If you have been researching first-home buyer support, you have probably seen several names that all point to roughly the same idea: the First Home Loan Deposit Scheme (FHLDS), the First Home Guarantee, the Home Guarantee Scheme, and now the Australian Government 5% Deposit Scheme. The naming has changed over the years, and so have the rules — significantly, from 1 October 2025.
This guide explains what the scheme is today, how the guarantee works, who is eligible, and what the recent changes mean if you are trying to buy your first home.
What the scheme is
The Australian Government 5% Deposit Scheme, administered by Housing Australia, lets eligible first-home buyers purchase with as little as a 5% deposit without paying Lenders Mortgage Insurance. It was formerly known as the Home Guarantee Scheme, and before that the First Home Loan Deposit Scheme.
The key word is guarantee. The government does not give you cash and does not pay part of your deposit. Instead, Housing Australia guarantees up to 15% of the property value to your lender. That guarantee covers the gap between your 5% deposit and the 20% that lenders normally want before they waive LMI — so you can borrow 95% without the LMI premium that would usually apply.
How the guarantee works in practice
You still borrow 95% of the purchase price, and you are fully responsible for every repayment. If you were to default and the sale of the property did not cover the outstanding loan, Housing Australia would cover the lender's shortfall up to the pre-agreed limit of 15% of the property value. It is protection for the lender that benefits you, because it removes the LMI cost and lets you buy sooner.
What changed on 1 October 2025
This is the part that makes older guides unreliable. From 1 October 2025 the scheme was expanded substantially:
- Income caps removed. There is no longer an income limit for first-home buyers applying under the scheme.
- Unlimited places. The previous annual cap of 10,000 places was abolished, so you can apply at any time rather than racing for a limited allocation.
- Higher property price caps. The caps were lifted to reflect current prices — for example, the Sydney cap increased to $1,500,000.
- Unified scheme. The Regional First Home Buyer Guarantee and elements of the Family Home Guarantee were folded into the main scheme.
Together these changes opened the scheme to far more buyers than the old FHLDS, which was tightly capped and income-tested.
Who is eligible
Eligibility rules still apply, and they centre on being a genuine first-home buyer. In general terms you need to:
- Be an Australian citizen or permanent resident, and at least 18 years old.
- Be a first-home buyer who has not owned property or land in Australia in the last 10 years.
- Have saved a minimum 5% deposit (2% for eligible single parents or legal guardians).
- Apply on your own or jointly with up to one other applicant — a partner, friend or family member.
- Intend to live in the property as your home (it is for owner-occupiers, not investors).
Property price caps vary by state and region, so a home that qualifies in one city may exceed the cap in another. Always check the current caps for your specific location.
How to apply
You cannot apply directly to Housing Australia. The scheme is accessed only through a participating lender as part of your home loan application. A mortgage broker or lender can confirm your eligibility, check the price cap for your area, and structure the loan so the guarantee is applied correctly.
Is it the right path for you?
For many first-home buyers, buying with a 5% deposit and no LMI is a genuine accelerant — it can bring forward a purchase by years. But borrowing 95% means a larger loan, higher repayments, and less equity buffer if prices dip in the short term. It works best when your income is stable and your repayments are comfortable under the lender's serviceability assessment.
It is also worth comparing the scheme against other supports you may qualify for, such as the First Home Super Saver Scheme, the Help to Buy shared equity scheme, and state-based stamp duty concessions and grants. The best combination depends on your deposit, income, state and the property you are targeting.
Because the settings changed recently and caps differ by location, confirm the current details with a participating lender or licensed adviser before you commit.