The Australian Government 5% Deposit Scheme is a major federal initiative designed to help first home buyers and eligible single parents enter the property market sooner with a small deposit.

Key Features & Benefits

  1. Low Deposit Requirement
  • First home buyers can enter the market with a minimum 5% deposit of the property value.
  • Eligible single parents & legal guardians only need a minimum 2% deposit.
  1. Government Guarantee, No LMI
  • The Australian Government acts as a guarantor to your lender, enabling you to borrow up to 95% (or in the case of a single parent, up to 98%) of the home’s value without paying Lenders Mortgage Insurance.
  1. No Income Caps & Unlimited Places
  • The Scheme has no income limits allowing buyers of all income levels to apply.
  • There are unlimited places and no waiting list, so eligible buyers aren’t restricted by quotas.
  1. Wide Choice of Home Types
    You can use the Scheme to buy a range of properties, including:
  • Existing houses, townhouses and apartments
  • House & land packages
  • Vacant land with a building contract
  • Off-the-plan apartments or townhouses
  1. Higher Price Caps
  • The Government has increased property price caps to reflect current market prices, making more homes eligible under the Scheme.
  1. Faster Path to Ownership & Lower Up-Front Costs
  • By reducing the upfront deposit and eliminating LMI, many buyers fast track years of saving and tens of thousands in additional costs.

Eligibility Criteria (General)

To qualify for the Scheme, you must meet all of the following:

  • Be an Australian citizen or permanent resident
  • Be at least 18 years old
  • Have saved the required minimum deposit (5% for first home buyers or 2% for eligible single parents)
  • Be buying a home priced at or below the location’s price cap
  • Plan to live in the property as your owner-occupier home, it can not be an investment property
  • Apply for an owner-occupier home loan with Principal & Interest repayments through a Participating Lender
  • Agree to live in the property within six months of settlement and while the Scheme guarantee remains active 
  • You must not have owned residential property in Australia in the last 10 years if applying as a first home buyer.

How the Scheme Works

  1. Check your eligibility – use the government’s online tools or talk with a participating lender.
  2. Contact a participating lender – they assess your overall home loan application.
  3. Find a home – you’ll have time (often a drafting period) to secure the property within price caps.
  4. Settle and move in – once approved, your new loan completes and you take ownership.

Additional Points to Consider

  • You are still responsible for all loan repayments, just as with a standard mortgage.
  • Some lenders may have credit policy requirements that affect their assessment of your eligibility, even if you meet the Scheme’s criteria. 
  • Other costs like stamp duty and legal fees are not covered by the Scheme and still apply.

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