applies to a variety of properties.

Cons

• You will pay more in interest
  After securing your home loan, you'll essentially be paying interest on a 95% loan (or 98% if you're an eligible single parent) over the life of your loan. This means you will be paying much more in interest than a traditional home loan with a 20% deposit. However, you'll need to weigh this up with how much you might end up paying in rent to save a larger deposit.

• You might take on a bigger loan
  If you use the 5% Deposit Scheme to borrow more than you otherwise might, you could find yourself at a greater risk of experiencing financial hardship. Larger loans generally come with more sizeable risks. A hike in interest rates can mean a bigger jump in repayments. It can also expose you to the risk of negative equity, where a drop in the market can see the amount you borrow worth more than the value of your property.

• You are restricted to participating lenders
  Because there are a limited number of financial institutions involved in the scheme, you may not be able to access the most competitive interest rates on the market.

If you're looking for a competitive home loan, the table below has some of the lowest interest rates on the market:

Important Information and Comparison Rate Warning

Can I use the 5% Deposit Scheme alongside other first home owner grants?

Yes, you can generally access the federal government's 5% Deposit Scheme in conjunction with other state and territory initiatives designed to help eligible home buyers. These might include first home owner grants and stamp duty exemptions or concessions, depending on where you live or plan to buy.

Again, your lender or mortgage broker may be able to advise you on your eligibility and how to best take advantage of what's on offer.

Bear in mind though, eligibility criteria for the federal government's 5% Deposit Scheme may not always be the same as for other state or territory programs, so you'll need to check particular requirements.

Here's a guide to some state government programs:

• First Home Buyers Grant NSW
• NSW shared equity scheme
• First Home Owners Grant Victoria
• First Home Owners Grant Queensland
• First Home Owners Grant WA
• First Home Owners Grant SA
• First Home Owners Grant Tasmania

Which lenders participate in the 5% Deposit Scheme?

As at September 2025, there are 38 lenders offering the 5% Deposit Scheme. They are as follows:

Major bank lenders

• Commonwealth Bank
• National Australia Bank
• Westpac

Major bank affiliates

• Bank SA
• Bank of Melbourne
• St George

Non-major lenders

• Bendigo Bank
• Bank Australia
• Great Southern Bank
• MyState Bank
• IMB Bank
• Newcastle Permanent
• IMB Bank
• People's Choice
• Auswide Bank
• Beyond Bank
• Teachers Mutual Bank
• Credit Union SA
• Defence Bank
• QBank
• Police Bank
• Queensland Country Bank
• Regional Australia Bank
• Bank of Us
• Firefighters Mutual Bank
• G&C Mutual Bank
• Indigenous Business Australia
• UniBank
• Australian Military Bank
• Australian Mutual Bank
• Border Bank
• Bank First
• Community First Bank
• Health Professionals Bank
• Illawarra Credit Union
• Unity Bank
• BankWAW
• The Mutual Bank
• Gateway Bank

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