If you’ve been thinking you must save 20% of your new home value before you buy, then it’s time to think again.
The Australian Government’s 5% deposit scheme is changing the game for first homebuyers and single parents, by helping them get into a home sooner and with less upfront cost.
But, it’s not a free ride. Here’s what you need to know, how it works, and how you make it work for you.
What the scheme is and why it matters.
- The scheme allows elegible first homebuyers to purchase a home with a minimum deposit of 5% of the properties value. For single parents or legal guardians, that deposit can be as low as 2%.
- The Government then provides a guarantee to participating in lenders so you can borrow up to 95% (or a single parents up to 98%) of the properties value, and avoid paying Lenders Mortgage Insurance (LMI)
- This matters because many first homebuyers are stuck saving for years under the traditional 20% deposit rule. This scheme opens up the opportunity to buy sooner and begin building equity instead of continuing to rent or live at home.
What’s new (changes from October 2025).
- As of 1 October 2025 the scheme was expanded. It now has no income caps, higher property price caps depend depending on location and unlimited places.
- So if you thought it was too late or you are over the income threshold, check again. The new rules may make you eligible.
How it works.
- Save your minimum deposit: 5% for most first homebuyers, 2% for eligible single parents.
- Check eligibility: You must meet other criteria such as citizenship and residency requirements, not owning as any other property in the last 10 years, buying owner occupier, and your property must be under the price cap.
- Choose a participating lender: The guarantee only applies if your lender is part of the scheme.
- Apply & secure approval: The lender assesses your loan application (just like any other), incorporating your deposit, income, expenses, credit history.
- Buy and move in: You must move into the property as your primary place of residence (owner-occupier) and comply with ongoing obligations.
Why you should talk to a mortgage broker.
A good broker can help you:
- Determine if the scheme fits your budget, income, and timeline.
- Compare lenders who are participating in the scheme.
- Walk you through the paperwork, eligibility checklists, and ensure you meet the criteria.
- Alert you to the hidden costs or future scenarios (interest rates, refinancing, what happens if you move out, etc.).
Official scheme page: firsthomebuyers.gov.au/…/5-percent-deposit-scheme
FAQ & tools: firsthomebuyers.gov.au/tools-and-resources
If you’re a first-home buyer or a single parent thinking “I’ll never save enough” — the 5% Deposit Scheme might be the game-changer you’ve been waiting for. Start by checking your eligibility, download the guide, speak to a participating lender or mortgage broker, and get clarity on your budget and timeline.
Because the sooner you act, the sooner you move from “saving for a deposit” to “owning your own home”.