The 5% deposit scheme in 2026: how the rules changed, and what it means for first home buyers

Saving a 20% deposit has been the single biggest hurdle between renters and their first home for years. In 2026, the federal government’s low-deposit scheme looks very different to how it did even 18 months ago — and the changes have widened access considerably. If you wrote off the idea of buying because the deposit felt impossible, it’s worth understanding what’s actually on the table now.

This article explains what the scheme is, what changed on 1 October 2025, who can use it, and the things to weigh up before you do. No pressure and no predictions about the market — just the facts, so the next step is your call.

What the scheme is

The Australian Government 5% Deposit Scheme (formerly the First Home Guarantee, and before that the Home Guarantee Scheme) lets eligible first home buyers purchase with as little as a 5% deposit — without paying lenders mortgage insurance (LMI). The government guarantees up to 15% of the property’s value to the lender, which is what removes the need for LMI. You own 100% of the home from settlement; the government holds no stake in your property.

What changed on 1 October 2025

The scheme was expanded and renamed. According to Treasury and Housing Australia (2026), three changes stand out:

• Income caps removed: the previous limits ($125,000 single / $200,000 joint) no longer apply. Your income no longer locks you out.
• Unlimited places: the old annual cap of 35,000 places has been abolished. There’s no waitlist and no race for a spot.
• Higher property price caps: the maximum eligible purchase price rose in most regions. In Sydney, for example, the cap increased to $1.5 million.

Housing Australia reports that more than 300,000 Australians have used the scheme since it launched in 2020 (Housing Australia, March 2026).

Price caps — and how to check yours

Price caps still apply, and they vary by state and by region (capital city plus designated centres, versus the rest of the state). The scheme is designed for “modest” homes, not luxury property. Both the purchase price and the lender’s assessed value must sit at or below the cap for your location.

Because caps differ by postcode and are updated periodically, the reliable way to check is the official Postcode Search Tool on firsthomebuyers.gov.au. For buyers around Toowoomba and the Darling Downs, the regional Queensland cap typically applies rather than the higher Brisbane figure — worth confirming for your exact suburb before you start making offers.

Who can use it

The headline eligibility points for the first home buyer stream are:

• Australian citizen or permanent resident, at least 18 years old.
• A deposit of at least 5% (and less than 20%) of the property value.
• You haven’t owned property or land in Australia in the last 10 years (returning buyers can qualify).
• You’ll live in the home as an owner-occupier — the scheme isn’t for investment properties.
• You apply on your own or jointly (maximum two applicants), with a participating lender.

There’s also a single-parent stream that allows qualifying single parents or legal guardians to buy with as little as a 2% deposit, with a higher government guarantee. Eligibility for that stream differs — worth a separate conversation if it applies to you.

Eligibility is the first hurdle, not the last

Here’s the part the government pages don’t emphasise: qualifying for the scheme doesn’t guarantee loan approval. Each participating lender applies its own credit policy on top of the scheme’s rules — they’ll still assess your income, expenses, existing debts, and your ability to service the loan at their buffered assessment rate. You also generally need genuine savings for your deposit, though gifted deposits and first home owner grants qualify under most lender policies.

The scheme is accessed through a panel of participating lenders — banks, customer-owned banks, and non-banks — not directly through Housing Australia. You apply through a lender, or through a broker on the panel. Not every lender participates, and the panel changes, so it’s worth comparing across the lenders who do.

Stacking other support

The 5% deposit scheme can often be combined with other first home buyer support, depending on your state and eligibility:

• First Home Owner Grant (varies by state — in Queensland this has been a substantial grant for eligible new builds, but amounts and end dates change, so confirm the current position).
• State stamp duty concessions for first home buyers.
• First Home Super Saver Scheme, which lets you build deposit savings inside super up to a total cap of $50,000 in voluntary contributions.

Which of these you can access depends on your circumstances and your state. A broker can help you map the combination that fits.

Things to weigh up

A smaller deposit gets you in sooner — but it also means a larger loan and more interest over time, and buying with 5% down leaves less of a buffer if circumstances change. Whether buying now suits you depends on your job security, your budget under different scenarios, and your plans for the property. There’s no universally right answer; there’s the answer that’s right for you.

Your call — and how to make it

The scheme has genuinely opened the door for more first home buyers than it did a year ago. Whether it’s the right path for you is something to work through with the full picture in front of you — your borrowing capacity, the price cap for your area, the grants you can stack, and the lenders on the panel. We unlock the options across 70+ lenders; you decide.

Your Rate, Your Choice, Your Call — That’s Unlocked.