5% Deposit Scheme 2026: First Home Guarantee Caps & Eligibility
Buy with 5% deposit and no LMI. Since October 2025 there are no income caps and no limit on places. State-by-state price caps, eligibility checklist, an $800k worked example and the trade-offs.
The Australian Government's 5% deposit scheme, formally the First Home Guarantee, lets you buy with a 5% deposit and pay no lenders mortgage insurance (LMI). The Government guarantees up to 15% of the loan to the lender, which is what LMI would otherwise cover.
From 1 October 2025 the scheme was expanded significantly: income caps were removed, the annual cap on places was scrapped, and property price caps were lifted in every state. It is now open to almost any first home buyer, which changes the maths of saving for a 20% deposit.
How it works
- You save a deposit of at least 5% of the purchase price
- You borrow up to 95% from a participating lender
- Housing Australia guarantees the gap between your deposit and 20%
- Because the lender is protected, it does not charge you LMI
- You own 100% of the home. The Government takes no equity share
That last point is the key difference from Help to Buy, where the Government co-owns part of your home. Under the First Home Guarantee you carry the full loan, but you also keep all the capital growth.
Property price caps from 1 October 2025
| State / territory | Capital city & regional centres | Rest of state |
|---|---|---|
| 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 |
| ACT | $1,000,000 | n/a |
| NT | $600,000 | $600,000 |
"Regional centres" covers the larger regional cities in each state, such as Newcastle, Wollongong, Geelong, the Gold Coast and the Sunshine Coast. The definition is set by Housing Australia, so check the exact postcode before you shop.
Eligibility checklist
- Aged 18 or over
- Australian citizen or permanent resident
- First home buyer, or you haven't owned property in Australia in the previous 10 years
- You intend to move in within 6 months and live in the property
- Buying as an individual or with one other person (partner, friend or family member)
- Deposit of at least 5% of the purchase price
- Loan through a participating lender (most major banks and many smaller lenders)
Worked example: $800,000 home
Without the scheme (5% deposit, LMI charged)
With the First Home Guarantee
The scheme saves tens of thousands in LMI. Just as important, it saves time. Going from 5% to 20% on an $800k home means saving another $120,000. At $2,000 a month that is five years, during which prices in most capitals have historically risen faster than you can save.
The trade-offs
- Bigger loan, bigger repayments.A 95% loan on $800k costs roughly $720 a month more than an 80% loan at 6% over 30 years. You are paying interest on the deposit you didn't save.
- Thin equity buffer. With 5% equity, a modest price fall can put you in negative equity. That matters if you need to sell or refinance in the first few years.
- Price caps still bind. In inner Sydney and inner Melbourne, the caps exclude most houses. The scheme works best for apartments, townhouses and middle-ring houses.
- Owner-occupier only. If you move out and rent it, the guarantee can end. Talk to your lender before you change your plans.
Stacking it with state concessions
The First Home Guarantee stacks with state stamp duty concessions and the First Home Owner Grant. A first home buyer purchasing a $600k established home in Queensland, for example, can use a 5% deposit, pay no LMI and pay no transfer duty. See the state rules in our FHB grants guide, and the stamp duty guides for NSW, VIC and QLD.
The other Home Guarantee Scheme options
- Family Home Guarantee:single parents and single legal guardians can buy with a 2% deposit, and don't need to be first home buyers.
- Regional First Home Buyer Guarantee: folded into the main First Home Guarantee as part of the October 2025 expansion.
Find postcodes that fit under the cap
PropPulse reports show the estimated median price, FHB eligibility and stamp duty for every Australian postcode, so you can see which suburbs fall under your state's cap. The Suburb Finder matches postcodes to your budget and income. Start free.