The changes that make it easier to buy a home.

Recent changes to the Australian Government’s 5% Deposit Scheme have made it easier for more first home buyers to achieve homeownership through the scheme.

For many first home buyers, saving a deposit is one of the most significant hurdles to overcome.

The expanded Australian Government scheme is designed to make it easier to get into the market. Picture: Getty

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The Australian Government has expanded the 5% Deposit Scheme to make it easier for more people to buy a home sooner with a lower deposit.

The number of places is now uncapped, income caps have been removed, and property price caps have been increased.

Here’s an overview of how the scheme works and what’s changed.

What is the 5% Deposit Scheme?

The Australian Government 5% Deposit Scheme is designed to help eligible first home buyers purchase a property with as little as a 5% deposit saved, without paying Lenders Mortgage Insurance (LMI).

Normally, buyers with less than a 20% deposit are required to pay LMI.  

Under the scheme, the Government guarantees up to 15% of a property’s value allowing eligible buyers to avoid paying LMI and potentially buy sooner.

There’s also a stream for single parents and single legal guardians, where eligible buyers can purchase with just a 2% deposit.

The scheme can be used to buy a range of property types, including:

• Houses 
• Townhouses 
• Units and apartments 
• Off-the-plan dwellings 
• House-and-land packages 

What’s changed in the Scheme?

The Australian Government expanded the 5% Deposit Scheme from 1 October 2025 to make it easier for more people to buy a home sooner. Key changes include:

• Income caps removed: There are no longer income restrictions, which means all first home buyers, no matter what they earn are now eligible
• No cap on scheme places: The previous cap on the number of scheme places has been lifted, meaning eligible home buyers can apply at a time that is right for them
• Property price caps increased: This change allows buyers to consider a wider range of homes, including in areas where property values have risen in recent years

These changes expand access to enable more home buyers to access the scheme.

Who is eligible?

Recent changes have made the Scheme more accessible for a broader range of buyers.

If you're a first home buyer or haven’t owned a property or land in Australia in the last 10 years, you may be eligible. Picture: Getty

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You may be eligible if you:

• Are buying your first home or haven’t owned a property or land in Australia in the last 10 years (with different requirements if you qualify for the single parent stream)
• Are an Australian citizen or permanent resident
• Will live in the property
• Have saved a minimum deposit of 5% (or 2% if you qualify for the single parent stream)
• Are purchasing a property within the relevant price cap for your location

What are the potential savings?

With the help of the scheme buyers can save on LMI.

For example, on an $800,000 home:

• A 5% deposit would be $40,000
• Normally, you’d need to pay LMI of around $30,000
• Under the scheme, the Government provides a guarantee to your Participating Lender so you can avoid paying LMI, meaning a significant saving

This could help you buy sooner.

Can I buy with someone else?

Yes. The scheme allows applications from:

• Individuals
• Couples (including de facto relationships)
• Friends, family members, or other eligible parties buying together

All applicants must meet the eligibility criteria and intend to live in the property.

How to check eligibility or apply

To help buyers to understand their options, the Government has launched a dedicated website: firsthomebuyers.gov.au

Check out the Australian Government’s dedicated website to see if you meet eligibility criteria. Picture: Getty

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The site includes:

• A 5% Deposit Scheme eligibility checker
• A property price tool

You can apply for the Scheme through an approved Participating Lender who will assess your eligibility.

Whether you’re just starting to save or you’ve been ready to buy, the expanded 5% Deposit Scheme could make it easier for you to buy a home sooner.