Saving for a deposit can be one of the biggest hurdles when it comes to home ownership, especially if it's your first home. But a recently expanded government scheme aims to help more first home buyers get into the housing market sooner, with a lower deposit and reduced upfront costs.
Eligible first home buyers can now buy or build a home with as little as a 5% deposit under the Australian Government’s 5% Deposit Scheme (previously known as the First Home Guarantee). Updates to the original First Home Guarantee makes home ownership achievable for more aspiring home buyers.
How does the Australian Government 5% Deposit Scheme work?
The scheme allows eligible first home buyers to build or buy a home with a low deposit and without having to pay Lenders Mortgage Insurance (LMI), which can often add thousands to the cost of a home loan.
In October 2025, the government expanded and renamed the First Home Guarantee Scheme scheme to give all first home buyers the ability to buy with a minimum 5 per cent deposit.
Instead of requiring buyers to cover LMI, a government guarantee is provided to the lender, allowing them to offer loans of up to 95% (or even 98%) of the property value. This makes home ownership possible for Australians who may be struggling to save a larger deposit, particularly in a competitive housing market.
What's changed in the updated scheme?
The updated and expanded scheme makes it easier for more Australians to access, with:
- No cap on places available so eligible buyers won’t miss out due to limited spots
- No income caps so your income won’t be a barrier if you meet the other criteria
- Higher property price caps giving buyers more choice in where and what they buy
- Separate streams for first home buyers (minimum 5% deposit) and single parents or guardians (minimum 2% deposit).
Scheme eligibility criteria for all applicants
The scheme is designed to help Australian citizens or permanent residents who have a minimum deposit buy a first home to live in. To be eligible, applicants must meet all of the eligibility criteria, including:
- Be an Australian citizen or permanent resident aged 18 or older
- Be buying a home in Australia priced at or below the location price cap
- Be planning to live in the home as an owner-occupier (investment properties are not eligible)
- Apply for a principal and interest home loan of up to 30 years with a participating lender.
Additional criteria for first home buyers
- Have saved at least a 5% deposit
- Be a first home buyer (or haven’t owned property in the past 10 years)
- Applying on your own or jointly with other family members, such as a sibling, parent, or adult child.
Additional criteria for single parents or guardians
- Have saved at least a 2% deposit
- Be a single parent or single legal guardian with one or more dependent children
- Apply on your own (no joint applications).
- Must not have any other property interest once your new home settles
Single parents or guardians are not required to be first home buyers. For the purpose of the scheme, being single means you have no spouse or de facto partner. If you're separated but not divorced, you're not considered single. You must also be the natural parent, adoptive parent, or legal guardian of one or more dependants.
What type of home can you buy with the 5% Deposit Scheme
Buyers have flexibility to choose the type of residential property they want to live in. However property price caps apply which can limit the locations and type of home. The scheme covers a wide range of property types, including:
- New or existing homes such as houses, townhouses, apartments, duplexes or units
- House and land packages
- Off-the-Plan apartments or townhouses
- Land and build where land and construction contracts are separate.
How to apply
Applicants can now apply for an owner-occupier home loan with principal and interest repayments for a term of up to 30 years.
There are more than 30 participating lenders, including major banks and and credit unions, that can help you check your eligibility and guide you through the loan process.
To qualify, you'll need meet the lender's credit policy and loan eligibility criteria. If you're eligible for the scheme but don't meet the lender's requirements, you may not get a home loan so it's a good idea to check early.
Once your loan is pre-approved, you'll have 90 days to find a home and sign a contract of sale.
Property price caps in Victoria
Location based price caps limit the value a home buyer can spend and be covered by the 5% Deposit Scheme. The purchase price and the home's value must stay at or below the cap. If you're building a new home on vacant land with separate contracts, the total land price plus build costs need to come in under the cap too.
Property price caps set for each state have different values for capital cities and regional centres, and other locations.
For Victoria, the maximum purchase price is:
- Melbourne & Geelong: Up to $950,000
- Regional Victoria: Up to $650,000
Good to know
- Only residential properties are eligible for the scheme
- The scheme does not provide cash payments to home buyers
- Home buyers must meet ongoing obligations, including being responsible for all costs and repayments and continuing to live in the property as an owner-occupier
- Property owners who do not meet the ongoing obligations may have to pay LMI or other costs.
For more information visit Australian Government 5% Deposit Scheme or the Housing Australia website.
Build or buy with Henley using the 5% Deposit Scheme
The Australian Government 5% Deposit scheme makes it easier for more Victorians to get into a home sooner with lower upfront costs and flexible pathways to home ownership.
Eligible Henley customers can choose from a range of options under the scheme, including house and land packages or move-in-ready completed homes, making the journey to owning your own home more achievable than ever.
