First Home Guarantee: 5% Deposit, No LMI
The Australian Government 5% Deposit Scheme (formerly the First Home Guarantee / FHBG, a stream of the Home Guarantee Scheme that was rebranded and expanded on 1 October 2025) lets eligible first home buyers purchase with as little as 5% deposit and pay no Lenders Mortgage Insurance. Here's how it works, who qualifies, and the price caps that apply in your state.
What the scheme actually does
Normally, if you buy with less than 20% deposit, the bank requires you to pay Lenders Mortgage Insurance (LMI) — a premium that protects the lender if you default. LMI on a $700,000 loan at 95% LVR can cost $25,000+.
Under this scheme, the Commonwealth acts as guarantor for the 15% gap between your 5% deposit and the 20% threshold. Because the lender is protected by the government guarantee, they don't require LMI from you. There are no fees for the scheme itself — the LMI is genuinely waived.
The scheme was expanded on 1 October 2025: income caps removed, unlimited places, higher property price caps. It's now effectively accessible to all first home buyers who meet the eligibility rules and buy within the regional price caps.
Who qualifies
- Australian citizen or permanent resident, 18 or older
- First home buyer— or you haven't owned residential property in Australia in the last 10 years (it's a 10-year lookback, not absolute “first home”)
- Minimum 5% deposit(2% for the single-parent stream, which has different eligibility rules beyond the deposit minimum — must be a single parent or legal guardian with a dependent child, and can have previously owned property as long as you don't currently own one. This guide doesn't cover that stream in detail; see the single-parent stream page.)
- Owner-occupier— you must live in the property as your principal place of residence; investment properties don't qualify
- Move in within 6 months of settlement and continue living there while the guarantee is active
- Property price under the cap for your state and region (table below)
- Apply through a participating lender — 50+ lenders are on the Housing Australia panel, including all four major banks
Full eligibility detail is on firsthomebuyers.gov.au. There's no income cap as of 1 October 2025.
Price caps by state
Every state has two caps — one for the capital city plus designated regional centres, one for the rest of the state. ACT and NT have a single cap each (NT splits on 1 July 2026). If your purchase price exceeds the cap for your region, the scheme doesn't apply to that purchase.
| State | Capital + regional centres | Rest of state |
|---|---|---|
| NSW | $1,500,000 | $800,000 |
| VIC | $950,000 | $650,000 |
| QLD | $1,000,000 | $700,000 |
| WA | $850,000 | $600,000 |
| SA | $900,000 | $500,000 |
| TAS | $700,000 | $550,000 |
| ACT | $1,000,000 | — (single cap) |
| NT | $600,000 | — (single cap) |
Which cities count as “capital + regional centres”?
- NSW: Sydney, Newcastle, Lake Macquarie, Illawarra (Wollongong)
- VIC: Melbourne, Geelong
- QLD: Brisbane, Gold Coast, Sunshine Coast
- WA / SA / TAS: Capital city metro only
- ACT / NT: Single cap applies statewide (NT splits Darwin $750,000 / rest $600,000 from 1 July 2026)
Effective 2025-10-01. See the official caps table for the definitive regional centre definitions.
How much could you save? Worked examples
These LMI figures are indicative estimates from standard LVR-bracket rates — the scheme waives the full amount. Actual LMI varies by lender and loan characteristics; your participating lender will quote the exact figure before you commit.
Sydney · $1,200,000 · 5% deposit
A $1.2M Sydney purchase sits under the NSW capital cap ($1,500,000). Without the scheme you'd pay LMI in the top bracket.
Melbourne · $750,000 · 7% deposit
Comfortably under the VIC capital cap ($950,000). Even at 7% deposit you'd normally pay LMI — the scheme waives it entirely.
Brisbane · $900,000 · 10% deposit
Under the QLD capital cap ($1,000,000). 10% deposit is still well below the 20% LMI threshold.
Stacking with other first home buyer schemes
The 5% Deposit Scheme is a federal programme. It sits alongside various state-level schemes and can be combined with most of them:
- ✅ State stamp duty concessions— e.g. NSW First Home Buyers Assistance Scheme (FHBAS), Victoria's FHB duty concession, Queensland's First Home Concession. See our NSW stamp duty guide for the NSW specifics.
- ✅ First Home Super Saver (FHSS) — you can withdraw voluntary super contributions for your deposit and still use the scheme
- ✅ State First Home Owner Grants — the one-off grants offered in some states for new builds
- ❌ Help to Buy — shared-equity schemes cannot stack; you choose one path or the other
When the guarantee ends
The Commonwealth's guarantee isn't permanent. Under standard scheme mechanics it stops applying when:
- Your loan-to-value ratio falls below 80% — at that point LMI wouldn't apply anyway, so the guarantee isn't needed
- You sell the property
- You stop using it as your principal place of residence (e.g. convert to an investment) — your lender may then require LMI if your LVR is still above 80%
Reaching 80% LVR naturally means you've already passed the point where LMI would have been required, so you've effectively saved the LMI premium you would have paid upfront. Your lender can confirm how guarantee discharge works for your specific loan.
Want to see your exact upfront cost with or without the scheme?
Run your numbers in the calculatorFrequently asked questions
Does the scheme really mean no LMI at 5% deposit?
Yes. The Commonwealth guarantees the portion of the loan between your deposit and 20%, so your lender doesn't require Lenders Mortgage Insurance. There are no fees to use the scheme itself. The waiver is genuine — not deferred or payable later.
Do I have to put down exactly 5%, or does more count too?
5% is the minimum, not a fixed amount. Any deposit between 5% and 19.99% gets the same LMI waiver — the government guarantees whatever sits between your deposit and 20%. At 20% or more, LMI doesn't apply anyway, so the scheme becomes redundant.
Who qualifies?
Australian citizens and permanent residents aged 18+ who haven't owned residential property in Australia in the last 10 years. You must use the property as your principal place of residence, move in within 6 months of settlement, and keep living there while the guarantee is active. Income caps were removed on 1 October 2025 — there's no longer any income test.
Is there a price cap on what I can buy?
Yes — and the cap varies by state and whether you're buying in the capital city + designated regional centres, or rest of state. NSW capital + regional centres caps at $1,500,000; rest of NSW caps at $800,000. QLD caps at $1,000,000 / $700,000. Full table above. If your property price exceeds the cap for your region, you can't use the scheme for that purchase.
Can I use this with state first home buyer stamp duty concessions?
Yes — they stack. The 5% Deposit Scheme operates at the federal level (LMI waiver via Commonwealth guarantee) while state concessions are separate state-level rules. You can use NSW's First Home Buyers Assistance Scheme, Victoria's FHB duty concession, Queensland's First Home Concession, and similar state schemes alongside the federal guarantee. First Home Super Saver (FHSS) and state First Home Owner Grants also stack.
What about Help to Buy — can I combine them?
No. Help to Buy is a separate shared-equity scheme administered separately. The two cannot be combined — you pick one pathway or the other. Help to Buy also has different eligibility criteria and different price caps.
Does every bank offer it?
No — only participating lenders on the Housing Australia panel (currently 50+ lenders including all four major banks plus many mutuals and regionals). Housing Australia has an open RFP to expand the panel through 2026. You apply for the scheme through your chosen participating lender, not directly to Housing Australia.
What happens when I've paid down enough to reach 80% LVR?
Once your LVR falls below 80%, the guarantee is no longer needed — at that point LMI wouldn't apply anyway. In practice, reaching that threshold naturally means you've already passed where LMI would have been required, so you've effectively saved the premium. If you sell or convert to an investment property before then, the guarantee also ends — and your lender may require LMI at that point if your LVR is still above 80%. Your lender is best placed to confirm how guarantee discharge works for your specific loan.
Can I use it on an investment property?
No. The scheme requires you to be an owner-occupier and to live in the property while the guarantee is active. If you later convert the property to an investment, the guarantee ends (and you may need to refinance, at which point LMI may apply if your LVR is still above 80%).
This guide is for general information only and is not financial advice. Scheme rules change — verify current eligibility, price caps, and participating lenders at firsthomebuyers.gov.au or with a participating lender before making property decisions. Your lender will assess your specific eligibility and credit circumstances independently of the scheme's own rules.