An eligible government guarantee can help you buy with a smaller deposit and no LMI. You still repay the loan.
- Illustrative home price
- $800,000
- 5% deposit
- $40,000
- Remaining price to borrow
- $760,000
Buying costs are extra. The example does not confirm your eligibility, a location price cap or lender approval.
What is the scheme called now?
The Australian Government 5% Deposit Scheme is the current program name. Older pages may refer to the Home Guarantee Scheme or First Home Guarantee. Start with the official scheme site so you use the rules for your application date.
Who is it for?
The first-home-buyer pathway includes adult Australian citizens or permanent residents, an eligible ownership history, a minimum 5% deposit, an eligible property within its location cap and an intention to live there. A participating lender checks the full rules and whether you can repay.
Three different kinds of help
A guarantee supports a loan. A grant is a payment if you qualify. A duty concession reduces a state or territory tax. Qualifying for one does not establish eligibility for the others. Add buying costs and test repayments before treating a deposit target as a complete plan.
Put a smaller deposit beside a larger loan
Take a hypothetical $700,000 eligible property. A 5% deposit is $35,000 and the remaining price is $665,000. A 20% deposit is $140,000 and leaves $560,000 to borrow. The smaller-deposit route uses $105,000 less cash towards the price, but also leaves $105,000 more debt before any financed costs. The guarantee does not pay that difference into your bank account. Use the same loan term and interest assumption when comparing repayments, so the effect of the extra borrowing is clear.
Check the property and applicant together
Open the official scheme page for the first-home-buyer pathway, then check the location price cap for the exact property. A house being advertised as suitable for first-home buyers does not confirm scheme eligibility. Prepare a note of every applicant, citizenship or permanent-residency status, ownership history and the intended use of the property. The participating lender checks those details alongside its lending requirements. Record which version of the rules you checked and ask the lender to explain any uncertainty before relying on the scheme.
Build a complete cash target
The deposit towards the price is only one line in the budget. Add a separate estimate for transfer duty after any confirmed concession, legal work, inspections, moving and a cash buffer. If some costs will be financed, show that clearly in the loan amount instead of counting them twice. Use our savings-goal tool for the total cash still needed, then the mortgage tool for the proposed debt. A scheme can address the size of the deposit without solving an ongoing repayment shortfall.
Practise the repayment before making a commitment
As an exercise, write down the estimated repayment, council and water costs, insurance and expected maintenance next to your current monthly housing budget. Compare the difference with what you actually have left after ordinary expenses. Run another mortgage example at a higher hypothetical rate to see the sensitivity; this does not reproduce a lender’s assessment. Keep the lender’s eligibility confirmation, property-cap check and cost estimates together. Recheck them if the property, applicants, contract timing or intended living arrangements change.
Does the government guarantee pay off part of your loan for you?
Sources & update record
Expanded with original worked examples, practical checks and common mistakes. Current rule notes remain separate from illustrative arithmetic.
Published 18 Sept 2026 · Updated 18 Sept 2026. These dates do not guarantee rules are unchanged.
Published by Howloop. AI assists preparation. This lesson has not been reviewed by a licensed financial adviser. How we check our content →