No income cap, no place limit, no LMI. We walk through who qualifies, which properties are covered, and the gotchas to watch for.
On 1 October 2025, the Australian Government permanently expanded the scheme previously known as the First Home Guarantee. If you qualify, you can buy a home with a 5% deposit and avoid Lenders Mortgage Insurance (LMI) — even on a $1 million-plus property. The expansion removed the two biggest barriers that used to lock buyers out: the income cap, and the limited annual places.
What changed on 1 October 2025
Before the expansion, the scheme was capped at 40,000 places per year, with an income cap of $125,000 (single) or $200,000 (joint). The 1 October 2025 changes:
- No income cap. The previous $125,000/$200,000 thresholds have been removed.
- No place limit. The annual cap of 40,000 has been scrapped — places are uncapped.
- Price caps lifted. Most state price caps rose significantly. Sydney and regional NSW capitals now share a $1.5M cap. NT's cap increased to $600,000.
Source: Housing Australia — housingaustralia.gov.au
How it works, step by step
- Confirm eligibility. You must be an Australian citizen or permanent resident, at least 18, and either a first home buyer or have not owned property in Australia in the last 10 years.
- Find the property. The property must be in Australia, be a residential home you'll live in (owner-occupier), and be within your state's price cap. Investment properties don't qualify.
- Save your 5% deposit (plus costs like stamp duty, legal, inspections, and a buffer). On a $700,000 home, that's $35,000.
- Apply with a participating lender (most major banks plus a few non-banks). The lender assesses your borrowing capacity and submits a guarantee application to Housing Australia.
- If approved, the Government guarantees the next 15% of the property's value to the lender. This guarantee means the lender doesn't need to charge you LMI — saving you thousands.
- Settle. You pay your 5% deposit plus costs; the lender funds the remaining 95% as a normal principal-and-interest loan.
What LMI would have cost you
LMI premiums depend on your loan-to-value ratio (LVR) and loan size. On a $700,000 home with a 5% deposit ($35,000), your LVR is 95% and your loan is $665,000. At 95% LVR, LMI typically runs 4-5% of the loan — so $26,000 to $33,000 in pure insurance premium. The 5% Deposit Scheme waives all of that.
Property price caps by state
| State | Capital & regional centres | Other areas |
|---|---|---|
| NSW | $1,500,000 (Sydney, Newcastle, Wollongong) | $800,000 |
| VIC | $950,000 (Melbourne) | $650,000 |
| QLD | $1,000,000 (Brisbane, Gold Coast, Sunshine Coast) | $700,000 |
| WA | $850,000 (Perth, Peel) | $600,000 |
| SA | $900,000 (Adelaide) | $500,000 |
| TAS | $700,000 (Hobart) | $550,000 |
| ACT | $1,000,000 (whole territory) | — |
| NT | $600,000 (whole territory) | — |
Source: Housing Australia. Caps current as of 1 October 2025.
What you can stack on top
The 5% Deposit Scheme stacks with most other federal and state support:
- State First Home Owner Grant (FHOG) — paid at settlement, reduces your loan or funds your deposit
- State stamp duty exemption or concession — most states offer a discount for first home buyers
- First Home Super Saver Scheme — withdraw up to $50,000 from super per person to boost your deposit
- Family Home Guarantee — but only if you're a single parent; you can only use one or the other for a given purchase
You cannot stack the 5% Deposit Scheme with Help to Buy for the same property. Help to Buy is the larger benefit, and using it means you don't need the 5% LMI waiver.
What it doesn't cover
- Investment properties. The property must be your principal place of residence.
- Vacant land. You can buy land + build packages through the New Home Guarantee stream instead, where available.
- Commercial property.
- Holiday homes.
- Properties above your state cap.
What to do next
- Confirm your eligibility (citizenship, age, prior property ownership) and the property's price cap.
- Save your 5% deposit plus a 5% buffer for costs (stamp duty, legal, inspections, removalists).
- Talk to a participating lender. Most major banks and a few non-bank lenders are on the panel.
- Apply pre-approval so you can move quickly when you find a property.
The 5% Deposit Scheme is the cornerstone of the Australian low-deposit landscape. For most first home buyers in 2026, it's the single most important pathway to know about.