The 5% Deposit Scheme: Buy With 5% and No LMI
On an $800,000 first home in NSW with a 5% deposit, that is about $31,900 of LMI you do not pay, the typical figure our LMI calculator would otherwise show (range $22,400 to $40,000).
In short
- No LMI, no income caps and no waitlist since 1 October 2025.
- Price caps run from $400,000 to $1,500,000 depending on where you buy, as at 29 September 2026.
- You must live in the home and apply through a Participating Lender.
- LMI can apply later if the guarantee ends while your loan-to-value ratio (LVR) is above 80%.
Your result
You may be eligible. Only a Participating Lender can confirm it.
- Your LVR: 95.0%. The government guarantees up to 15% of the value, so no LMI is charged.
- LMI you would otherwise pay: about $31,900, within a range of $22,400 to $40,000 from lenders' published figures.
- The lender's valuation must also be at or under the $1,500,000 cap.
- The loan must be principal and interest, up to 30 years, plus up to 3 years to build.
- You have 90 days after pre-approval to find a home, and you must move in within 6 months of settlement.
General information, not credit or financial advice. Caps as at 29 September 2026.
What is the 5% Deposit Scheme?
The 5% Deposit Scheme is an Australian Government guarantee, run by Housing Australia, that covers up to 15% of the property's value (18% for single parents). That lets a Participating Lender lend up to 95% of the value (98% for single parents) without LMI.
In law it is still the Home Guarantee Scheme, and its single parent stream is still the Family Home Guarantee (Housing Australia Investment Mandate, in force 18 July 2026). It began on 1 January 2020 as the First Home Loan Deposit Scheme and was renamed the First Home Guarantee on 1 July 2022. That is why many lenders still use those names. The Family Home Guarantee is not the same as a guarantor home loan, where a family member backs part of your loan. Like LMI, the guarantee protects the lender, not you. It is not a cash payment, and you receive no money from it.
| Stream | Minimum deposit | Guarantee | Highest LVR without LMI | Who it is for |
|---|---|---|---|---|
| First home buyers | 5% | Up to 15% of the value | 95% | First home buyers, or people with no Australian property in the last 10 years |
| Single parents and legal guardians | 2% | Up to 18% of the value | 98% | A single parent or single legal guardian of at least one dependent child; need not be a first home buyer |
What changed on 1 October 2025
- Places became unlimited, with no annual cap.
- Income caps were removed.
- Price caps rose in every state and territory (the old caps are in the table below).
- The Regional First Home Buyer Guarantee closed to new applicants. Regional buyers now apply as first home buyers or single parents.
Over 320,000 Australians have used the scheme since it began in 2020.
Do you pay LMI under the scheme?
No. While the guarantee covers your loan you pay no LMI, because the guarantee does the job LMI would do for the lender.
| State | Typical lender figure | Range, with duty at the top | Duty on LMI |
|---|---|---|---|
| NSW | $31,900 | $22,400 to $40,000 | None |
| QLD | $31,900 | $22,400 to $43,600 | 9% |
| VIC | $31,900 | $22,400 to $44,000 | 10% (general insurance rate; confirm with your lender) |
When the guarantee ends and LMI can come back
The guarantee stays until you sell, fully repay, refinance away from a Participating Lender, borrow more, stop living in the home, or your scheduled balance falls to 80% of the value.
- You stop living in the home without an exemption. Your lender may then require you to pay LMI.
- You rent it out, which is not allowed while the guarantee applies.
- You refinance to a lender that is not a Participating Lender.
- You borrow more against the home.
- You sell or fully repay the loan.
- Your scheduled balance falls to 80% or less of the value, when no LMI would apply anyway.
If the guarantee ends while your LVR is still above 80%, your lender may charge LMI or other costs under its own policies.
Who is eligible?
You may be eligible if you are an Australian citizen or permanent resident aged 18 or over, you will live in the home, and you are either a first home buyer with a 5% deposit or a single parent or legal guardian with a 2% deposit. If you qualify as both, you must apply as a single parent.
| Rule | First home buyers | Single parents and legal guardians |
|---|---|---|
| Residency and age | Citizen or permanent resident, 18 or over, on the date you sign the loan | The same test |
| Minimum deposit | 5%, and less than 20% of the lender’s valuation | 2%, and less than 20% of the lender’s valuation |
| Property history | First home buyer, or no Australian property or land in the last 10 years | Need not be a first home buyer; no other property after settlement |
| Who can apply | Alone or with one other person | Alone only |
| Use | You live in it, moving in within 6 months of settlement | The same |
| Loan | Principal and interest, up to 30 years, plus up to 3 years to build | The same |
| Price | Purchase price and lender valuation at or under the cap | The same caps |
| Income | No income cap since 1 October 2025 | No income cap |
| Savings | Use as much of your savings as you can; with 20% or more saved after purchase costs, you are not eligible | The same |
Which lenders take part?
You can only apply through a Participating Lender, not through Housing Australia. The official list showed 54 lenders on 28 September 2026, including CommBank, Westpac, NAB, ANZ, St.George, BankSA, Bank of Melbourne, Bendigo Bank, Great Southern Bank, Liberty, IMB and Newcastle Permanent. Macquarie, ING and BOQ were not on it. If your bank is not listed, the scheme is not available through it. Check the Participating Lenders list before you apply.
What are the property price caps?
The cap depends on where you buy: from $400,000 on Christmas Island and the Cocos (Keeling) Islands to $1,500,000 in Sydney and the NSW regional centres, as at 29 September 2026. Both the purchase price and the lender's valuation must be at or under it.
| State or territory | Capital city and regional centres | Other areas | Before 1 October 2025 |
|---|---|---|---|
| NSW | $1,500,000 | $800,000 | $900,000 / $750,000 |
| VIC | $950,000 | $650,000 | $800,000 / $650,000 |
| QLD | $1,000,000 | $700,000 | $700,000 / $550,000 |
| WA | $850,000 | $600,000 | $600,000 / $450,000 |
| SA | $900,000 | $500,000 | $600,000 / $450,000 |
| TAS | $700,000 | $550,000 | $600,000 / $450,000 |
| ACT | $1,000,000 | Same | $750,000 |
| NT | $750,000 | $600,000 | $600,000 |
| Jervis Bay Territory and Norfolk Island | $550,000 | Same | Not shown |
| Christmas Island and Cocos (Keeling) Islands | $400,000 | Same | Not shown |
Regional centres on the higher cap: in NSW the Central Coast, Coffs Harbour to Grafton, Illawarra, the Mid North Coast, Richmond to Tweed, and Newcastle and Lake Macquarie; in Victoria, Geelong; in Queensland, the Gold Coast and the Sunshine Coast. In the NT the higher cap is for Darwin.
What changed on 1 July 2026
- Darwin's cap rose from $600,000 to $750,000. The rest of the NT stays at $600,000.
- Four NSW regional centres (Central Coast, Coffs Harbour to Grafton, the Mid North Coast and Richmond to Tweed) moved up to the $1,500,000 cap.
Scheme or LMI: which costs less?
On the same home and deposit, the scheme costs less upfront, because it removes the LMI and the duty on it. Paying LMI costs more, but LMI itself places no conditions on how you use the home.
| 5% Deposit Scheme | Paying LMI at 95% | |
|---|---|---|
| Deposit | $40,000 | $40,000 |
| LMI, with duty | $0 | about $34,800 |
| Loan if LMI is added | $760,000 | about $794,800 |
| LVR | 95% | about 99.4% once LMI is added. QBE, for example, allows 95% before LMI is added and 100% after. |
| Conditions while the loan runs | Live in the home, no renting, refinance only to a Participating Lender; a top-up ends the guarantee | None from LMI itself |
Either way, borrowing 95% of the value means more interest over the life of the loan. The scheme sets the guarantee, not the interest rate: your rate and fees are agreed with your lender, and there is no fee to use the scheme. Compare the rate on a scheme loan with the lender's standard owner-occupier rate.
Australian citizens under the income caps can also compare the Help to Buy scheme, which needs a 2% deposit.
Estimate the LMI you would payCommon questions about the 5% Deposit Scheme
Is the 5% Deposit Scheme the same as Help to Buy?
No. Under the 5% Deposit Scheme the government guarantees part of your loan. Under Help to Buy the government pays up to 30% of an existing home, or 40% of a new one, for an equity share, and you repay its share of the home’s value later. You cannot use both, but you can still claim state first home owner grants and stamp duty concessions with either.
What if I don't qualify as a first home buyer?
You can still use the scheme if you have not owned property or land in Australia in the last 10 years. Single parents and single legal guardians do not need to be first home buyers at all.
Can I buy an investment property with the scheme?
No. The home must be your own home while the guarantee applies, and renting it out is not allowed.
Can I build a new home under the scheme?
Yes. The loan can include up to 3 extra years while you build, and that period may be interest only. The land and build total must be at or under the price cap.
For every other route, see how to avoid LMI. If you are not eligible, read LMI for first home buyers.
Sources
Each source was checked on 29 September 2026.
- firsthomebuyers.gov.au: 5% Deposit Scheme
- firsthomebuyers.gov.au: first home buyers
- firsthomebuyers.gov.au: single parents
- firsthomebuyers.gov.au: property price caps
- firsthomebuyers.gov.au: Participating Lenders
- firsthomebuyers.gov.au: 5% Deposit Scheme FAQs
- 5% Deposit Scheme Information Guide, 1 July 2026 (PDF)
- 5% Deposit Scheme for Single Parents Information Guide, 1 July 2026 (PDF)
- Housing Australia: unlimited places and higher price caps from 1 October 2025
- Housing Australia: First Home Loan Deposit Scheme implementation (2019)
- Explanatory statement renaming the scheme (2022)
- Housing Australia Investment Mandate Direction 2018
- Treasury: home ownership support
- Broker Daily: caps and rules updated under the 5% Deposit Scheme (17 July 2026)
- firsthomebuyers.gov.au: Help to Buy
- QBE: LMI Guide (PDF)
- Revenue NSW: insurance duty exemptions
- Queensland Revenue Office: insurance duty rates
- State Revenue Office Victoria: insurance duty rates
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PhD in Financial Studies, 5 years in finance
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