First Home Guarantee: How the Australian Government 5% Deposit Scheme Works in 2026

Key takeaways

• From 1st October 2025, the First Home Guarantee (now officially the General Stream of the Australian Government 5% Deposit Scheme) has no income caps and no annual limit on places.
• The Melbourne and Geelong property price cap is $950,000.
• Eligible first home buyers can purchase with a 5% deposit under the scheme without paying Lenders Mortgage Insurance (LMI) entirely.
• You can’t apply to Housing Australia directly, only through a participating lender.
• A home loan broker in Melbourne can check your eligibility, compare scheme lenders, and manage the application for you.

What is the First Home Guarantee?

The First Home Guarantee, now known as the General Stream of the Australian Government 5% Deposit Scheme, is a federal government initiative administered by Housing Australia that helps eligible buyers purchase a home with a deposit as low as 5%.

The scheme can reduce the deposit barrier by allowing a participating lender to provide a loan with a loan-to-value ratio of up to 95%, without the borrower paying Lenders Mortgage Insurance, subject to the scheme’s eligibility requirements and the lender’s assessment.

The government guarantee is not money given to you towards your purchase. Instead, it provides a guarantee to the participating lender for part of the loan above the amount that would normally be supported by a 20% deposit.
You cannot apply for the scheme directly through Housing Australia. You need to apply for an eligible home loan through a participating lender.

What’s changed since 1 October 2025?

The scheme underwent significant changes on 1 October 2025. The former Home Guarantee Scheme is now officially called the Australian Government 5% Deposit Scheme, with the former First Home Guarantee becoming the General Stream.

• No income caps. Previously capped at $125,000 for individuals and $200,000 for couples, income is no longer tested at all.
• No annual place limit. The old national cap of 35,000 places a year, which routinely ran out mid-year, has been removed. Eligible buyers are no longer competing for a capped number of places.
• Higher property price caps. Caps were lifted across every state and region, including a rise to $950,000 for Melbourne and Geelong.
• Broader previous ownership eligibility: the General Stream can cover first home buyers and some previous homeowners who have not owned property in Australia during the relevant 10-year period, subject to the current Housing Australia eligibility rules.

These changes mean the scheme can be relevant to more buyers than the former First Home Guarantee. However, scheme eligibility is only one part of the home loan assessment. You still need to meet the participating lender’s lending criteria and demonstrate that you can comfortably service the loan.

What is the Eligibility for the First Home Guarantee?

For the General Stream, eligible buyers generally include first home buyers. It also includes previous homeowners who have not owned property in Australia during the relevant 10-year period, subject to the current Housing Australia eligibility rules.

Importantly, being a first home buyer for the purposes of the scheme does not necessarily mean you have never owned property. The General Stream can also include previous homeowners who have not owned a property in Australia during the last 10 years, subject to the current scheme requirements.

To qualify, you generally need to:

• Be an Australian citizen or permanent resident, aged 18 or over
• Intend to move into the property as your home, usually within six months of settlement
• Have at least a 5% genuine deposit
• Buy a property at or under the price cap for your area
• Apply through a lender participating in the scheme   

Couples can apply jointly, and since the income test was removed, what you and your partner earn together no longer affects eligibility.

How Much Deposit Do I Need for the First Home Guarantee?

Just 5% of the purchase price. Housing Australia’s guarantee covers the remaining gap up to 20%. It allows an eligible buyer to borrow with a deposit as low as 5% without paying LMI, subject to the scheme and lender requirements.

Figures are indicative examples based on the Melbourne/Geelong price cap, not a quote. Actual LMI costs on a 95% loan without the scheme can run into the tens of thousands of dollars, so removing it is often the scheme’s single biggest saving.

One of the biggest misconceptions we see is that first home buyers assume they need to save a 20% deposit before they can start looking. For an eligible buyer, the 5% Deposit Scheme can bring the purchase forward significantly. 

However, having a 5% deposit does not automatically mean you are ready to buy. Borrowing capacity, repayments, purchasing costs and lender policy still need to work.

You can get a feel for your own numbers with our How Much to Deposit Calculator.

What Are the Melbourne Property Price Caps?

The price cap for both Melbourne and Geelong is $950,000. It is the maximum eligible property value for the relevant location, not an indication of how much you can afford. 

A common misunderstanding we see is treating the $950,000 Melbourne price cap as a $950,000 borrowing limit. It isn’t. The scheme determines which properties may be eligible, while the lender still determines how much you can actually borrow based on your income, expenses, debts and servicing position.

For eligible properties, both the purchase price and your lender’s assessed value of the property need to sit at or below that figure. If you’re buying land and building separately, the combined cost of land plus build needs to stay under the cap too. 

Property price caps are reviewed periodically by Housing Australia, so it’s worth confirming the current figure for your suburb before you commit to a contract.

First Home Guarantee vs Other First Home Buyer Schemes

The First Home Guarantee is one of several federal and state supports, and they’re not interchangeable:

• Single Parent Stream (former Family Home Guarantee): for single parents or legal guardians, with a deposit of just 2%. Otherwise works the same way as the First Home Guarantee.
• Help to Buy: a separate shared-equity scheme where the government co-owns part of the property. It’s generally not used alongside the First Home Guarantee on the same purchase.
• First Home Owner Grant (Victoria): a state grant, separate from the federal guarantee, that can often be used alongside it.

Note: The former Regional First Home Buyer Guarantee should not be treated as a current separate scheme for new applicants. Housing Australia confirms that it closed to new applications when the scheme changed on 1 October 2025.

How a Home Loan Broker Can Help You Apply

At What If We Finance, we look beyond whether you technically qualify for the scheme. We assess your borrowing capacity, available deposit, purchasing costs, repayments and participating lender options so you understand your realistic purchasing range before you make an offer.

Different participating lenders can still assess the same borrower differently. Being eligible for the government scheme does not mean every participating lender will approve the same amount or treat your circumstances the same way.

This is one reason we don’t stop at checking whether a lender participates in the scheme. We look at how its lending policy and servicing assessment may apply to your particular circumstances before recommending an option.

As a Melbourne home loan broker, we can help you:

1. Check your eligibility against the citizenship, first-home-buyer, and deposit requirements.
2. Assess your borrowing power so you know your realistic price range under the cap.
3. Apply through a participating lender on your behalf, since Housing Australia won’t accept applications directly from buyers.
4. Work towards approval and settlement once you have found a suitable property and all lender and scheme requirements have been met.
5. Support you through to settlement, alongside your conveyancer, once you’ve found a property under the cap.

Approval is not automatic, and a scheme place or guarantee is subject to the applicable government scheme requirements and the participating lender’s credit assessment.

Our experience matters

What If We Finance has been helping Melbourne buyers with home loans since 2008. We hold our own Australian Credit Licence and have been an MFAA member for 15 years.

Our approach is not simply about finding a lender that participates in a government scheme. We look at the broader lending position, including borrowing capacity, loan structure, repayments, costs and lender policy, so you can make a more informed decision.

Spiro Kolokithas, Managing Director of What If We Finance, holds the Mortgage Finance Professional Australia (MFPA) designation, a professional designation awarded by the MFAA to experienced brokers who demonstrate excellence and a commitment to professional standards in ethics, education, conduct and customer engagement.

This professional standard supports our approach to assessing your circumstances carefully rather than simply matching you with a participating lender.

Common Mistakes First Home Buyers Make

• Assuming a 5% deposit means 5% is all the cash you need
• Looking at properties before confirming borrowing capacity
• Assuming the $950,000 scheme cap is the same as your personal borrowing limit
• Making an unconditional offer before finance is properly assessed
• Not allowing for conveyancing, inspections and other purchasing costs
• Assuming every participating lender will assess your application the same way

Speak to a Melbourne Home Loan Broker

If you’re a first home buyer, you don’t need to work all of this out yourself.

We’ve been helping Melbourne buyers navigate home loans since 2008. We can help you understand whether the Australian Government 5% Deposit Scheme is available to you, what you may be able to borrow, what costs you need to allow for and which participating lenders may suit your circumstances.

Book a free 30-minute meeting or call us on 03 8804 1354.

Frequently Asked Questions