Saving a 20% deposit can take years, particularly when property prices are high and buyers are also managing rent and other living costs. For eligible first-home buyers, the Australian Government’s low-deposit scheme can reduce the deposit needed to purchase a home.
Although many people still refer to it as the First Home Guarantee, the scheme was renamed the Australian Government 5% Deposit Scheme on 1 October 2025. The expanded scheme allows eligible first-home buyers to purchase with a minimum 5% deposit, with the Australian Government providing a guarantee to the participating lender.
The changes also removed income caps and the previous limit on available places, making the scheme accessible to more first-home buyers.
For buyers considering the scheme in 2026, understanding the eligibility requirements, property price limits and lending process is important before making an offer.
What is the First Home Guarantee?
The First Home Guarantee was part of the Australian Government’s Home Guarantee Scheme and was designed to help eligible first-home buyers purchase a home with a smaller deposit.
Since 1 October 2025, the scheme has operated under the name Australian Government 5% Deposit Scheme. It continues to provide government-backed support for eligible buyers who have a minimum 5% deposit.
The government guarantee is provided to the participating lender rather than directly to the home buyer. This can allow an eligible buyer to borrow with a smaller deposit without paying Lenders Mortgage Insurance (LMI) under the scheme.
Importantly, the guarantee does not mean the government pays part of your home loan or deposit. You remain responsible for the mortgage, repayments, interest and other costs associated with buying the property.
What changed for the First Home Guarantee in 2026?
The scheme underwent significant changes from 1 October 2025.
For first-home buyers, the current 5% Deposit Scheme has:
- A minimum 5% deposit
- No income caps
- Unlimited places
- No waiting list
- No LMI for eligible scheme participants
- Higher property price caps
- Eligibility for new and existing homes
- Access through participating lenders
These changes mean that some buyers who would previously have exceeded the income or place limits may now be able to consider the scheme.
However, meeting the scheme’s eligibility requirements does not guarantee that a lender will approve your home loan. You still need to meet the lender’s credit, income and serviceability requirements.
Who is eligible for the 5% Deposit Scheme?
For first-home buyers, eligibility generally includes meeting requirements around your age, citizenship or residency, deposit, property ownership history, property type and intended use. You must generally:
Be at least 18 years old
The scheme is available to applicants aged 18 or over.
Be an Australian citizen or permanent resident
You must meet the relevant citizenship or permanent residency requirements at the applicable home loan date.
Have at least a 5% deposit
First-home buyers generally need a minimum deposit of 5% of the property’s value.
Be a first-home buyer or meet the 10-year rule
You may qualify if you have not owned a home or land in Australia within the previous 10 years. The rules apply to the relevant applicants and circumstances.
Buy a home to live in
The property must be purchased as an owner-occupied home rather than an investment property.
Use a participating lender
You cannot apply directly to Housing Australia. The scheme is accessed through a participating lender as part of the home loan application process.
Do you need to earn under a certain amount?
No. One of the major changes introduced from 1 October 2025 was the removal of income caps.
Under the current Australian Government 5% Deposit Scheme, there are no income caps for applicants.
However, this doesn’t mean income is irrelevant when applying for a mortgage. Your participating lender will still assess your income, expenses, debts and overall ability to service the proposed home loan.
In other words, there is no scheme income cap, but normal lending assessment still applies.
How much deposit do you need?
For an eligible first-home buyer, the minimum deposit is generally 5% of the property’s value.
For example, if an eligible property has a value of $700,000:
- 5% deposit = $35,000
- Remaining amount = $665,000
This is a simplified example and does not include other purchasing costs.
It’s also important to understand that the required deposit is based on the home’s value as assessed by the participating lender, which may differ from the purchase price.
You’ll also need to budget for costs such as stamp duty, conveyancing, inspections and other transaction expenses where applicable.
What properties can you buy?
The scheme can be used for a range of eligible residential properties.
Depending on the circumstances, these can include:
- Existing houses
- Existing townhouses
- Existing apartments
- New-build homes
- House and land packages
- Off-the-plan properties
- Vacant land with a building contract
The property must satisfy the scheme’s requirements and remain within the applicable location-based price cap.
What are the property price caps in 2026?
Property price caps vary depending on where you’re buying.
For 2026, the current caps include:
| State/Territory | Capital city & regional centres | Other areas |
| NSW | $1,500,000 | $800,000 |
| Victoria | $950,000 | $650,000 |
| Queensland | $1,000,000 | $700,000 |
| Western Australia | $850,000 | $600,000 |
| South Australia | $900,000 | $500,000 |
| Tasmania | $700,000 | $550,000 |
The ACT has a $1,000,000 cap, while different caps apply across the Northern Territory and certain territories.
The exact cap can depend on the property’s suburb or postcode, so buyers should check the current location-specific cap before making an offer.
For example, a property that appears to fall within the NSW capital-city limit may not necessarily qualify without checking its specific location and valuation.
How does the First Home Guarantee work?
The process is relatively straightforward, but there are several stages to consider.
1. Check your eligibility
Start by checking whether you meet the scheme’s requirements, including the deposit, previous property ownership, citizenship or residency and intended use of the property.
2. Speak with a participating lender
The scheme is accessed through participating lenders.
The lender will assess both your scheme eligibility and your ability to service the home loan.
3. Understand your borrowing position
Before searching for a property, understand how much you may be able to borrow and what repayments could look like.
This is important because being eligible for the scheme does not necessarily mean you can afford the maximum property price allowed under the scheme.
4. Find an eligible property
Once you understand your borrowing position, you can search for a property that fits both your budget and the applicable scheme price cap.
5. Complete the home loan process
Your lender will complete the required checks and, if everything is approved, proceed with the home loan and settlement.
6. Move into the property
The property must be used as your owner-occupied home. The scheme has ongoing occupancy requirements, including moving into the property within the required timeframe.
Can you use the scheme with a mortgage broker?
Yes, the home loan itself must be arranged through a participating lender, and a mortgage broker may be able to help you understand and compare eligible lending options where they have access to participating lenders.
A broker can also help you consider the broader home loan rather than looking only at the deposit requirement.
This can include discussing:
- Borrowing capacity
- Loan structure
- Interest rates
- Repayments
- Loan features
- Upfront costs
- Lender requirements
- Overall affordability
At MorFin Group, we take an education-first approach, helping clients understand their home loan options before proceeding.
What are the risks of buying with a smaller deposit?
A 5% deposit can make entering the property market possible sooner, but it doesn’t make the property cheaper.
For example, if you purchase a $700,000 property with a 5% deposit, you would need to finance approximately $665,000 before considering other costs. That means your repayments can be significant.
Before purchasing, consider:
- Your expected mortgage repayments
- Interest rate changes
- Income stability
- Existing debts
- Living expenses
- Future financial commitments
- Property ownership costs
- Your emergency savings
The goal should not simply be to qualify for the scheme. It should be to make sure the resulting home loan is manageable for your circumstances.
How MorFin Group can help first-home buyers
Government schemes can make the deposit side of buying a home easier to understand, but there is still the broader question of choosing and managing a suitable home loan.
MorFin Group helps first-home buyers understand their borrowing position, lending options and the costs associated with purchasing a property.
With access to 25+ banks and lending institutions, we can help you explore relevant home loan options based on your circumstances.
Our approach focuses on helping you understand:
Your deposit → Your borrowing position → Your loan options → Your repayments → Your broader financial position
The aim is to help you make an informed decision rather than simply focus on getting into the market with the smallest possible deposit.
Conclusion
The First Home Guarantee remains a popular search term, but in 2026 the scheme is officially known as the Australian Government 5% Deposit Scheme.
For eligible first-home buyers, the scheme can provide a pathway to buying with a minimum 5% deposit, no income cap and no LMI under the scheme. Property price caps still apply, and buyers must meet the relevant eligibility and lender requirements.
A smaller deposit can reduce the time needed to save, but it also means taking on a larger home loan. Understanding your borrowing capacity, repayments and overall financial position is therefore just as important as understanding the scheme itself.
If you’re considering buying your first home, MorFin Group can help you understand your home loan options and explore lending solutions based on your circumstances.
FAQs
Is the First Home Guarantee still available in 2026?
Yes. The scheme continues in 2026 under its new name, the Australian Government 5% Deposit Scheme. It was renamed from 1 October 2025.
How much deposit do I need for the First Home Guarantee?
Eligible first-home buyers generally need a minimum 5% deposit.
Is there an income limit for the First Home Guarantee?
No. Income caps were removed when the scheme was expanded from 1 October 2025. However, lenders still assess your income and ability to service the home loan.
Do I have to be a first-home buyer?
For the first-home-buyer stream, you must generally be a first-home buyer or not have owned a home or land in Australia within the previous 10 years.
Can I buy an investment property under the scheme?
No. The property must be purchased as an owner-occupied home rather than an investment property.
Does the First Home Guarantee cover stamp duty?
No. You remain responsible for purchase costs such as stamp duty, legal fees and other applicable costs.
Can I use the scheme to buy an apartment?
Potentially. Eligible existing or new apartments can qualify, provided the property meets the relevant scheme requirements and location-specific price cap.
Is there a limit on the number of places?
There are currently unlimited places for eligible buyers under the Australian Government 5% Deposit Scheme.
Can I apply with my partner?
First-home buyers can generally apply individually or jointly with one other person, provided the relevant applicants meet the eligibility requirements.
Can I use a mortgage broker for the 5% Deposit Scheme?
Yes. A mortgage broker may be able to assist with your home loan application if they have access to participating lenders and can help assess relevant lending options.
Does the scheme guarantee that my home loan will be approved?
No. You still need to satisfy the participating lender’s credit, serviceability and other lending requirements.
Does the 5% Deposit Scheme mean I don’t pay LMI?
Eligible participants can avoid LMI under the scheme. However, you remain responsible for your home loan and other applicable costs.
How do I apply for the First Home Guarantee?
You cannot apply directly to Housing Australia. You need to apply through a participating lender as part of your home loan application.