The First Home Guarantee, now the 5% Deposit Scheme
The First Home Guarantee is now called the Australian Government 5% Deposit Scheme. It lets a first home buyer buy with a deposit of 5%, or 2% for a single parent, without paying lenders mortgage insurance. The government doesn't lend or give you money: it guarantees the lender against a loss, up to a limit, in place of the insurance. Since 1 October 2025 there's no income cap and no limit on places.
What the scheme actually does
Normally, borrowing more than 80% of a home's value means paying lenders mortgage insurance, a one-off cost that protects the lender. Under the scheme, Housing Australia, a government agency, guarantees the lender instead, so you don't pay it.
Two things follow. The guarantee protects the lender, not you: you still owe the whole loan. And the scheme doesn't approve the loan: the lender still assesses you as it would anyone else. Passing the scheme's checks and passing the lender's are two separate tests.
What changed on 1 October 2025
No income cap.
The scheme used to be means-tested. It isn't any more.
No limit on places, and no waiting list.
It used to have a set number of places each year.
The Family Home Guarantee is now part of it.
Single parents and legal guardians buy from a 2% deposit within the scheme.
Regional buyers use the main scheme.
There's no separate regional guarantee in the scheme's current guide.
Who qualifies
Age and residency.
You're 18 or older and an Australian citizen or permanent resident.
Not a recent owner.
You haven't owned property in Australia in the last 10 years, including land, a commercial property or an investment, alone or with a former partner.
Alone or with one other person.
A joint application is exactly two people, who don't have to be a couple. Both must pass every test. Single parents apply alone.
Deposit of at least 5%, or 2% for single parents and legal guardians, and less than 20%, after purchase costs.
A home to live in.
You move in within six months of settlement and keep living there while the guarantee is in place. It can't be rented out.
Under the price cap for where you're buying.
The price caps
| State or territory | Capital city and regional centres | Rest of the 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 | $600,000 |
Both the price you pay and the lender's valuation have to be at or under the cap. For land with a separate building contract, the land and the build together count.
The "regional centres" are a short list: in New South Wales, the Central Coast, Coffs Harbour–Grafton, the Illawarra, the Mid North Coast, Richmond–Tweed, and Newcastle and Lake Macquarie; in Victoria, Geelong; in Queensland, the Gold Coast and the Sunshine Coast. Everywhere else outside a capital city is on the lower cap.
How much deposit you need, and the limit people miss
An illustration, not a client file: a $700,000 home in Brisbane is under the Queensland capital-city cap. A 5% deposit is $35,000, and the loan is $665,000 with no mortgage insurance. You'll also need money for purchase costs such as stamp duty and legal fees, on top of the deposit.
The scheme also has a ceiling. If you have 20% or more saved after purchase costs, $140,000 on that $700,000 home, you can't use it. And the scheme's guide says moving money to someone else to get under the limit goes against the scheme's intent.
Why applications fail
Places don't run out any more, so these are the reasons left:
The 10-year test catches more than people expect.
Inherited land, a share in a commercial property or a property held with a former partner all count as owning.
Too much saved.
20% or more after costs puts you outside the scheme.
Over the cap.
The price, or the lender's valuation, comes in above the cap for that area.
The lender says no.
The scheme's checks passed, but the lender's assessment of your income and spending didn't.
One of two applicants doesn't qualify.
One ineligible applicant rules out the pair.
Land and building timing.
For house and land, the land has to be titled before the guarantee can be issued, within the 90-day pre-approval period. If you already own vacant land, you can't use the scheme to build on it, and owner-builder contracts don't qualify.
The rules while the guarantee is in place
You live in it. It can't be rented out while the guarantee lasts.
You can't increase the loan. No topping up for a renovation. Rate changes and switching products with the same lender are fine.
Refinancing has a catch. You can move to another lender on the scheme's panel and keep the guarantee, without increasing the loan or extending the term. Move to a lender that isn't on the panel and the guarantee ends.
It ends on its own once your loan reaches 80% of the property's value on your scheduled repayments. Extra repayments you can redraw don't count toward getting there.
How to apply
You apply through a lender on the scheme's panel, not to the government. The panel has more than 30 lenders, including the four major banks, and changes from time to time; the full list is on the scheme's website. Once a lender gets you a place, you have 14 days to complete the application, and pre-approval gives you 90 days to find a home and sign a contract.
The declaration you sign about your eligibility is a statutory declaration, and a false one is a criminal offence. Housing Australia checks it against council and title records.
The scheme, a guarantor, or paying LMI
5% Deposit Scheme.
No mortgage insurance and no family property at risk, within the price caps and rules above.
Help to Buy.
The government shares in the value of the home. It can't be combined with this scheme.
Family guarantee.
A parent's home equity stands in for part of the deposit, with real risk to them.
Pay LMI.
No scheme rules on where you buy or whether you rent it out later, at the cost of the insurance.
First Home Guarantee questions
Yes, under a new name. Since 1 October 2025 it's the Australian Government 5% Deposit Scheme, with no income cap and no limit on places.
Want to know if you qualify?
Tell me where you're looking, roughly what you'll pay, what you've saved and what you earn. I'll check you against the scheme's rules and a lender's, and tell you whether the scheme or another route suits you better.
You'll hear back within the hour in business hours, and by 9am the next business day after hours.
Sources
- 1
Housing Australia, Australian Government 5% Deposit Scheme Information Guide for First Home Buyers, dated 1 July 2026. Checked 29 September 2026.
- 2
firsthomebuyers.gov.au, Australian Government 5% Deposit Scheme. Checked 29 September 2026.
https://
firsthomebuyers.gov.au/ australian-government-5-percent-deposit-scheme - 3
firsthomebuyers.gov.au, Participating lenders. Read 29 August 2026.
Updated 3 October 2026