The short version
- Buy with a 5% deposit and no lenders mortgage insurance, as the government guarantees part of the loan.
- Since 1 October 2025 there are no income limits and no caps on places.
- The home must be under a price cap, which depends on where you buy.
Buying your first home requires a substantial amount of savings to secure a home loan. However, there are government schemes to ease the deposit burden for first-time home buyer loans.
This article explains how the First Home Loan Deposit Scheme (FHLDS) works and who qualifies for it. The scheme is now called the 5% Deposit Scheme (officially the First Home Guarantee) and is run by Housing Australia, formerly the National Housing Finance and Investment Corporation (NHFIC). It's a government scheme aimed at helping first-time homebuyers buy their properties sooner.
The government hopes to achieve this by shortening how long it takes eligible candidates to save up for their deposit. It both reduces the required deposit to 5% of the property value and allows these candidates to avoid paying lenders mortgage insurance (LMI).
When the scheme began, only 10,000 places were released each financial year. Since 1 October 2025 there is no limit on places and no income test. Housing Australia does not take direct applications. The scheme is instead made available through participating banks and lenders.
How does the First Home Loan Deposit Scheme work?
Here are the major points that break down what the scheme achieves and how it works.
- The applicant will need to pay a deposit of 5% (rather than the usual 20%) to secure a home loan.
- The government will act as a guarantor for the remaining 15% of the normal deposit required.
- The applicant will have to borrow and pay back the remaining 95% of the home loan.
- The applicant doesn't need to pay LMI, which is often required for small deposits.
- The property will need to be a residence and lived in by the applicant, who must move in within six months of settlement (or of the home being finished, for a new build).
You can apply for this scheme through participating lenders. Single parents and legal guardians earning up to $125,000 can buy with a deposit of just 2% through the Family Home Guarantee, with the government guaranteeing up to 18% of the loan. They don't need to be first home buyers, but can't own another property.
5% Deposit Scheme price caps by state
There are differing upper limits on the value of the homes eligible for the scheme in the different states. When the scheme began there were separate, higher caps for new homes under the New Home Guarantee, but since 1 October 2025 the same caps apply to new and existing homes.
The price caps differ between capital cities and large regional centres, and the rest of each state. These are the caps from 1 July 2026:
| State or territory | Capital city and regional centres | Rest of the state |
|---|---|---|
| NSW | $1,500,000 (Sydney, Newcastle, Lake Macquarie, Illawarra, Central Coast, Coffs Harbour-Grafton, Mid North Coast and Richmond-Tweed) | $800,000 |
| VIC | $950,000 (Melbourne and Geelong) | $650,000 |
| QLD | $1,000,000 (Brisbane, Gold Coast and Sunshine Coast) | $700,000 |
| WA | $850,000 (Perth) | $600,000 |
| SA | $900,000 (Adelaide) | $500,000 |
| TAS | $700,000 (Hobart) | $550,000 |
| ACT | $1,000,000 | n/a |
| NT | $750,000 (Darwin) | $600,000 |
The cap is based on the lender's valuation of the home, including the land. Price caps are reviewed from time to time, so check the current caps with your lender or Housing Australia before you start looking.
How to qualify for the 5% Deposit Scheme
There are specific criteria you must meet to be eligible for the scheme. Housing Australia's website has the full requirements. However, for now, let's take a brief look at what is required:
- You must be an Australian citizen or permanent resident at least 18 years of age.
- There is no income limit. The income caps of $125,000 for singles and $200,000 for couples were removed on 1 October 2025.
- You can apply alone or with your spouse or de facto partner. Other people buying a home together, such as siblings, parents, children or friends, do not qualify.
- The saved deposit must be at least 5% of the property's value (2% for single parents and legal guardians). If you have saved more than 20%, you don't need the scheme.
- Applicants must be first home buyers, or not have owned property in Australia in the last 10 years. This applies to both partners when buying as a couple.
- Applicants must live in the chosen property. No investment properties can be funded through the scheme.
- The loans provided through the scheme require scheduled repayments of the loan amount and interest for the full term of the agreement. There are a few exceptions for interest-only loans, which in this situation are usually construction loans.
- You can't keep too much in savings. For places reserved since 1 July 2026, you can't hold more than about six months of living expenses and six months of loan repayments in savings once the loan is drawn down.
Property types that can be bought
This scheme requires that the property be a residential property. These are specifically:
- 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;
- a new home bought from a builder or developer.
For a new build you'll need to start building within 12 months and finish within 24 months of settlement, then move in within six months.