What Is the 5% Deposit Scheme, and Who Actually Qualifies?
The Australian Government 5% Deposit Scheme lets eligible first home buyers purchase with as little as a 5% deposit (2% for single parents and legal guardians) without paying Lenders Mortgage Insurance.
Since it was expanded on 1 October 2025, there are no income caps, no waitlists, and higher property price caps than before.
You still need to pass a normal lending assessment with a participating lender, but the deposit and LMI hurdles that used to lock people out are largely gone.
If you're wondering whether you qualify, the honest answer is that most eligibility barriers from a couple of years ago no longer apply. The scheme used to exclude people earning over a certain amount and only had a limited number of places each year, which meant good buyers missed out simply because the spots ran out. Both of those restrictions are gone now, and it's genuinely changed who can realistically get into their first home.
I get asked about this scheme almost every week, usually by someone who assumes they earn too much to qualify, or who heard about it a while ago and never checked back. So here's what's actually changed, and what still matters.
What actually changed on 1 October 2025?
Three things changed, and they're the ones that matter most:
No more income caps. Previously, singles earning above $125,000 and couples earning a combined $200,000 were excluded. That restriction has been removed entirely, so eligibility no longer depends on how much you earn.
No more waitlists. The scheme used to have a limited number of guarantee places released each financial year, and once they ran out, you had to wait. Places are now unlimited for eligible applicants.
Higher property price caps. The maximum purchase price that qualifies has increased across every state and territory, with caps varying by location. In NSW, for example, the cap for Sydney metro, Illawarra, Newcastle, and Lake Macquarie sits at $1,500,000, with regional NSW at a lower cap.
None of this removes the need for a proper loan assessment. Your lender still checks your income, expenses, credit history, and capacity to service the loan. What's changed is that a smaller deposit and no LMI are now available to far more people than before.
Who is actually eligible?
Broadly, you need to be an Australian citizen or permanent resident, be a genuine first home buyer (or eligible single parent or legal guardian), intend to live in the property as an owner-occupier, and buy within the price cap for your location. There's no restriction based on profession, and investment properties aren't eligible, since the scheme is specifically for people buying a home to live in.
Because the old income restrictions are gone, a lot of buyers who were told a couple of years ago that they earned too much should genuinely check again. That single fact alone has opened the scheme up to a much broader range of people.
How much can you actually save by using it?
The main saving is avoiding Lenders Mortgage Insurance, which is the cost a lender normally charges when you're borrowing with less than a 20% deposit. On a typical property, that can easily run into the tens of thousands of dollars. The scheme removes that cost because the government guarantees part of the loan on your behalf, which means the lender doesn't need LMI to protect themselves.
What it doesn't remove is the size of the loan itself. Buying with a smaller deposit means a larger loan and higher ongoing repayments, so the scheme is about reducing your upfront costs and getting you into the market sooner, not about reducing what the home actually costs you over time.
What are the risks of buying with a smaller deposit?
This is the part that doesn't get talked about enough. Borrowing at a higher loan-to-value ratio means less buffer if property values dip, and it means larger repayments from day one because you're borrowing more. I always walk clients through the full picture, including stamp duty, ongoing repayments, rates, insurance, and moving costs, not just the deposit and LMI savings, so you're making a properly informed decision rather than only seeing the upside.
Frequently Asked Questions:
Do I need to apply directly to Housing Australia? No. You can only access the scheme through a participating lender as part of your home loan application. Housing Australia doesn't take applications directly.
Can I use the scheme to buy an investment property? No. It's specifically for owner-occupiers. You need to intend to live in the property.
What happens if the property is above the price cap for my area? You won't be eligible for the guarantee on that purchase. Price caps are location-specific, so it's worth checking the cap for your exact area before you start looking, since it varies significantly between metro and regional areas.
Is this the same as the Help to Buy scheme? No. The 5% Deposit Scheme is a deposit guarantee, meaning you still own 100% of your home. Help to Buy is a different, shared equity scheme where the government co-owns a percentage of the property, and it has its own separate income caps and limited annual places.
Where this leaves you:
If you've ruled yourself out of buying because of income, deposit size, or a scheme place running out, it's genuinely worth checking again. A lot has changed in the last year, and the barriers that used to be real often aren't anymore. You don't need to figure out whether you qualify on your own. That's exactly what I'm here for, and I'll walk you through your actual numbers rather than a general rule of thumb.
Ready to see if you qualify? Book a free call https://calendly.com/aprilsix or head to https://aprilsix.com.au/services to see everything I help first home buyers with, from grants and guarantor options through to what you can actually borrow.
Sources and References: Australian Government, firsthomebuyers.gov.au — 5% Deposit Scheme Housing Australia — Australian Government 5% Deposit Scheme Information Guide (published via [firsthomebuyers.gov.au] Housing Australia reported over 320,000 Australians assisted since the scheme commenced in 2020, as published on the official 5% Deposit Scheme.
Any information contained on the April Six Pty Ltd website is general in nature only and has been prepared without considering your individual personal objectives, financial situation or requirements. Before acting or relying on this information, you must consider the appropriateness of this information with regard to your individual circumstances and objectives.
April Six Pty Ltd is a Credit Representative of Astute Financial Management Pty Ltd | Australian Credit Licence 364253
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About the author: Eshanee is the founder of April Six, a mortgage broker for first home buyers and first-time property investors, and a Credit Representative (554762) of Astute Financial Management Pty Ltd. Get in touch at hello@aprilsix.com.au or 0488 471 888.
