Your step-by-step guide to access the 5% first home deposit scheme
Rising housing costs can feel overwhelming, especially for first-home buyers. But the updated 5% Deposit Scheme is designed to make it easier.
With this scheme, you can enter the market with just a 5% deposit. It breaks down barriers and improves affordability, supporting first-home buyers and single parents in particular.
With wider eligibility and more flexible terms, now’s a great time to see how this scheme can help you own your first home.
What’s new with the 5% Deposit Scheme?
Since 1 October 2025, the 5% Deposit Scheme has become more generous and accessible. One of the biggest changes is that the scheme doesn't require you to pay Lenders Mortgage Insurance (LMI), which saves you thousands of dollars.
Another major update is the increase in property price caps — which means you can now find homes worth up to $950,000 in Melbourne. This gives you more flexibility in choosing where and what to buy.
Here's an overview of what has changed:
| Feature | Previous Rule | New Rule |
|---|---|---|
| Income Caps | Singles: $125,000 Joint applicants: $200,000 |
Removed; no income limits apply |
| Property Price Caps | Lower limits across states; Melbourne/VIC: $700,000 |
Significantly higher limits; Melbourne/VIC: $950,000 |
| Lenders Mortgage Insurance (LMI) | Mandatory if deposit is lower than 20% | No LMI required |
| Available Places | Limited spots (about 35,000 places per year) |
Unlimited places for eligible buyers |
| Name of Stream | First Home Buyer Guarantee & Family Home Guarantee | General Stream (5%) and Single Parent Stream (2%) |
| Regional Guarantee | Separate stream for regional applicants | Merged into General Stream |
Source: First Home Buyers Fact Sheet
Who can apply?
You can apply for the 5% Deposit Scheme if you are:
- An Australian citizen
- Planning to live in the property as your main home
- Meeting the deposit requirements: 5% for most buyers, or 2% for single parents with dependants
This ensures the scheme supports people who are serious about buying and living in their first home.
Related: The 5% first home deposit scheme arrives early - what this means for you
How to access the 5% Deposit Scheme in five steps
1. Check your eligibility and local price caps
Use the eligibility checker to confirm that you meet citizenship, residency, and deposit requirements. Also, check the property price cap in your area to understand your home-buying budget within the scheme.
2. Save your genuine deposit and keep records
You need to prove that you’ve saved your deposit amount genuinely over at least 90 days. Start saving early and keep detailed records, so documents are ready when applying.
3. Reach out to approved lenders for pre-approval
The scheme works only through participating lenders. Get in touch with them early to discuss your loan options and obtain pre-approval, which can speed up the home-buying process.
4. Find your perfect home within your budget
Search for properties that meet the price caps and scheme rules. When buying land, you need a signed building contract with a builder to show your bank for eligibility. You can also explore house & land packages under $950k to find great options.
5. Submit your loan application and proceed to settlement
Work closely with your lender during the application process. Once your loan is approved and conditions are met, you can proceed to settlement and move into your new home.
What happens if things don’t go as planned?
While the scheme lowers upfront deposit and removes Lenders Mortgage Insurance (LMI), you remain fully responsible for repaying your loan. The government guarantee assists lenders if you miss payments but does not cover your debt or take ownership of your home. It’s important to manage your repayments carefully to keep your home.
Make sure to maximise the scheme by:
- Staying consistent with your savings for the 90-day requirement
- Speaking to lenders early to clarify options
- Being sure you’re ready to live in the home long term
Looking ahead to your first home
The expanded 5% Deposit Scheme is a great chance to lower your upfront costs and get closer to owning your first home. Start early by building your savings, talking to approved lenders, and keeping up to date with your local property market. With some planning and the government’s support, owning your first home is finally possible again.
If you’re looking for more information about the updated 5% Deposit Scheme, visit The Talk website. We would be happy to guide you more in securing your first home.
Disclaimer: The contents in this article including prices, all government incentives, grants, and schemes are subject to eligibility criteria, availability, and may change or be withdrawn at any time. All property purchases are subject to terms, conditions and eligibility requirements. Purchasers must make and rely on their own enquiries and seek independent professional advice before making any financial decisions. Please refer to relevant government sources for the most current information. Government grants, incentives and eligibility criteria are determined by relevant Federal and State authorities and are subject to change.
For further information, please refer to:
- Australian Government 5% Deposit Scheme details
- First Home Owner Grant eligibility