New Name, New Rules: What the 5% Deposit Scheme Offers

The First Home Guarantee Has a New Name. Here's What It Actually Offers Now.

If you've been researching first home buyer support in Australia and keep seeing two different names for what sounds like the same thing, you're not imagining it. The scheme most people still call the First Home Guarantee was renamed on 1 October 2025. It's now the Australian Government 5% Deposit Scheme, and the rules changed along with the name.

Here's what it actually offers, as it stands today.

What the scheme gives you

At its core, the scheme lets an eligible first home buyer purchase with a smaller deposit than they'd otherwise need, and skip the Lenders Mortgage Insurance that usually comes with a low-deposit purchase.

• A 5% deposit, or 2% if you're a single parent or legal guardian

• No Lenders Mortgage Insurance payable. The government guarantees the portion of the loan a lender would normally require insurance on

• No income caps. These were removed when the scheme was renamed

• No place caps. There's no annual allocation limit and no waitlist to worry about

• You need to be buying as an owner-occupier, meeting the scheme's first home buyer and citizenship or residency requirements

That's a meaningfully different offer to the version a lot of people still have in their heads from a year or two ago.

The part that catches Melbourne buyers out

The cap isn't on what you earn anymore. It's on what you buy.

In Victoria, the property price cap depends on where you're purchasing, with a higher cap for Melbourne and Geelong than for the rest of the state. Two details are worth knowing before you get attached to a property.

The purchase price and the lender's valuation both need to sit at or below the cap. You can agree a contract just under the limit and still fall outside the scheme if the valuation comes back higher.

The boundary between the Melbourne cap and the regional cap runs on postcode, and some suburbs sit across more than one. Don't assume your suburb falls under the cap you'd expect. Check the official postcode tool for the specific address, not the general area.

Book a 15-minute call, to know your borrowing power based on your situation. 

What it doesn't do

The scheme reduces your deposit requirement and removes an insurance cost. It doesn't reduce what you're borrowing, and it doesn't remove your responsibility for repayments.

Borrowing with a 5% deposit means borrowing a larger share of the property's value than you would with a standard deposit. That's a bigger loan, and typically more total interest over the life of it. None of that makes the scheme a bad idea. It just means the deposit isn't the only thing worth thinking through before you use it.

It's also worth knowing that the scheme runs through a panel of participating lenders, not directly from government. Those lenders share the scheme's rules, but everything else, including how they assess your income, is their own credit policy. That matters a great deal if either applicant's income doesn't come from a standard payslip, which is exactly where a broker earns their keep.

What you can use alongside it

The scheme doesn't operate in isolation. In Victoria, first home buyers may also be eligible for a stamp duty exemption or concession, depending on the purchase price, and the First Home Owner Grant on eligible new homes. These are separate programs with their own eligibility rules, but they're designed to work alongside the deposit scheme rather than instead of it.

Frequently asked questions

Is the First Home Guarantee still available?
Not under that name. It was renamed the Australian Government 5% Deposit Scheme on 1 October 2025, with updated rules. If you're researching the older name, the current version is what you'll actually be applying for.

Do I need to earn under a certain amount to qualify?
No. Income caps were removed when the scheme was renamed. There's currently no income ceiling.

Do I have to pay Lenders Mortgage Insurance?
Not under the scheme. The government guarantees the portion of the loan a lender would ordinarily require insurance on.

What's the property price cap in Melbourne?
It depends on where you're buying, with a higher cap for Melbourne and Geelong than for the rest of Victoria. Confirm the current figures and the exact boundary for your target suburb before relying on them, since caps and postcode boundaries can be updated.

Can I use the scheme and Victoria's stamp duty relief together?
Yes, they're separate programs with separate eligibility rules, but they're commonly used alongside each other by eligible first home buyers.

Does the scheme work the same way for a self-employed applicant?
The scheme itself doesn't treat employment types differently. What varies is how the participating lender you apply through assesses self-employed income, which is a lender policy question rather than a scheme rule. We've covered exactly how that works if one applicant in your household is self-employed.

A recent example of how this can play out

We recently helped a Melbourne couple, one PAYG, one running a business still building its financial history, use an earlier version of this scheme to buy sooner than they thought possible. Read their story here.

Wondering what this could mean for you?

Start with our first home buyer page or run your own numbers on the stamp duty calculator. If you'd rather talk it through, complete the Finance Square Score quiz and we'll map out what applies to your situation.

Priya Dey is the founder of Finance Square Group, a Melbourne mortgage broking firm specialising in self-employed borrowers, investors and business owners.

This article is general information only. It does not take your objectives, financial situation or needs into account, and it is not a recommendation that any product or scheme is suitable for you. Scheme rules, price caps and eligibility criteria referenced on this page are current as at September 2026 and are subject to change without notice. Nothing on this page is a guarantee of eligibility or approval.

Finance Square Group is a trading name of Sioux Property Solutions Group Pty Ltd, Credit Representative 543438, authorised under BLSSA Pty Ltd, Australian Credit Licence 391237.