- With the changes to the 5% Deposit Scheme, first home buyers are able to buy a home with only 5% deposit and no LMI, regardless of your income.
- The Government acts as a guarantor for your home, so you don't need to pay the LMI.
- You can save tens of thousands of dollars by avoiding LMI.
- There are no limit to the number of first home buyers who can access ths 5% deposit scheme, and property price caps have been increased.
5% Deposit Home Loan Scheme - Summary
What is the 5% Deposit Scheme?
The 5% deposit scheme is a government-backed initiative designed to help first home buyers break into the property market sooner. It allows eligible buyers to purchase a home with as little as 5% deposit, without needing to pay for Lender’s Mortgage Insurance (LMI) - a cost that usually applies when borrowers have less than 20% deposit.
With the government stepping in as a guarantor for the remaining 15% deposit, first home buyers are treated by lenders as though they have a full 20% deposit. This significantly reduces upfront costs and makes homeownership more accessible and affordable for Australians trying to buy their first home.
Who Can Access the 5% Deposit Scheme?
To qualify for the 5% deposit scheme, there are a few key eligibility requirements you’ll need to meet. These ensure the program supports genuine first-time buyers who need a hand getting into the market. Currently, applicants must be:
- At least 18 years old
- Australian citizens or permanent residents
- Applying as an individual or two joint applicants (including couples, siblings, friends, or other family members)
- Planning to live in the property they purchase (not available for investment properties)
- A first home buyer, or someone who hasn’t owned a property or land in Australia in the past 10 years
Ready to get started or have questions about the process? Simply fill out the form below to connect with a home loan expert from Eden Emerald Mortgages. Their help won’t cost you a cent (as they’re paid by the lender, not you) and they’ll support you every step of the way, from your first enquiry all the way to getting the keys.
So I Only Need to Save 5% Deposit For a Home Loan?
While the 5% deposit scheme allows you to buy a home with just a 5% deposit and no Lenders Mortgage Insurance (LMI), it doesn't cover other upfront costs involved in buying property. One of the biggest extra expenses is stamp duty, which is a state government tax on property purchases. Whether you need to pay it as a First Home Buyer (and how much) depends on your state and the price of the home. See the stamp duty calculator to work out if you need to pay it, and how much it is.
On top of stamp duty, you'll also need to pay for a conveyancer or solicitor to handle the legal side of the purchase, which can cost $1,000 to $2,500. Then there are building and pest inspections, often around $400 to $800, which are strongly recommended to avoid nasty surprises. You might also have loan application fees, moving costs, and upfront expenses like council rates or home insurance. So while the 5% deposit gets you through the lender’s door, you’ll need to have extra funds saved to cover the total cost of buying a home.
Which Properties are Eligible for 5% Deposit Scheme?
The 5% deposit scheme can be used to buy a wide range of residential properties, giving first-home buyers the freedom to choose what suits them best. Whether you're looking at a newly built home, an existing house, apartment, or townhouse, you're covered. The scheme also includes house and land packages, off-the-plan properties, and even vacant land with a building contract in place. The key requirement is that the property must be ready for you to live in (or will be once built) and must meet all building regulations and safety standards.
It’s also important to consider the price cap for the area you’re buying in. The 5% deposit scheme has maximum purchase price limits that vary based on location, helping to keep the support focused on affordable homes. Metro areas and regional centres have higher limits due to higher property values, while smaller towns and rural areas have lower thresholds. Check the current price cap for your chosen suburb or region to make sure your property fits within the scheme's eligibility range.
Property Price Caps for 5% Deposit Scheme
State/Territory | Capital City and Regional Centre* | Rest of State |
|---|---|---|
NSW | $1,500,000 | $800,000 |
VIC | $950,000 | $650,000 |
QLD | $1,000,000 | $700,000 |
WA | $850,000 | $600,000 |
SA | $900,000 | $500,000 |
TAS | $700,000 | $550,000 |
ACT | $1,000,000 | Cell |
NT | $600,000 | Cell |
Jervis Bay Territory & Norfolk Island | $550,000 | Cell |
Christmas Island and Cocos (Keeling) Island | $400,000 | Cell |
* Regional centres are Newcastle and Lake Macquarie, Illawarra, Geelong, Gold Coast and Sunshine Coast.
Which Lenders Offer 5% Home Loans
The 5% deposit scheme is offered through a network of 39 participating lenders, ranging from major banks to smaller institutions. These include well-known names like Commonwealth Bank, NAB, Westpac, and St. George, as well as various credit unions and regional banks. Each lender may have slightly different criteria and interest rates, so it’s important to choose carefully.
To make the process easier, it's a smart move to work with a mortgage broker who specialises in helping first-home buyers, like Eden Emerald Mortgages. They can help you identify which lenders support the 5% deposit scheme, explain any differences in deposit requirements, and compare interest rates and loan features to find the best deal for your situation. Best of all, their services are completely free, as they’re paid by the lender, not you.
How to Apply for 5% Deposit Scheme Home Loan
The easiest way to apply for the 5% deposit scheme is by working with a mortgage broker who can guide you through the process, compare lenders, and secure the most competitive rates. The journey starts with checking that you meet the scheme’s criteria and pulling together key documents like your proof of income, ID, and savings history. A specialist broker like Eden Emerald Mortgages makes the process much smoother, especially for first-home buyers navigating things for the first time.
EE Mortgages will help you get pre-approved, compare offers from banks that participate in the 5% deposit scheme, and handle the application to Housing Australia on your behalf. Once approved, you’ll be able to buy with just a 5% deposit and avoid paying LMI, potentially saving you thousands. Having a broker on your side means you’ll get expert advice, personalised support, and access to the best loan options for your situation. To get started, fill out the contact form below or call EE Mortgages on (02) 9188 9398.
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Get Your Mortgage Approved
To get started on your journey of securing a home loan, fill in the form below, and an experienced mortgage broker will contact you about your personal situation. You can also call us directly on (02) 9188 9398.
Conclusion
The 5% deposit scheme is a game-changing opportunity for Australian first-home buyers, making it easier to enter the property market without the burden of a full 20% deposit or costly LMI. By understanding how the scheme works, including the types of properties allowed, price caps, and which lenders are involved, first home buyers can take full advantage of this support.