The Australian Government’s 5% Deposit Scheme: What It Is, How It Works, and What to Watch Out For
By Thrive Property Australia — helping Australians acquire new property responsibly and ethically.
The Australian Government’s recently expanded 5% Deposit Scheme (formerly the Home Guarantee Scheme) is designed to help more first-home buyers get into the market sooner. From 1 October 2025, the program was widened significantly: unlimited places, no income caps, and higher property price caps now apply nationwide.
Below, we explain the scheme in plain English, include the current state/territory price caps, outline the benefits and risks, and list the participating lenders so you know where to start.
Quick overview
- Minimum deposit: as low as 5% for eligible first-home buyers (and 2% under the related pathway for eligible single parents/guardians). The government provides a guarantee (generally up to 15% of the property value) so buyers can avoid paying Lenders Mortgage Insurance (LMI). You must still meet the bank’s normal credit and serviceability checks.
- What changed on 1 Oct 2025: the scheme moved to unlimited places, removed income caps, and lifted property price caps by location, making access broader and simpler.
- Who runs it: Housing Australia (with public-facing information via FirstHomeBuyers.gov.au)
Current price caps by state & territory
You must buy at or below these caps (both the purchase price and the lender’s assessed value must be within the cap). For land-and-build contracts, the land + build total must be under the cap.
States (capital city & named regional centres vs other areas):
- NSW: $1,500,000 (Sydney/Illawarra/Newcastle/Lake Macquarie) | $800,000 (other areas)
- VIC: $950,000 (Melbourne/Geelong) | $650,000 (other areas)
- QLD: $1,000,000 (Brisbane/Gold Coast/Sunshine Coast) | $700,000 (other areas)
- WA: $850,000 (Perth/major centres) | $600,000 (other areas)
- SA: $900,000 (Adelaide/major centres) | $500,000 (other areas)
- TAS: $700,000 (Hobart/major centres) | $550,000 (other areas)
Territories (single cap across all areas):
- ACT: $1,000,000
- NT: $600,000
Tip: There’s also a postcode search tool to check the exact cap for your target suburb. Always confirm with your lender before making an offer.
What properties are eligible?
New or existing houses, townhouses, apartments, house-and-land packages, off-the-plan purchases, or vacant land with a building contract—so long as the relevant price cap is not exceeded and standard lender criteria are met.
The positives (why buyers are interested)
- Lower deposit hurdle: Buying with 5% instead of 20% brings timelines forward by years for many households.
- Avoids LMI: The government guarantee substitutes for LMI, which can save buyers tens of thousands of dollars depending on price, LVR and lender. (Exact savings vary.)
- Broader access: No income caps and unlimited places reduce bottlenecks that previously shut out otherwise capable buyers.
- Higher price caps: Caps now better reflect major-city prices (e.g., Sydney up to $1.5m).
The risks (what to consider carefully)
- Higher LVR = higher risk: With a ~95% loan-to-value ratio, you have less equity buffer. If prices fall or rates rise, you’re more exposed to negative equity or repayment stress.
- Budget discipline still essential: The guarantee doesn’t relax lenders’ serviceability tests. You must still qualify and afford repayments, plus upfront costs like stamp duty, legal fees and inspections.
- Price-pressure debate: Some analysts warn that demand-side support can lift prices in eligible brackets, potentially offsetting some benefits. (Evidence varies by location and cycle.)
Who’s eligible (in practice)?
- First-home buyers intending to live in the property (not investors), with at least the minimum deposit saved and who meet a participating lender’s credit and serviceability checks. (Pathways exist for eligible single parents/guardians at 2% deposit.)
Participating lenders
Housing Australia has authorised 30+ lenders nationally to offer the scheme. Contact one to test your eligibility and compare product options. (List current at time of writing; always check the official page for updates.)
- Australian Military Bank
- Australian Mutual Bank
- Auswide Bank
- Bank Australia
- Bank First
- Bank of Melbourne
- BankSA
- Bank of Us
- Bendigo Bank
- Beyond Bank
- Border Bank
- Commonwealth Bank
- Community First Bank
- Credit Union SA
- Defence Bank
- Firefighters Mutual Bank
- G&C Mutual Bank
- Gateway Bank
- Great Southern Bank
- Health Professionals Bank
- Indigenous Business Australia (IBA)
- Illawarra Credit Union
- IMB Bank
- MyState Bank
- National Australia Bank (NAB)
- Newcastle Permanent
- People’s Choice
- Police Bank
- QBank
- Queensland Country Bank
- Regional Australia Bank
- St.George
- Teachers Mutual Bank
- The Mutual Bank
- UniBank
- Unity Bank
- Westpac
- Bank WAW
How Thrive suggests you approach the scheme (balanced, step-by-step)
- Set a safe budget buffer. Model repayments at interest rates 1–2 percentage points higher than today to understand stress points before you commit. (Your lender/broker can run scenarios.)
- Pick target postcodes—then check the cap. Confirm your price cap with the official postcode tool and your lender before shortlisting properties.
- Compare multiple lenders. Product features, fees, and assessment policies differ. Use at least two or three participating lenders for quotes.
- Build a complete cost plan. Add stamp duty (or concessions), legal, inspections, moving, and a contingency for early repairs.
- Focus on fundamentals. Even with a lower deposit, asset quality matters: location drivers (jobs, infrastructure, amenities), build quality, and rental depth if you may rent in future. (General good practice; not scheme-specific.)
FAQs we hear from first-home buyers
Does the government pay my deposit?
No. You provide the 5% (or 2%) deposit; the government provides a guarantee to the lender, which helps you avoid LMI. You still need to qualify for the loan and make repayments like any other borrower.
Can I use it on brand-new or existing homes?
Yes—both are permitted within the relevant price caps (including off-the-plan and land-and-build, subject to rules).
Are there really no income caps now?
Correct—income caps were removed from 1 Oct 2025. Places are also uncapped. You must still pass the lender’s normal checks.
How Thrive supports buyers — nationwide
At Thrive, we know buying your first brand new home is a major milestone. It can also feel overwhelming to navigate caps, lenders, contracts, and builders while trying to avoid costly mistakes. That’s where we come in.
Here’s why you can feel confident working with Thrive under the 5% Deposit Scheme:
- National reach, local expertise: Our network spans every Australian state and territory. Whether you’re targeting an inner-city apartment in Melbourne, a townhouse on the Gold Coast, or a new build in regional WA, our team has trusted partners on the ground to help.
- End-to-end guidance: We don’t just help with finance introductions. Thrive manages the entire process—from confirming scheme eligibility and comparing lenders, to identifying high-quality new properties, negotiating with builders/developers, and project-managing your build or purchase.
- 50+ years combined experience: With billions of dollars’ worth of projects delivered, our leadership team has the expertise to spot both opportunities and risks early—so you’re not left guessing.
- Independent, fee-for-service model: We work solely for you—not developers, builders or banks. Our advice is unbiased, transparent, and focused on securing the right property for your future.
- Limited client intake: To protect service quality, Thrive takes on only a select number of new clients at a time. That means you get the full attention of a national team dedicated to making your purchase smooth and stress-free.
Final word from Thrive
The 5% Deposit Scheme can be a genuine accelerant for first-home buyers, particularly in high-priced markets now that caps are higher and places are uncapped. But a higher-LVR loan demands more discipline: protect yourself with buffers, be selective about the asset you buy, and stress-test repayments.
If you’d like tailored guidance—budget setting, suburb and property selection under your price cap, and a lender comparison—we can help you navigate the scheme responsibly and buy well.
Sources & further reading
- Housing Australia media releases on the expanded scheme and changes effective 1 Oct 2025 (unlimited places, higher caps, no income caps). Housing Australia+1
- FirstHomeBuyers.gov.au Price Cap tables and postcode tool (official caps by state/territory). First Home Buyers
- FirstHomeBuyers.gov.au Participating Lenders (current list). First Home Buyers
- ABC News explainer on the revamped scheme (pros, cons, and context). ABC
- General lender guidance on costs and serviceability (example: CBA). CommBank
This article is general information only and does not constitute financial advice. Consider seeking independent advice to assess whether this scheme is appropriate for your circumstances.
