Saving a large home deposit can be one of the biggest barriers to buying your first home. For many Australians, it can take years to save a traditional 20% deposit while property prices and living costs continue to change.
The Australian Government 5% Deposit Scheme is designed to help eligible buyers purchase a home sooner with a smaller deposit.
For eligible first-home buyers, the scheme allows a purchase with a minimum 5% deposit, while eligible single parents or legal guardians may be able to purchase with a minimum 2% deposit. Since 1 October 2025, the expanded scheme has no income caps, no waitlist and no Lenders Mortgage Insurance requirement for eligible participants.
How Does the 5% Deposit Scheme Work?
Normally, buyers who borrow more than 80% of a property’s value may be required by their lender to pay Lenders Mortgage Insurance (LMI).
Under the Australian Government 5% Deposit Scheme, the Government provides a guarantee to the participating lender for part of the home loan.
For an eligible first-home buyer, this can mean:
A minimum deposit of 5%
No income cap
No scheme waitlist
No Lenders Mortgage Insurance
Access to both new and existing eligible homes
Government-backed support for the participating lender
The scheme does not mean the Government pays your deposit or contributes equity to your home. You still take out and repay your own home loan. The Government guarantee helps eligible buyers obtain finance with a smaller deposit without paying LMI.
Who May Be Eligible?
Current eligibility requirements for first-home buyers include being:
At least 18 years old
An Australian citizen or permanent resident
Able to contribute a minimum 5% deposit
A first-home buyer, or someone who has not owned property or land in Australia during the previous 10 years
Buying a property within the applicable location price cap
Purchasing the property to live in as an owner-occupier
Applying for an eligible principal-and-interest home loan through a participating lender
You can apply individually or jointly with one other person, including a partner, family member or friend, provided the relevant requirements are met. Your participating lender must also approve you under its normal lending criteria.
What Properties Can You Buy?
The scheme can be used for a variety of eligible property types, including:
Existing houses
Newly built homes
Townhouses
Apartments
House-and-land packages
Eligible off-the-plan purchases
Vacant land combined with an eligible building contract
The property must stay within the applicable price cap for its location.
What Are the Current Victorian Property Price Caps?
For the Australian Government 5% Deposit Scheme, the current caps in Victoria are:
Melbourne and Geelong: up to $950,000
Other Victorian areas: up to $650,000
For a vacant-land-and-build arrangement, the combined land price and building costs generally need to remain within the applicable cap. Buyers should always confirm the cap for their specific postcode with their participating lender before committing to a purchase.
Why Could the Scheme Be Helpful?
Consider a first-home buyer looking at a $600,000 property.
A traditional 20% deposit would be:
$120,000
A 5% deposit would be:
$30,000
There are still other purchasing costs to consider, and lender approval is required, but reducing the minimum deposit requirement can significantly shorten the time some buyers need to save.
The scheme may also remove the cost of Lenders Mortgage Insurance for eligible participants.
How Do You Apply?
The general process is:
- Check your eligibility
Review the official eligibility requirements and use the Government eligibility tool.
- Contact a participating lender
Applications cannot be made directly to Housing Australia. A participating lender assesses your circumstances and submits the scheme application as part of your home-loan application.
- Obtain pre-approval
If approved, you can begin searching for an eligible property within your purchasing limit and location price cap.
- Find your property
Once pre-approved, scheme guidance states that buyers generally have 90 days to find a home and sign a contract.
- Complete finance approval and settlement
Your participating lender manages the final loan and scheme approval process.
Could Bright Homes Help With Your First-Home Journey?
Finding a suitable home involves more than simply choosing a design. Your deposit, borrowing capacity, preferred location, property price and available government support all need to work together.
Bright Homes can help you explore suitable home and building options based on your goals and budget and help you understand the next steps in your first-home journey.
Ready to Take the Next Step?
Talk to Bright Homes about your first-home plans and explore the options that may suit you.