You might know this as the First Home Loan Deposit Scheme, or the First Home Guarantee. It is now officially just the Australian Government 5% Deposit Scheme. Same idea, one name. Here is what you actually need to know.
What It Does
Normally you need a 20% deposit to avoid Lenders Mortgage Insurance. This Scheme lets you buy with just a 5% deposit, with no LMI (Lenders Mortgage Insurance), because the government guarantees part of your loan to the bank.
Important: it is not cash. You never receive any money. It simply lets your lender feel comfortable lending you more with less deposit.
Do You Qualify?
You need to tick all of these:
- Australian citizen or permanent resident
- At least a 5% deposit saved (generally under 20%)
- Haven't owned property in Australia in the last 10 years
- Planning to live in the home,
- At least 18 years old
You can apply solo, or jointly with one other person (partner, friend or family). No income test currently applies which was abolished in late 2025
What You Can Buy
- An existing house, townhouse or apartment
- A house and land package
- Vacant land with a separate building contract - the application at the bank needs to have both settle at the same time.
- An off-the-plan apartment or townhouse
Victorian price caps:
- Melbourne and Geelong: $950,000
- Rest of Victoria: $650,000
Both the purchase price and your lender's valuation need to sit under the cap.
If You're Building
There are fixed deadlines you cannot push back:
- Sign your building contract within 6 months of settlement
- Start building within 12 months
- Finish building within 36 months
- Move in within 6 months of your occupancy certificate
Your builder needs to be licensed, and owner-builder contracts don't qualify.
What Ends the Guarantee
The government's guarantee drops off if you:
- Stop living in the property (without an approved exemption)
- Rent the property out
- Pay your loan down to 80% or less of the property value
- Refinance with a lender not on the scheme's panel
- Sell the property
If it drops off while your loan is still above 80%, you may be asked to pay LMI at that point.
What You'll Need to Apply
- Full name and date of birth
- Medicare card
- A signed Home Buyer Declaration
- Depending on the lender there might be specific requirements
You apply through a lender on the scheme's panel, not directly to the government.
The Application Steps
- Talk to a broker about your eligibility and the price cap for your area, rather than guessing from an online tool
- We matche you with a lender on the scheme's panel that actually suits your situation, not just whichever bank you already use
- We handle the application for you -
- Get pre-approved, then you have 90 days to find a home
- Sign your contract, settle, and move in!
Worth Knowing Before You Apply
A smaller deposit means a bigger loan, which means more interest over time and less buffer if rates rise or values fall. Your lender will also value the property independently, and if it comes in under the purchase price, you may need extra cash on hand.
something to note as well: you can't use this scheme and the Help to Buy scheme together (30% government ownership on the house). It's one or the other.
Want to Know If You Qualify?
Every situation is different, especially once you factor in your deposit, your property, and your income. Get in touch and I'll walk you through it.
