Buying with a 5% Deposit: How the Australian Government Scheme Works
The 5% Deposit Scheme can help eligible first home buyers purchase sooner without Lenders Mortgage Insurance, but it is not free money or a shortcut around borrowing capacity.
Eligibility - Australian Government 5% Deposit Scheme
- You are an Australian citizen or permanent resident.
- You are at least 18 years old.
- You are a first home buyer, or you have not owned property in Australia in the last 10 years.
- You are buying or building a home to live in; investment properties are not eligible.
- You have at least a 5% deposit based on the property value assessed by the participating lender.
- The property is within the relevant location and property type price cap.
- The loan is through a participating lender and meets scheme loan requirements, including owner-occupier principal and interest repayments in most cases.
- You still pass the lender's normal credit assessment, including income, expenses, debts, and repayment capacity.
What the 5% Deposit Scheme does
The scheme helps eligible buyers purchase with a smaller deposit by having Housing Australia provide a guarantee to the participating lender. This can remove the need to pay Lenders Mortgage Insurance when the application fits the rules.
What it does not do
The guarantee is not a deposit contribution, not a cash payment, and not approval for a loan by itself. You still need income, savings history, acceptable credit conduct, and a loan structure that passes the lender's assessment.
Why price caps matter
The property needs to be within the relevant price cap for the location and property type. In practice, that means you should check the price cap before you spend time on inspections or auctions.
The broker checklist
Start with your Notice of Assessment, deposit evidence, living expenses, credit cards, HECS or other debts, and a realistic purchase budget. A clean file gives the lender less reason to slow the application down.
Key points
- Eligible first home buyers may be able to buy with a deposit as low as 5%.
- The government guarantee supports the lender; it is not a cash grant paid to the buyer.
- You still need to meet lender approval, property price caps, loan requirements, and all purchase costs.
Sources
General information only. This content is educational and does not constitute personal credit, legal, tax, or financial advice. Policy details were last checked on 4 May 2026 unless a state or territory tab says otherwise.
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