Australian Government 5% Deposit Scheme Explained

1. What is the 5% Deposit Scheme?

Under the scheme, the Australian Government provides a guarantee to participating lenders. That guarantee means eligible buyers may not need the 20% deposit many lenders typically look for to avoid lenders mortgage insurance, so a smaller deposit can be enough to buy a home.

It's important to understand what the scheme is not: it is a government guarantee, not a cash grant paid to the buyer. You still need a genuine deposit, a home loan from a participating lender, and enough money for your other buying costs.

2. How does the 5% Deposit Scheme work?

The basic process looks like this:

• Meet the eligibility requirements.
• Have at least a 5% deposit for the first-home-buyer pathway.
• Apply through a participating lender.
• The lender assesses the home loan and scheme eligibility.
• Buy an eligible property within the applicable price cap.
• Move into the property and meet the ongoing scheme requirements.

Here's a simple mathematical example: on a $700,000 home, a 5% deposit is $35,000. The remaining $665,000 would be financed through a home loan, subject to the lender's approval of your borrowing capacity and circumstances. This example does not guarantee loan approval, and the deposit you need depends on the property you buy.

3. Who is eligible?

The main current requirements for the first-home-buyer pathway are:

• Australian citizen or permanent resident
• At least 18 years old
• A first-home buyer, or generally have not owned a property or land in Australia in the previous 10 years
• A minimum 5% deposit
• An eligible property within the applicable location price cap
• Planning to live in the property (owner-occupier)
• An eligible principal-and-interest home loan through a participating lender
• You must also satisfy the lender's own credit and lending criteria

This is a summary of general requirements, not legal or financial advice. Rules and definitions change, so check the current eligibility details on our Government Help page and with your participating lender.

Separate pathway: eligible single parents or single legal guardians may be able to use a minimum 2% deposit pathway under the scheme. See our Government Help page for the current detailed eligibility rules.

4. Do I need a 20% deposit?

No — 20% is a common target because it generally avoids lenders mortgage insurance, but it is not universally required. Under the scheme, eligible buyers may purchase with a minimum 5% deposit. Outside the scheme, some lenders also offer loans with smaller deposits, though a higher LVR can mean paying LMI.

Our how much deposit do I need guide explains deposit sizes, LVR and LMI in more detail.

5. What are the property price caps?

The scheme has location-specific property price caps, which vary by state, territory and area. Two things must be true: the purchase price must be at or below the applicable cap, and the property's value as assessed by your participating lender must also be at or below the cap.

Postcode and price-cap tools are a guide only — the applicable cap for your property should be confirmed with your participating lender. Our Government Help page links to the official price-cap information and includes a cap checker you can use for an indication.

6. What types of homes can I buy?

Eligible properties can include:

• existing houses
• new houses
• townhouses
• apartments
• house-and-land packages
• off-the-plan purchases
• vacant land with a building contract

Property eligibility rules and the location price caps still apply, so check with your participating lender before committing to a purchase.

7. Do I have to pay LMI?

One of the main benefits of the scheme is that eligible buyers using it can avoid Lenders Mortgage Insurance under the scheme — normally, borrowing with a small deposit and a high LVR would mean paying LMI.

That doesn't mean the scheme guarantees your loan will be approved, or that LMI can never apply in every circumstance — ongoing scheme requirements matter, and your lender's assessment applies. Our affordability calculator estimates whether LMI is likely for your numbers, and our Government Help page covers the schemes that may help you avoid it.

8. What costs do I still have to pay?

A 5% deposit does not mean 5% is the total cash required. The deposit goes toward the property price, and other costs are generally paid on top of it. You may still need to pay for:

• transfer duty (stamp duty), where applicable
• conveyancing or legal costs
• building and pest inspections
• other purchasing costs, such as loan fees and registrations
• loan repayments and ongoing ownership costs, including insurance and rates

Our first home buyer costs guide breaks these down.

9. How do I apply?

The basic pathway is:

1. Check your eligibility.
2. Contact a participating lender.
3. Have the lender assess your application.
4. Obtain approval or pre-approval, as applicable.
5. Find an eligible property within the applicable price cap.
6. Complete the purchase.
7. Move into the property within the required timeframe.

Note that you cannot apply directly to Housing Australia — applications are made through participating lenders. The list of participating lenders can change, so check the official participating-lender information via our Government Help page rather than relying on any single list.

10. Is the 5% Deposit Scheme suitable for my situation?

That depends on your circumstances. Being eligible for the scheme does not mean you can automatically afford or obtain the property you want. Factors that still matter include:

• your income and borrowing capacity
• your deposit and other savings
• the property price and whether it's within the cap
• your buying costs and ongoing repayments
• lender requirements and credit criteria
• scheme eligibility rules, which can change

Our first home buyer affordability calculator estimates your borrowing position, deposit, upfront costs, loan required, LVR, LMI and repayments, so you can see whether a 5% deposit purchase is realistic for your numbers.