How the scheme works
Buy with a smaller deposit without paying LMI
The Australian Government 5% Deposit Scheme helps eligible first-home buyers purchase an owner-occupied home with a minimum 5% deposit. Housing Australia provides a guarantee to a participating lender, which can remove the need for Lenders Mortgage Insurance.
The guarantee is not a cash payment and it does not reduce your home loan. You remain responsible for the full loan balance, repayments, purchase costs and ongoing property expenses.
Illustrative $800,000 purchase
Purchase costs and any required financial buffer are additional. The lender's valuation may differ from the contract price.
Key features
What changed under the expanded scheme
From 1 October 2025, the scheme was expanded to remove income caps and place limits while increasing property price caps.
Minimum deposit
Eligible first-home buyers generally need saved funds equal to at least 5% of the lender-assessed property value.
No income caps
The scheme no longer applies an applicant income ceiling, although lender serviceability requirements still apply.
No waitlist
Scheme places are unlimited for eligible applicants, removing the former annual allocation limit.
No LMI
The government guarantee can allow the participating lender to approve an eligible loan without charging LMI.
Eligibility
Who may qualify?
To access the first-home-buyer stream, applicants generally need to meet all of the following scheme requirements.
- Be an Australian citizen or permanent resident aged at least 18.
- Have a saved deposit of at least 5% of the property value.
- Be a first-home buyer or not have owned property or land in Australia during the previous 10 years.
- Purchase an eligible Australian property at or below the location price cap.
- Live in the property as an owner-occupier rather than use it as an investment.
- Apply alone or jointly with one other eligible person, including a partner, friend or family member.
- Use an eligible owner-occupier principal-and-interest loan from a participating lender.
Scheme eligibility is not loan approval
A participating lender must still assess your income, living expenses, debts, credit history, deposit evidence and the property. You can meet the scheme rules but still be declined if you do not satisfy the lender's credit policy.
Triple O Finance can help compare participating-lender policies, but neither a broker nor Housing Australia can guarantee loan approval.
What we review before you apply
- Your previous property ownership history.
- Your deposit amount and source of savings.
- Your income, liabilities and living expenses.
- Your proposed property type and location.
Property requirements
What can you buy?
The scheme supports a broad range of homes, provided the property is acceptable to the lender and does not exceed the applicable location price cap.
Established or new homes
Eligible houses, townhouses, apartments and units may qualify, subject to the lender's security requirements.
Building options
House-and-land packages, eligible off-the-plan purchases and vacant land with an eligible building contract may be considered.
Location price caps
The maximum eligible property value differs by state, territory and location. The cap is not a borrowing entitlement or suggested budget.
Cash required
A 5% deposit is not the total amount you may need
The minimum deposit is calculated against the participating lender's assessed property value, which may differ from the purchase price. Buyers should also budget for costs that may not be covered by the loan.
- Contract deposit and balance of required contribution.
- Stamp duty after any exemption or concession.
- Conveyancing or solicitor costs.
- Building, pest or strata inspections.
- Registration, lender and settlement charges.
- Moving expenses and an appropriate post-settlement buffer.
Be prepared for a valuation shortfall
If the lender values the property below the agreed purchase price, the scheme deposit and guarantee are based on the lender-assessed value. You may need additional funds or may need to reconsider the purchase.
Example: If you agree to pay $800,000 but the lender values the property at $780,000, you may need to contribute the $20,000 difference in addition to your required deposit and costs.
Your available funds may need to cover
- Your required deposit.
- Purchase and settlement costs.
- Any valuation shortfall.
- An appropriate post-settlement buffer.
Consider the trade-offs
The scheme can reduce the deposit hurdle - but not the loan
Potential benefits
- Purchase with a smaller deposit.
- Avoid LMI where all requirements are met.
- Enter the market without waiting to save 20%.
- Choose from several eligible property types.
- Apply jointly with one eligible person.
Important limitations
- A larger loan normally means higher repayments and more interest over time.
- Property price caps may limit where or what you can buy.
- Only participating lenders can offer the scheme.
- You must continue meeting owner-occupier obligations.
- The guarantee protects the lender - not the borrower - from an eligible shortfall after default.
Compare before deciding
Is the 5% Deposit Scheme your most suitable pathway?
Eligibility does not automatically make the scheme the best option. Your repayment capacity, savings timeline and alternative deposit strategies should also be considered.
5% Deposit Scheme
May suit an eligible buyer with sufficient income to service the loan but a smaller deposit. No LMI applies when scheme requirements are met.
Standard low-deposit loan
May offer different lender or property options, but LMI may apply and the interest rate or credit criteria may differ.
Family guarantee
May reduce LMI or the required cash contribution, but places part of the guarantor's property at risk and requires careful advice.
A 10% or 20% deposit may reduce repayments and interest, but waiting longer can also have financial and personal consequences. The comparison should be based on your circumstances rather than the deposit percentage alone.
Application process
How to apply through a participating lender
Review your position
Assess income, debts, living expenses, deposit funds and an affordable purchase range.
Check scheme eligibility
Confirm ownership history, residency, deposit, loan and owner-occupier requirements.
Compare participating lenders
Review lender policies, borrowing capacity, rates, features and property restrictions.
Seek pre-approval
Provide supporting documents for lender and scheme assessment before property hunting.
Find an eligible property
Stay within the location price cap and arrange legal and property due diligence.
Formal approval and settlement
The lender completes valuation, confirms eligibility and finalises the loan and guarantee.
Pre-approval remains conditional. The property, valuation and updated application must still be acceptable. Obtain legal advice before signing an unconditional contract or bidding at auction.
How Triple O Finance can help
Understand the scheme and the loan behind it
We can help assess whether the scheme may apply, compare participating-lender policies and explain how the proposed loan fits your deposit, repayments and property plans.
Eligibility review
Check the main scheme requirements before starting an application.
Borrowing assessment
Review income, liabilities, expenses and likely lender servicing outcomes.
Lender comparison
Compare relevant participating lenders rather than approaching one bank only.
Application support
Coordinate documents, lender communication, approval milestones and settlement preparation.
Information reviewed 25 September 2026. Scheme rules and lender policies can change. General information only; eligibility and loan approval are assessed individually.