Everything you need to know about the 5% deposit scheme

The Albanese Government's decision to bring forward the expanded five per cent deposit scheme (Home Guarantee Scheme) to 1 October 2025, represents the most significant first home buyer intervention in decades. With national house prices verging on $950,000 and units at $700,000, the traditional path to homeownership has become increasingly challenging for young Australians.

Read our quick guide for first home buyers and what the Home Guarantee Scheme means for them:

What is the Home Guarantee Scheme and how much money will I save?

The Home Guarantee Scheme is a government-driven initiative to support first home buyers in entering the property market. Starting 1 October, all first home buyers can purchase property with just a five per cent deposit and no mortgage insurance required.

This means a home priced over $1 million now requires just $50,000 down instead of $200,000. For regional markets, the impact is equally dramatic - a $580,000 property in regional Victoria needs less than $30,000 rather than $116,000 for a traditional deposit, providing more opportunities for first home buyers willing to look beyond major capitals.

Under the new scheme there is a potential saving of 6-10 years in deposit accumulation time, plus immediate savings of $25,000-$42,000 in mortgage insurance costs. With $1.5 billion in potential insurance savings expected in the first year alone, the scheme fundamentally alters the economics of getting your foot on the property ladder.

Do I still have to pay mortgage insurance with the 5% deposit?

Previously banks would require mortgage insurance when you put down less than 20 per cent deposit because they see you as a higher risk. But under this scheme, the government acts as your insurance, they guarantee to the bank that if you default, they'll cover the shortfall.

Are there price caps for the more expensive cities?

Yes, there are still price caps but they’ve now also been increased too. Under this scheme you can buy homes in Sydney up to 1.5M (previously was 900k), Melbourne up to 950k (was 800k) and Brisbane up to 1M (was 700k).

Can this scheme be stacked with other first home buyer grants and state benefits?

Yes, this scheme stacks with most state-level benefits like stamp duty concessions and first home owner grants, each state has different combinations available. Take a look at our first home buyer incentives guide for a better understanding on the government support programs and state based initiatives.

Who is eligible for the 5% house deposit?

If you’re a first time buyer and an Australian citizen or permanent resident, you are eligible. From 1 October, the income limits will be removed and applications can be from an individual or two applicants, such as a friend, family member or partner. You also must live in the property, as investment properties are not covered in this scheme.

How do I apply for the Home Guarantee Scheme?

Check your eligibility with the Home Guarantee Scheme Eligibility Tool - the new version will be available from 1 October on Housing Australia’s website. They also have a list of participating lenders, contact one and apply. The participating lender will submit all eligible applications to Housing Australia and process pre-approval.