What is the 5% Deposit Scheme?
The short version
It’s a government scheme that can let eligible buyers purchase with a 5% deposit (2% for eligible single parents) and avoid LMI. Your interest rate still depends on the lender, product and application. The main catch: you have to live in the property and still qualify for the loan.
You may know it by its old name. Until 1 October 2025 this was the First Home Guarantee, run under the Home Guarantee Scheme (you’ll still see it written as FHBG or HGS). Same scheme, new name, better settings. It’s run by Housing Australia, the government agency behind it, and delivered through participating lenders.
Here’s why that matters. Borrow more than 80% of a place and the bank makes you pay Lenders Mortgage Insurance. The annoying part? It protects them, not you, and it can run north of $30,000.
The scheme puts the government behind that gap instead. So the lender drops the LMI, and you get in with a lot less saved. Here’s what that means in numbers:
There are 2 streams under it. The 5% one is the First Home Guarantee. The 2% one, for single parents and legal guardians with a dependent, is the Family Home Guarantee, and you don’t have to be a first home buyer for that one.
That last one is the part people underrate. At the same saving rate, a 5% deposit target is a quarter of a 20% one, so the deposit itself can take roughly one quarter of the time. Buying costs, loan approval and price changes still matter. In our big cities, closing that deposit gap can still save years of waiting.
Remember this
Being eligible for the scheme isn’t the same as being approved for the loan. You’ve still got to pass the lender’s normal credit check, and each one adds its own rules on top. That gap is where a good broker earns their keep.
Before you can play that gap, though, you need to see what the scheme actually does to a loan, and it comes down to a single picture the banks somehow make complicated.
Chapter 2How it works
It comes down to 1 picture. Here’s a home, 2 ways.
Drag it to your budget:
That smaller deposit isn’t just less to save — it’s years you’re not stuck renting. Drag what you can put aside each month:
The government guarantee just sits behind your loan, which is how the lender drops the LMI.
What changed on 1 October 2025
The scheme got a lot better. Income caps scrapped, the old $125k single and $200k couple limits are gone, no waiting list or capped spots, and higher price caps nationwide. You also count as a first home buyer again if you haven’t owned here in 10 years, handy for anyone rebuilding after a separation.
Why is skipping LMI such a big deal?
3 reasons, and they stack up.
First, LMI on a small deposit isn’t small. This page’s illustrative model estimates about $32,775 on a $750,000 purchase. The real premium depends on the lender, insurer, property and borrower—and it protects the lender, not you.
Second, some non-scheme 95% loans may be priced differently from lower-LVR or scheme products. The gap varies by lender, product and borrower; the calculator below uses a 0.40 percentage-point example, not a current universal rate difference.
Third, the one that catches people: LMI usually gets added onto your loan. So you pay interest on it for the full 30 years.
If you qualify, the scheme removes LMI. It does not guarantee a particular interest rate, borrowing capacity or approval.
Don’t take my word for it.
Slide it to your price and watch what LMI plus the higher rate costs over 30 years:
Interactive example
Compare a scheme loan with a 95% loan plus LMI
Both examples use the same 5% cash deposit. The rates and LMI premium are illustrative assumptions—not a quote, approval, or assessment of scheme eligibility.
- Your deposit (5%)
- $37,500
- LMI you pay
- $0
- Example rate assumption
- 6.25%
- Monthly repayment
- $4,387
- Your deposit (5%)
- $37,500
- LMI you pay
- ~$32,775
- Example rate assumption
- 6.65%
- Monthly repayment
- $4,784
Estimated repayment difference in this example
$143,070
This model adds an estimated $32,775 premium to the 95% loan and applies the two example rates above. The monthly repayment difference is about $397.
For scale only, that illustrative difference is:
Seeing that number is the easy part. Whether you can use the scheme at all starts with a ceiling almost nobody checks properly, and it’s set by your exact suburb.
Chapter 3The price cap for your area
There’s a price ceiling, and it depends where you buy. 2 numbers must come in under it: what you pay, and what the bank values it at.
Housing Australia sets these caps by region and updates them, so the First Home Guarantee caps you read on an old blog post are probably out of date. These are the current ones.
| Where you’re buying | City & big regional centres* | Rest of state |
|---|---|---|
| Queensland | $1,000,000 | $700,000 |
| New South Wales | $1,500,000 | $800,000 |
| Victoria | $950,000 | $650,000 |
| Western Australia | $850,000 | $600,000 |
| South Australia | $900,000 | $500,000 |
| Tasmania | $700,000 | $550,000 |
| ACT | $1,000,000 | n/a |
| Northern Territory | $750,000 | $600,000 |
* Higher caps cover each jurisdiction’s capital and listed major regional centres; exact boundaries depend on postcode. Jervis Bay & Norfolk Island: $550,000. Christmas & Cocos Islands: $400,000.
Not sure which band your suburb lands in? Pop your postcode in below:
Check the price cap for your postcode
Enter the postcode of the suburb you’re considering to see its estimated scheme property-price cap.
Australian postcodes have four digits.
Watch out, the postcode trap
In Queensland, only Brisbane, the Gold Coast and the Sunshine Coast get the $1M cap. Toowoomba, Cairns, Townsville and everywhere else sit on $700k. And the cap is set by your exact suburb, not the nearest big city.
Here’s one that still stings. A buyer came to us after going straight to her bank. Deposit saved, all set to go.
When we ran the numbers, her exact suburb’s cap was lower than she’d been told. The place she wanted pushed her over the limit and out of the scheme.
Her bank never checked the cap for her postcode. We did, first thing, because we always do. We rescued her deposit and got her sorted, but by then the LMI was locked in, around $15,000.
That’s the risk of going direct: if no one checks your exact postcode early, the cost is locked in before anyone notices. Check the address first, every time.
Get the postcode right and the only thing left is whether you tick the boxes, and in 2026 that list is a lot shorter than it used to be.
Chapter 4Who qualifies in 2026?
Short version: an adult citizen or PR, buying somewhere to live in, under your area’s cap, with the right small deposit.
These are the First Home Guarantee rules. Single parents going down the Family Home Guarantee path skip the first-home-buyer test, but everything else below still applies.
Run yourself through the full checklist:
You’ll tick these
✅ Australian citizen or permanent resident, 18 or over
✅ Buying to live in, not an investment
✅ At or below your area’s price cap (the table in chapter 3)
✅ A first home buyer, or you haven’t owned Australian property in the last 10 years
✅ At least the minimum deposit for your pathway (5%, or 2% for the single-parent pathway). Your participating lender decides what deposit sources it accepts and whether it requires genuine savings
✅ For the 2% pathway: a single parent or legal guardian with a dependent child, applying as the sole borrower and owning no other property when this home settles
Price caps and criteria as at July 2026, and can change without notice.
Nice surprise for Kiwis
New Zealand citizens here on the Special Category Visa (subclass 444) count as permanent residents for this scheme. So you get the 5% (or 2%) pathway just like an Aussie citizen. More in our NZ citizen home loan guide.
You can tick every one of those boxes on your own. But almost everyone asks the same next question: can I team up with someone to get there faster?
Chapter 5Can you buy with your parents or a friend?
Short answer: yes, with 1 other person. But there’s a catch.
Go solo, or jointly with 1 other person. Partner, mate, sibling, doesn’t matter. Both of you have to tick every box, including the 10-year rule: no Australian property in the past 10 years.
And no, 3 mates can’t team up. We get asked a lot. 2 people is the scheme’s hard cap.
That’s why buying with Mum or Dad usually doesn’t fit. They already own a home, so they fail the 10-year test.
If your parents want to help
2 better options: a guarantor home loan, where their equity backs your loan without them being a borrower, or gifted money on top of the first 5% you saved yourself.
So the who is sorted. Now the part that quietly decides it: the small traps that sink applications people were sure were in the bag.
Chapter 6The 5 traps that quietly kill applications
Want to know what kills scheme applications? These 5. We see them every week. All fixable, if you catch them early.
📍 The postcode trap
One street can tip you over the limit, or out of the scheme, and some lenders squeeze inner-city apartment postcodes even harder. The chapter 3 story is this trap in action. Always check the exact address first.
🏦 The retained-savings cap
You can be knocked back for having too much left over after settlement. Chapter 7 has the rule, and a calculator to check your number.
📋 “The scheme isn’t the loan”
We’ve watched a single dad with his Family Home Guarantee 2% deposit and eligibility sorted still get declined, because the lender judged the file too risky. The fix is almost always lender choice.
🎁 The gifted-deposit surprise
Most lenders won’t count a gift toward your first 5%. Some will. Wrong lender, and Mum and Dad’s gift can’t save you. Chapter 8 shows who bends.
📐 The “lower of price or valuation” rule
Buying from family below market value? The scheme lends against the actual price, not the higher valuation, which can put your LMI waiver at risk. Family deals need careful structuring.
The sneakiest of those five earns its own chapter, because it’s the one where doing everything right can still get you knocked back.
Chapter 7Genuine savings vs the “retained savings” cap
2 savings rules trip people up. They sound the same. They’re opposite problems.
Genuine savings
Money you’ve built up and held, usually for at least 3 months, rather than a last-minute gift or windfall. The scheme wants your first 5% to be exactly this. Full guide here.
Retained savings
The cash you’d have left in the bank after you’ve bought, once the deposit and all the buying costs are paid.
Here’s the twist most people don’t see coming. Some participating lenders review how much cash remains after settlement, and may apply their own retained-cash policy. There is no single six-month rule across every lender. The example below shows one policy approach so you can see the scale, not a universal cut-off.
Sounds mad, but we see it weekly. The catch is people forget what buying eats up. You move further out and need a car. The place is empty and needs furniture. Count that in and you’re usually well under the line.
Check your own number, drag in what you’d have left after settlement:
If retained cash is an issue under one policy, the options can include contributing more to the purchase or considering a lender whose policy better fits the reason for your buffer. That decision still needs a full assessment.
“They wanted to keep about $65k for renovations. Their own bank called it too much and knocked them back.”
The scheme was fine. Their bank’s policy wasn’t.
We took it to a lender comfortable with the reno money set aside, and it went through. They’d nearly walked away from the place.
It’s since gone up about $145k.
A first home buyer we helped · figures rounded
Notice how often the fix was simply “a different lender”. That’s not a throwaway line, it’s the whole game, and hardly anyone shows you how differently the banks behave.
Chapter 8How each lender actually treats it
This is the bit almost nobody publishes.
Every site gives you the list of “participating lenders.” Hardly any tell you how each one applies it. Housing Australia sets the scheme rules; the overlays on top are the lender’s own. 3 that catch people most:
🏙️ Inner-city apartments
Some lenders cap CBD and high-density postcodes at 80%, which kills the 95% the scheme needs. NAB is one. Houses are usually fine, city-centre units are where it bites.
🎓 A big HELP/HECS debt
Every lender treats it differently. A couple, CBA especially, can soften a nearly paid-off HELP debt, sometimes the difference between approved and declined.
💰 Proving the first 5%
The scheme wants your first 5% saved by you, held 3 months. A clean rental history can stand in at some lenders, and some banks will count a family gift. Same deposit, opposite answers.
This is a sample, not our full panel. A few of the big names and how differently they treat the scheme, plus a couple of well-known ones that aren’t in it at all. As at July 2026, and it changes without notice:
| Lender | The overlay that matters | Status |
|---|---|---|
| CBA | Won’t cover you if you have 20%+ saved. The stand-out: a family gift can count toward your 5% genuine savings. | Available |
| NAB | The Guarantee Certificate must be attached before unconditional approval. Gifts not accepted as your contribution. | Available |
| ANZ | Retained savings capped near $30k after settlement. No guarantors on scheme loans. | Available |
| Westpac / St.George | Genuine savings required whatever your deposit. Gifts not accepted as genuine savings. | Available |
| Teachers Mutual | Built for teachers and education staff. Strict on genuine savings, gifts don’t count toward your 5%, but no inner-city postcode fuss. | Available |
| Macquarie | Not part of the scheme. | Not participating |
| ING | A popular online lender, but not on the scheme, so it will never offer it. | Not participating |
| Suncorp | Not on the scheme either. Plenty of big names simply aren’t. | Not participating |
Nathan’s takeNathan Vecchio · Hunter GallowayPeople treat “the banks” like they’re all the same. They’re not. Even their pre-approvals aren’t equal, and that one bites people right at the auction.
Some lenders, CBA and UBank for example, fully assess you upfront. A real person checks your income, your job, and whether you can actually afford it before you go shopping.
Others, like Westpac and St.George, only give a conditional pre-approval. A lot of the checking waits until you’ve found a place, so it can still fall over after you’ve signed.
We point you to the lenders whose “yes” means yes.
Lender choice covers almost every situation. The one it can’t quite fix on its own is when the person selling you the home is your own family.
Chapter 9Buying a home from family
It works, but 1 rule catches well-meaning family deals every time.
If your parents sell you their place for under what it’s worth, that “gifted equity” can count as your deposit. Sounds perfect.
But the scheme lends against the lower of the price or the valuation. So the actual amount you pay, not the higher valuation.
“She was buying her parents’ place, worth around $900k, for about $765k. Great deal, right? Nearly cost her $13,000.”
The plan was mum and dad selling under market value, with that gap becoming her deposit. Really common way to do it.
But the lender would only lend against the $765,000 she was paying, not the $900,000 valuation. That put her LMI waiver, call it $12k to $14k, at risk.
We restructured the deal so it held together. Family deals are absolutely doable, they just need a bit of structuring.
A buyer Nathan helped purchase from family · figures rounded
Structure the family deal right and it holds together. Better still, the scheme rarely travels alone, there are grants you can stack straight on top of it.
Chapter 10Other grants you can stack on top
A First Home Guarantee spot doesn’t rule out the other first-home benefits. Depending on your situation, you might also use:
🏗️ First Home Owner Grant (QLD)
A grant for buying or building a brand-new home. Our full FHOG guide has the current figures.
🧾 Stamp duty concessions
First home buyers in QLD may pay reduced or no transfer duty depending on price and whether the home is new. Run your number through our stamp duty calculator.
💼 First Home Super Saver (FHSS)
Save your deposit inside super and withdraw it, often with a tax benefit, and the withdrawal can count toward your deposit. How FHSS works.
With the freebies stacked, one fair question is left: is this really your best low-deposit route, or would a guarantor or Help to Buy beat it?
Chapter 11Scheme vs guarantor, LMI waiver and Help to Buy
Often the best low-deposit path, but not always. The quick version:
Scheme vs a guarantor loan
A guarantor uses your parents’ equity to cover the deposit gap. But it puts them on the hook, and it doesn’t lift your borrowing power. If your limit is income, not deposit, a guarantor changes nothing. The scheme gets the same no-LMI result without a family home on the line.
Scheme vs a professional LMI waiver
Nurses, doctors, accountants and some other professions can get LMI waived by certain lenders. Sometimes that wins. Often the scheme wins on the smaller deposit. A case-by-case call, which is what we run for you.
What about Help to Buy, the shared equity one?
People mix this one up with the 5% scheme, so it’s worth a quick word.
Help to Buy is the government’s shared equity scheme. You put in as little as 2%, and the government chips in up to 30% of an existing home, or 40% for a new build, to shrink your loan.
Sounds great. But here’s the catch: it doesn’t just lend you that bit, it owns that share of your home.
That’s the whole difference. With the 5% scheme you own 100% from day one. With Help to Buy, the government is your co-owner the whole time you hold it. A few things come with that:
📈 You give up a slice of the growth
When the home goes up in value, the government’s share goes up too, and they take their cut when you sell. Under the 5% scheme every dollar of growth is yours.
🎟️ Tighter caps, very few spots
Help to Buy has lower income caps and limited places each year, so it’s competitive just to get in. The 5% scheme has had no income caps and no place limits since October 2025.
💵 You still have to buy them out
To fully own your home you have to pay the government’s share back, either in chunks over time or when you sell. It sits over the property the whole way through.
🔑 You can’t easily turn it into an investment
The big one we see. Loads of people buy, live in it a year or 2, then move out and rent it. With the 5% scheme that’s a normal refinance out of the guarantee, then rent away. With Help to Buy you’d have to buy back the government’s slice first: a much bigger loan, and you need to qualify for it. Same story if you move overseas.
My two centsJayden Vecchio9 times out of 10, owning the whole home beats sharing it with the government.
The 5% scheme gets you in with a small deposit, no LMI, and you keep 100% of the place and 100% of the growth. Help to Buy suits a narrow case, usually someone on a lower income who can’t service a full loan. For everyone else, keep the whole thing yours.
So it usually wins on the maths. But there’s one thing the maths leaves out entirely, and it turns out to be the part that matters most.
Chapter 12Is it worth it? Our take
One honest thing before the numbers.
My wife and I moved around for years. Sydney, the Gold Coast, then Brisbane. Always renting, always half-packed. The week we bought our first place, something shifted. We’d stopped moving, and for the first time it felt like we belonged somewhere.
That’s the bit a calculator can’t show you. Painting a wall because you can. A kid’s height marked on your own door frame. Knowing no one can make you move at Christmas.
So run the numbers, they matter. But a home is more than a spreadsheet.
The bottom lineJayden VecchioFor most first home buyers who’d otherwise spend years saving for 20%, it’s close to a no-brainer.
Getting in years earlier, with no LMI and often the same rate as a full deposit, beats waiting while prices run away from you.
I’d only say slow down in 3 spots: you’re right on a price cap, you’ve already got a big deposit, or your deposit is mostly gifted (gifts are fine, but most lenders want the first 5% saved by you). Everyone else, it’s usually a yes.
Your numbers
Quick tip: drag any slider above and this section rewrites itself around your price. Go on, I’ll wait.
| The upside | The trade-offs |
|---|---|
| Buy years sooner with 5% or 2% down | You borrow more, so repayments are higher |
| No LMI, save up to ~$30,000+ | Price caps can push you to a different area |
| No income caps, no waiting list | Owner-occupier only, principal & interest only |
| Same rate as 20% at many lenders | Smaller deposit = less buffer if prices dip |
Weigh all that up and most people are sold. Which leaves the question we get more than any other: why not just walk into my own bank?
Chapter 13Why not just go to my bank?
You can. Sarah did.
But a bank can only sell you its own loans. 1 menu. If the scheme’s not on it, or their rules don’t fit you, the answer is no and the conversation is over.
A broker plays the whole field. We’ve got 30+ lenders, and we know which one says yes to your exact situation: your postcode, your deposit, the savings you want to keep.
The other difference? Price. Our service costs you nothing. The lender pays us when your loan settles.
“You helped me bring to life something I couldn’t achieve with the Big4 banks.”
That’s T. Rogers, an accountant, in his Google review. He pushed us for a ridiculously short settlement, and we pulled it off.
Real 5-star Google review
So once you know a broker plays the whole field, only one thing’s left: actually starting. Here’s exactly how.
Chapter 14How to apply (and what you need)
You can’t apply to Housing Australia directly. First Home Guarantee spots get reserved through participating lenders and their brokers. The short path:
The 4 steps
1. Check you’re eligible. The checker on this page is a fast start.
2. Get in touch with us. We match you to the lender whose rules suit your situation.
3. Get pre-approved and reserve your scheme spot, then house-hunt under your cap.
4. Buy, settle, move in, no LMI paid.
You’ll also sign the government’s Home Buyer Declaration, reissued every 1 July, and hand over your latest ATO Notice of Assessment. We’ll sort both of those out with you.
The no-downside bit
Remember, our help costs you $0. The lender pays us when your loan settles, and you don’t pay a cent more for it.
So the worst case of a 5-minute chat? You find out exactly where you stand. The best case is everything this page just showed you.
And don’t take my word for it. We’re rated 5.0 on Google by first home buyers who sat exactly where you’re sitting. Read their reviews, then come say g’day.
Eligibility for the scheme is not loan approval, lender credit policy still applies. Client stories are real, with names and identifying details changed. General information only; it doesn’t consider your personal circumstances. Hunter Galloway, Credit Representative 476903 of Australian Credit Licence 389328.