5% Deposit Scheme (First Home Guarantee) — 2026 Guide
Last reviewed October 2026 by Brendan Singh, Mortgage Broker (Credit Rep 575816)
The Australian Government 5% Deposit Scheme (formerly the First Home Guarantee) lets eligible first home buyers purchase with a 5% deposit and no Lenders Mortgage Insurance. Since October 2025 there are no income caps and no limit on places. In Melbourne and Geelong the property price cap is $950,000.
The government guarantees the remaining deposit (up to 15%) with the lender, allowing you to buy without paying LMI upfront. Read the official guidelines at housing.gov.au
What Is the 5% Deposit Scheme?
Under the scheme, the Federal Government acts as guarantor for the portion of your deposit between 5% and 20%. This means you don't need to save a full 20% deposit, and you don't need to pay LMI — which can save eligible buyers thousands of dollars.
The guarantee is not a cash payment — it's a government commitment to the lender that allows them to lend at a higher LVR without requiring LMI.
Key Benefit
Can save thousands of dollars in Lenders Mortgage Insurance by using the government guarantee instead of paying LMI upfront.
Who Is Eligible?
Eligibility conditions apply. As a general guide:
How Does It Work in Practice?
Check your eligibility
Loans Cart will assess your deposit, first home buyer status, and property purchase plans
Apply through a participating lender
Not all lenders participate; Loans Cart has access to participating lenders on our 30+ panel
Purchase with 5% deposit
Your 5% plus the government guarantee covers the standard 20% deposit requirement
No LMI payable
Saving you thousands of dollars depending on your loan size
Repay your loan normally
The guarantee doesn't change your repayments or your loan terms
5% Deposit Scheme vs Other Schemes
The 5% Deposit Scheme is one of several schemes available to Victorian first home buyers:
First Home Owner Grant (FHOG)
$10,000 cash grant for new builds — can be used alongside the Scheme
Stamp Duty Exemption
No stamp duty on properties up to $600,000, concession to $750,000 — can be used alongside the Scheme
First Home Super Saver Scheme (FHSS)
Use super contributions toward your deposit — can be combined with the Scheme
Loans Cart will assess which combination of schemes you're eligible for based on your specific situation.
Frequently Asked Questions
Can I use the 5% Deposit Scheme for an established home or only new builds?
The 5% Deposit Scheme applies to both new and established properties, unlike the First Home Owner Grant which is for new builds only. Property price caps apply.
Is there a limit on places in the 5% Deposit Scheme?
No. Since October 2025 there's no cap on the number of places and no waiting list. You still need to meet the eligibility rules and be approved by a participating lender.
Is there an income limit for the 5% Deposit Scheme?
No. Income caps were removed in October 2025. Your income still has to be enough for the lender to approve the loan, but there's no maximum.
What is the property price cap in Melbourne?
The cap is $950,000 in Melbourne and Geelong, and $650,000 in the rest of Victoria. Both the purchase price and the lender's valuation must be at or under the cap.
Can I buy with a friend or sibling under the 5% Deposit Scheme?
Yes. You can apply alone or with one other person, such as a partner, friend or family member. Both of you must meet the eligibility rules.
Does the 5% Deposit Scheme affect my interest rate?
No. Your interest rate is determined by the lender based on your financial position — the guarantee doesn't change the rate you're offered.
Can I keep my savings after using the 5% Deposit Scheme?
Partly. For places reserved from 1 July 2026, you can't keep savings above roughly six months of living expenses plus six months of loan repayments after settlement. The rest goes into the purchase. Construction loans get a small extra buffer.
What happens if I sell the property?
The guarantee applies for the life of the loan or until you reach 20% equity — at which point no LMI would be payable anyway. If you sell, the guarantee simply ends.
Do I need to use a specific lender?
Yes — the 5% Deposit Scheme must be applied through a participating lender. Loans Cart has access to participating lenders on our panel and will apply on your behalf.
Find Out If You Qualify
Book a no-obligation chat with Brendan. We'll check your eligibility, identify every scheme you qualify for, and map out the fastest path to your first home.
Scheme details current as of October 2026 — check housing.gov.au for latest thresholds. Credit Representative Number: 575816 | Australian Credit Licence: 391209 | ABN: 45 601 426 582