Saving a full deposit has become one of the biggest barriers to home ownership in Australia. A government scheme now lets eligible first home buyers get in with far less, and recent changes have made it dramatically more accessible. Here’s a plain-language guide to how it works.
What the Scheme Does
The Australian Government 5% Deposit Scheme, formerly the Home Guarantee Scheme, lets eligible first home buyers purchase with a deposit as low as 5 per cent, without paying Lenders Mortgage Insurance. Single parents and legal guardians can access it with as little as 2 per cent.
The way it works is a guarantee, not a cash grant. The government guarantees up to 15 per cent of the property’s value to your lender, bridging the gap between your deposit and the usual 20 per cent threshold. That can save a buyer tens of thousands of dollars in insurance premiums.
“This helps buyers enter the market sooner, without the delay of saving a 20% deposit,” Housing Australia stated.
What Changed
From 1 October 2025, the scheme was significantly expanded. Income caps were removed entirely, so first home buyers at any income level can now qualify. The limit on the number of places each year was scrapped, meaning any eligible buyer can access it without competing for a spot. And property price caps were lifted across the board.
Together, these changes made the scheme relevant to far more buyers, particularly in higher-cost markets where the old limits had ruled many properties out.
Who Is Eligible
To qualify, you generally need to be an Australian citizen or permanent resident, aged 18 or over, and a genuine first home buyer or someone who has not owned property in Australia in the past ten years. You’ll need a deposit between 5 and 20 per cent, and you must intend to live in the property as an owner-occupier.
Applications are not made directly to the government. They go through a participating lender or a mortgage broker as part of a standard home loan application. You can find full details and eligibility on the First Home Buyers website.
The Risks Worth Understanding
A smaller deposit means a larger loan, higher repayments and more interest paid over the life of the loan. It also means less equity buffer if prices fall. With capital city house prices softening through 2026, the possibility of negative equity, owing more than the property is worth, is a real consideration for buyers entering with minimal deposits.
None of this makes the scheme a bad option, but it does mean going in with clear eyes. This is general information, not financial advice, and speaking with a broker or financial adviser about your own situation is a sensible step.
What It Means Right Now
The expanded scheme has arrived at an interesting moment. Buyer demand has been unlocked just as the market cools, which cuts both ways: less competition and softer prices in some areas, but also more caution warranted around borrowing at high loan-to-value ratios.
For first home buyers who have found saving a full deposit impossible, the scheme remains one of the most powerful tools available. The key is understanding both what it offers and what it asks of you.
Epik Wire covers the Australian property market in plain language for buyers and owners. Subscribe to our newsletter to stay informed.
