5% Deposit Scheme: How it Works and Who Qualifies

Buying a home in Australia can feel out of reach for many first-home buyers, especially with rising prices and the burden of large deposits. The updated 5% Deposit Scheme (part of the Home Guarantee Scheme) aims to change that by removing many previous barriers. Under the new rules, more Australians can access homeownership with just 5% deposit and without paying Lenders Mortgage Insurance (LMI).

Here’s how the scheme works, who qualifies now, and steps to apply.

What is the 5% Deposit Scheme?

The 5% Deposit Scheme allows eligible first-home buyers to purchase a home with as little as 5% deposit, while the government guarantees up to 15% of the property value. This guarantee replaces the need for LMI, which often adds tens of thousands of dollars in upfront cost for buyers who can’t put down a large deposit.

As of 1 October 2025, the scheme offers unlimited places, no income caps, and higher property price caps to better reflect current market values.

Who Qualifies for the 5% Deposit Scheme?

The changes introduced make the scheme more inclusive. Here are the current eligibility criteria:

• You must be a first-home buyer (i.e. you have not owned property in Australia in the past 10 years).
• You must be an Australian citizen or permanent resident.
• You need to have saved a minimum 5% deposit. 
• The property must be your owner-occupied home (you intend to live there); it cannot be for investment.
• The property must be within the location-specific price caps.
• You must be aged 18 or older.
• There are no income caps now under the scheme. The previous caps (e.g. $125,000 for singles / $200,000 for couples) have been removed.

To apply for the 5% deposit scheme or find out more information, speak to an experienced mortgage broker from Eden Emerald Mortgages by filling out the form below. They do not charge any fees (they are paid a commission by the lender), and they will help you through the 5% deposit scheme and entire home loan process.

How the Scheme Works (Step by Step)

1. Save a 5% Deposit
   You’ll need genuine savings for at least 5% of the property value.
2. Apply via a Participating Lender or Broker
   You cannot apply directly to the government; applications go through lenders approved under the scheme. Use a free mortgage broker to make the process easier.
3. Government Provides a Guarantee
   The government guarantees up to 15% of the loan to the lender, reducing their risk and eliminating the need for LMI.
4. Purchase and Move In
   Once approved, you find a qualifying property, settle, and move in.

Property Price Caps by Location

* Regional centres are Newcastle and Lake Macquarie, Illawarra, Geelong, Gold Coast and Sunshine Coast.

What Kinds of Property Are Eligible?

You can use the 5% deposit scheme to buy

• Newly constructed homes
• Existing houses, townhouses, and apartments
• House and land packages
• Land with a contract to build
• Off-the-plan purchases

All must be within the property price caps applicable to your area. These property caps have been increased to align with market changes.

Final Thoughts

The 5% Deposit Scheme is one of the strongest tools to help first-home buyers enter the market more easily. By removing income restrictions and increasing property caps, the government has opened doors wider than before.

If you think you might qualify, it pays to talk with a trusted mortgage broker, for example Eden Emerald Mortgages, to check your eligibility, compare lenders, and guide you through the process. You could be closer to home ownership than you think.

Get Expert Help Today

Working with a mortgage broker ensures you get expert advice and the best possible loan terms for your situation. To get started, reach out to Eden Emerald Mortgages via the form below for a free consultation, or call them directly on (02) 9188 9398.