First home · Schemes The 5% Deposit Scheme, explained
The Australian Government 5% Deposit Scheme lets eligible buyers purchase a home with a 5% deposit, or 2% for single parents, without lenders mortgage insurance. Since 1 October 2025, there’s no income cap and no limit on places. Here are the rules, the price caps and the catch, as at 1 July 2026.
Key takeaways
- Buy with a 5% deposit, or 2% for eligible single parents, through a participating lender.
- No income cap and unlimited places since 1 October 2025.
- Price caps run from $700,000 in Hobart to $1.5 million in Sydney.
- You must be a first home buyer, or not have owned property in Australia for 10 years. That includes property held with a former partner.
Who is eligible?
- An Australian citizen or permanent resident, aged 18 or over.
- A first home buyer, or someone who hasn’t owned property in Australia in the last 10 years. In a joint application, both applicants.
- Buying a home to live in, and moving in within 6 months of settlement.
- Borrowing as one person or two joint applicants: partners, friends or family.
- A loan that is owner-occupier, principal and interest, up to 30 years, through a Participating Lender.
There’s no income test. That matters for high earners, many of whom assume they’re ruled out.
Single parents: 2% deposit
Single parents with a dependent child can buy with a 2% deposit. They don’t need to be first home buyers. The rule is that they can’t hold any other property interest once the new home settles, which can let a single parent buy out a former partner’s share. See buying after a separation.
The 10-year rule
If you’ve owned before, you may still be eligible. The test is whether you’ve held property in Australia in the 10 years before the home loan date. In a joint application, it applies to both of you, and it counts property held with a former partner.
So someone who sold 11 years ago may qualify, and someone who sold last year won’t. Haven’t owned in 10 years? covers it in detail.
The catch
- A bigger loan. A 5% deposit means a 95% loan, so higher repayments and more interest over time.
- Participating lenders only. Not every lender offers the scheme.
- You must live there. It’s not for investments, and moving out changes things.
- Stamp duty is separate. The scheme covers the deposit, not your state’s duty, which can be the bigger number.
5% Deposit Scheme price caps by state
Both the price and the lender’s valuation must be at or under the cap. Regional centres in NSW, Victoria and Queensland use the capital city cap.
| State or territory | Capital city and regional centres | Rest of state | 5% deposit at the cap |
|---|---|---|---|
| NSW | $1,500,000 | $800,000 | $75,000 |
| VIC | $950,000 | $650,000 | $47,500 |
| QLD | $1,000,000 | $700,000 | $50,000 |
| WA | $850,000 | $600,000 | $42,500 |
| SA | $900,000 | $500,000 | $45,000 |
| TAS | $700,000 | $550,000 | $35,000 |
| ACT | $1,000,000 | — | $50,000 |
| NT | $750,000 | $600,000 | $37,500 |
As at 1 July 2026, checked 23 October 2026. Regional centres: NSW Central Coast, Coffs Harbour–Grafton, Illawarra, Mid North Coast, Richmond–Tweed, Newcastle and Lake Macquarie; VIC Geelong; QLD Gold Coast and Sunshine Coast. The ACT has one cap.
How to apply for the 5% Deposit Scheme
- Check you’re eligible, including the 10-year rule for both applicants.
- Choose a participating lender. You apply through the lender, not the government.
- Get pre-approval. From then, you have 90 days to find a home and sign a contract.
- Buy under the cap, with a valuation that’s under the cap too.
- Move in within 6 months of settlement.
The scheme and stamp duty
The scheme reduces the deposit, not the stamp duty. In NSW, first home buyers pay no duty on an established home up to $800,000 and a reduced amount up to $1 million. Above $1 million, they pay full duty, even though the scheme cap in Sydney is $1.5 million.
At $1.5 million, the 5% deposit is $75,000 and the duty is $63,787. That’s why your real number starts with both. Try the stamp duty calculator for your state.
FAQ Questions clients ask
Who is eligible for the 5% Deposit Scheme?
Australian citizens and permanent residents aged 18 or over, buying a home to live in, who are first home buyers or haven’t owned property in Australia in the last 10 years. In a joint application, both applicants must meet the rules. There’s no income cap.
Is there an income limit for the 5% Deposit Scheme?
No. Income caps and the limit on places were removed on 1 October 2025. Help to Buy, a separate shared equity scheme, still has income caps.
What are the 5% Deposit Scheme price caps?
They range from $700,000 in Hobart to $1.5 million in Sydney and the NSW regional centres. Both the purchase price and the lender’s valuation must be at or under the cap for the area.
Do I pay lenders mortgage insurance under the scheme?
No, as long as you keep meeting the scheme’s rules, such as living in the home. The government backs part of the loan instead, which is what lets lenders accept a 5% deposit.
Can I use the scheme with a friend or sibling?
Yes. Two joint applicants can apply together, including partners, friends or family members. Both must meet the eligibility rules, and loans with three or more borrowers don’t qualify.
How long do I have to find a home?
Under the scheme, you have 90 days from pre-approval to find a home and sign a contract.
Do I have to live in the home?
Yes. You must move in within 6 months of settlement and live there while the scheme applies to your loan. It’s for homes you live in, not investments.
Can I use the scheme for a new build or land?
Yes. It covers new and existing homes, house-and-land packages, and land with a separate build contract. With land and a build, the total must stay under the cap and the build must start within 12 months of settlement.
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