Property
Can I Buy My First Home With Just A 5% Deposit?
October 2026
October 2026
Can I Buy My First Home With Just A 5% Deposit?
Yes, you may be able to buy your first home with a minimum 5% deposit through the Australian Government 5% Deposit Scheme. The scheme can help eligible first-home buyers purchase without paying Lenders Mortgage Insurance, but a 5% deposit does not automatically mean you qualify for a loan. You still need to meet the scheme rules and your participating lender’s lending criteria.
The key point: since 1 October 2025, the scheme has no income caps, no waitlist and unlimited places for eligible buyers. For first-home buyers, the minimum deposit is 5% of the property value.
What is the Australian Government 5% Deposit Scheme?
The Australian Government 5% Deposit Scheme is designed to reduce one of the biggest upfront hurdles for eligible home buyers: saving a large deposit.
Normally, buying with a deposit below 20% can mean paying Lenders Mortgage Insurance, often called LMI. Under this scheme, the Australian Government provides a guarantee to the participating lender for part of the home loan. Eligible first-home buyers can therefore purchase with a minimum 5% deposit without paying LMI.
The guarantee supports the lender, not the buyer. You remain responsible for the home loan, repayments and other purchasing costs.
Who is eligible for the 5% Deposit Scheme?
For the first-home buyer stream, you need to meet a number of eligibility requirements. These include:
- being an Australian citizen or permanent resident
- being at least 18 years old
- having saved enough to contribute a minimum deposit of 5% of the property value
- being a first-home buyer, or not having owned a home or land in Australia during the previous 10 years
- buying an eligible residential property in Australia within the applicable location price cap
- buying or building the property to live in as an owner-occupier, rather than as an investment
- using an eligible owner-occupier home loan from a participating lender
- making principal and interest repayments, subject to the scheme rules for construction loans.
You can apply by yourself or jointly with one other eligible person. That person can be a partner, friend or family member, but both applicants need to satisfy the relevant eligibility requirements.
Importantly, meeting the scheme rules does not guarantee home-loan approval. Your participating lender will still assess your income, expenses, debts, credit position and ability to service the loan under its lending criteria.
Is there still an income limit for the 5% Deposit Scheme?
No. Income caps were removed from the Australian Government 5% Deposit Scheme from 1 October 2025.
This is an important change from the former Home Guarantee Scheme rules. There are also no waiting lists or limits on the number of scheme places for eligible applicants.
No income cap does not mean automatic loan approval. Your lender still needs to decide whether you can afford the proposed home loan and meet its credit and approval requirements.
How much can I spend on a home under the scheme?
Property price caps apply and vary according to location. Both the purchase price and the property value assessed by your participating lender must be at or below the relevant cap.
| Location category | Property price cap |
|---|---|
| Victorian capital city and Geelong regional centre | $950,000 |
| Other Victorian areas | $650,000 |
If you are looking in Melbourne’s south-east, including areas such as Berwick, Officer or Beaconsfield, check the property’s suburb or postcode using the official price-cap search tool and confirm the applicable cap with your participating lender before relying on it for a purchase.
What types of property can I buy?
The scheme can cover several types of residential property, provided the property is eligible and within the applicable price cap. Options can include:
- an existing house
- a townhouse
- an apartment
- a house-and-land package
- an off-the-plan property
- vacant land with an eligible building contract.
If you are buying vacant land and building under separate contracts, the total land price and construction costs need to fall within the relevant scheme cap.
Does a 5% deposit mean I only need to save 5% of the purchase price?
Not necessarily. The scheme’s minimum deposit requirement is based on the property value assessed by your participating lender, which may differ from the purchase price.
You should also allow for other buying costs that may apply, such as conveyancing, inspections and land transfer duty. Your lender may also require you to contribute more than the minimum deposit depending on your circumstances.
In Victoria, eligible first-home buyers may separately qualify for a land transfer duty exemption on homes with a dutiable value up to $600,000, or a concession from $600,001 to $750,000. These are Victorian duty benefits with their own eligibility rules and should not be confused with the federal 5% Deposit Scheme.
Do I have to live in the property?
Yes. The first-home buyer stream is for owner-occupiers, not investment properties. Under the scheme’s current rules, you generally need to move into the property within six months of settlement and continue living there while the government guarantee remains active.
If you do not meet the ongoing occupancy requirements, the guarantee may no longer apply and your lender may require LMI or other additional costs.
How do I apply for the 5% Deposit Scheme?
You do not apply directly to Housing Australia. Applications are made through participating lenders as part of the home-loan process.
- Check the eligibility rules. Use the Australian Government eligibility tool as an initial guide.
- Speak with a participating lender. The lender will assess both scheme eligibility and whether you qualify for a home loan.
- Check your buying limit and location cap. A pre-approval can help you understand your lending position before you start making offers.
- Find an eligible property. Once pre-approved under the scheme, buyers generally have 90 days to find a home and sign a contract of sale.
- Complete final loan approval and settlement. Your lender manages the scheme guarantee as part of the loan process.
Before you start inspecting homes: know both numbers that matter: what your lender is prepared to lend you and the scheme’s price cap for the location you are considering. They are not necessarily the same.
Common questions
Can I use the scheme if I owned property years ago?
Possibly. For the first-home buyer stream, you may qualify if you have not owned a home or land in Australia in the previous 10 years. The 10-year period is measured under the scheme rules, so confirm your circumstances with a participating lender.
Can I buy with a partner, friend or family member?
Yes. First-home buyers can apply individually or jointly with one other person, including a partner, friend or family member. Both applicants need to meet the applicable eligibility requirements.
Can I use the scheme to buy an investment property?
No. The property must be bought or built for you to live in as an owner-occupier.
Is the 5% Deposit Scheme the same as the First Home Owner Grant?
No. They are separate forms of assistance with different eligibility rules. The 5% Deposit Scheme is a federal government guarantee that can allow eligible buyers to purchase with a smaller deposit without LMI. Victorian first-home buyer grants and duty benefits are separate programs.
Does being eligible guarantee that I can borrow enough to buy?
No. Scheme eligibility and home-loan approval are separate. A participating lender still needs to assess whether you meet its credit policy and can afford the loan.
What should I do before looking for my first home?
If the 5% Deposit Scheme could be relevant to you, start by checking your eligibility, speaking with a participating lender and confirming the price cap for the area where you want to buy. That gives you a clearer budget before you compare properties.
For first-home buyers considering Berwick, Officer, Beaconsfield and surrounding areas, knowing your finance position and the scheme rules before making an offer can make the property search more manageable.
This article provides general information only and is not legal advice. Requirements can change, so consider obtaining advice that reflects your circumstances.
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Got more questions for us?
Whether you’re buying, selling, leasing or just curious, we’re here to help. Get in touch with our Berwick or Officer branches.
