The 5% Deposit Scheme, One Year On

You and your partner sat down with a broker or a bank a couple of years ago. You both work full time. You'd saved hard.

And you were told you earned too much for the government's 5% deposit scheme. Or that the places had run out for the year.

So you parked it and kept renting. That was a fair call at the time. A year ago, the rules changed.

What changed on 1 October 2025

The First Home Guarantee was renamed the Australian Government 5% Deposit Scheme. The name is the least of it.

• Income caps went. The old limits of $125,000 for a single and $200,000 for a couple no longer apply. There's no income test at all now.
• Place limits went. It used to be a race for a fixed number of spots each year. Now the number of places is uncapped.
• Price caps went up. In Melbourne and Geelong the cap rose from $800,000 to $950,000. Regional Victoria is $650,000.

That's a big shift for a couple in Tarneit or Point Cook earning a combined $210,000. Twelve months ago they were out. Today, on the scheme's own rules, they're in.

How the scheme actually works

You put in a deposit of at least 5%. The government guarantees up to 15% of the property's value to the lender on your behalf.

So the lender treats you like a 20% deposit borrower. That means no Lenders Mortgage Insurance, which on a smaller deposit can run into the tens of thousands.

It's a guarantee to the lender, not a gift to you. You still borrow the other 95% and you pay it all back.

The scheme also isn't only for people who have never owned. If it's been at least 10 years since you last owned property in Australia, you can be eligible too.

What didn't change

This is where people get tripped up. The scheme opens the door on deposit size. It doesn't change how a lender decides what you can borrow.

• The lender still assesses you. Your income, your expenses, your debts and the serviceability buffer all still apply. No income cap doesn't mean no limit.
• You still need a participating lender. Not every bank or lender offers it, and the ones that do have their own policies on top.
• It has to be your home. You must live in it. It isn't for investment properties.
• Stamp duty is a separate bill. In Victoria you pay no duty up to $600,000 as a first home buyer, with a concession sliding up to $750,000. Above that, duty comes out of your savings, not the loan.

If you're wondering how these pieces fit together for your own numbers, book a chat. It's a conversation, not a sales pitch.

The trade off nobody puts in the ad

Buying with 5% gets you in sooner. That's the whole point, and for plenty of couples it's the difference between buying this year and buying in four.

But a 95% loan is a bigger loan. You'll pay interest on more money, and your repayments are higher than if you'd waited and saved 20%.

You also start with less equity. If values went sideways for a few years and you needed to sell, there's less cushion between what you owe and what the place is worth.

None of that makes it a bad scheme. It makes it a trade. Getting in sooner against carrying a larger loan for longer. Which way that falls is different for every couple.

Where it sits next to Help to Buy

Help to Buy launched in December 2025 with a 2% deposit, but it comes with income caps. From 1 July 2026 they're $103,000 for a single and $165,000 for a couple or single parent.

The government also takes an equity share in your home in return, up to 30% on an established home or 40% on a new one.

For a lot of dual income couples in the west, that income cap rules Help to Buy out. The 5% scheme has no income cap, so it's often the one that's actually on the table.

Single parents have their own stream, with a deposit as low as 2% and no requirement to be a first home buyer.

Worth a second look

If you were knocked back on income or timing before October 2025, the reason you were given may no longer apply.

We've helped over 100 first home buyers into the market, and we're rated 10/10 on Reviewr by over 100 customers. If you'd like to see where you'd land under the current rules, book a chat.

Let's get you into a home.

Figures verified 2 October 2026 against treasury.gov.au, sro.vic.gov.au and firsthomebuyers.gov.au.