Saving for a house in Australia feels impossible, doesn’t it?

Property prices keep climbing while your savings barely grow. The standard 20% deposit plus stamp duty and fees seem out of reach.

Here’s the good news: The Australian Government’s First Home Guarantee changes everything. This first home scheme lets you buy with just a 5 percent deposit, no Lenders Mortgage Insurance required.

Even better for migrants: From October 1, 2025, the scheme expanded dramatically. Unlimited places. No income caps. Higher property price limits. If you’re a permanent resident dreaming of homeownership, this is your opportunity. This guide covers everything you need to know about the 5% deposit first home buyer program.

Let’s get you into your first home.

What is the First Home Guarantee Scheme?

Think of the First Home Guarantee as your government-backed shortcut into the property market.

Here’s the deal: Normally, you need a 20% deposit to buy a house in Australia. With anything less, you pay Lenders Mortgage Insurance (LMI), a fee that protects the bank if you can’t make payments. LMI can cost anywhere from $15,000 on a $500,000 property to over $65,000 on a $1.5 million property with just a 5% deposit.

That’s where this first home scheme changes everything. According to Housing Australia, the Australian Government guarantees up to 15% of your home loan to the lender. This means you can buy with just a 5 deposit first home buyer amount and skip the massive LMI bill entirely.

Here’s what you save

According to the Prime Minister’s office, a first home buyer purchasing a $600,000 home in Bendigo needs only $30,000 deposit instead of $120,000. They save around $25,000 in mortgage insurance and could cut up to 6 years off their saving time.

Important to understand: This isn’t a grant or free money. The government doesn’t give you cash. They simply promise the bank they’ll cover part of the risk. You still take out a regular home loan. You’re still 100% responsible for making your repayments.

But you get into your own home years sooner without that crushing LMI cost.

For migrants who’ve recently become permanent residents, this is huge. You don’t need years of Australian credit history or mountains of savings to qualify.

Who can apply for the First Home Guarantee?

From October 1, 2025, the first home scheme opens up to virtually all first home buyers with no income caps and unlimited places. According to Housing Australia, this is the eligibility criteria:

Here’s who qualifies for the First Home Guarantee

Citizenship status (Critical for Migrants)	You must be an Australian citizen or permanent resident. You must also be at least 18 years old.
Income requirements	From October 1, 2025, there are NO income caps. Whether you earn $50,000 or $250,000, you can apply.
Property ownership history	You must be a first-time buyer, or you haven’t owned property in Australia for the past 10 years. Owned a house back in your home country before migrating? That doesn’t count. This rule only applies to Australian property.
Living requirements	You must move into the property within 6 months of settlement and live there as your primary home. This isn’t for investment properties.
Deposit requirements	You need at least 5% of the property’s value as your deposit. Most lenders want this from genuine savings, not borrowed money.
Who can apply together?	You can apply solo or with one other person: spouse, sibling, friend, or family member.

Even if you meet these requirements, your bank still needs to approve your home loan. The First Home Guarantee helps with the deposit, but you still need to prove you can afford the repayments.

What properties qualify for the First Home Guarantee?

Not every property qualifies for the 5 deposit first home buyer scheme. You must buy a residential property below the price cap for your location.

Property price caps (From October 1, 2025)

Major cities	Property Price Caps (From October 1, 2025)
Sydney, Newcastle, Illawarra	$1.5 million
Brisbane, Gold Coast, Sunshine Coast	$1 million
Canberra	$1 million
Melbourne, Geelong	$950,000
Adelaide	$900,000
Perth	$850,000
Hobart	$700,000
Darwin	$600,000

Regional areas: Price caps are generally lower.

How to apply for the First Home Guarantee

Ready to apply for the 5 deposit first home buyer program? Here’s the step-by-step process.

You can’t apply directly to Housing Australia. You must go through an approved participating lender.

Step 1: Check your eligibility

Use Housing Australia’s free Eligibility Tool at Housing Australia. This tool gives you a quick check of the main requirements. Your lender will confirm final eligibility.

Step 2: Choose a participating lender

Over 30 lenders participate in the first home scheme, including major banks like Commonwealth Bank, NAB, and Westpac, plus smaller customer-owned and regional banks.

You can work directly with a bank or use a mortgage broker. Many migrants find brokers helpful, they understand the scheme and can compare options across multiple lenders. Click here ton find the full lender list.

Step 3: Get pre-approval

Your lender will assess your eligibility and submit an application to Housing Australia to reserve a guarantee place for you, held for 14 days.

You’ll need to provide Proof of citizenship or permanent residency (passport, visa documents), ATO Notice of Assessment (previous financial year), Proof of deposit savings (bank statements) and other docuements.

Step 4: Find your property

Once pre-approved, you have 90 days to find a home and sign a contract of sale. Remember: The property must be within the price cap for your area. Both the purchase price and the bank’s valuation must be at or below the limit.

Step 5: Loan approval and settlement

Your lender finalises the home loan approval. They handle all communication with Housing Australia. Once everything’s approved, you proceed to settlement. Then you move into your new home!

You must move into the property within 6 months of settlement and continue living there as your primary home while the guarantee applies. The 5 percent deposit scheme doesn’t work for investment properties. This is your home, not a rental.

Important considerations & tips

You still need more than just the deposit: You’re responsible for all home loan costs and repayments, including stamp duty, bank fees, and legal costs.

Lenders still assess your ability to repay: The scheme requires your lender to assess affordability and credit. You still need to prove you earn enough to cover the loan repayments.

Building credit history as a migrant: Just received permanent residency? Start building your Australian credit history immediately. Get an Australian credit card. Use it for small purchases. Pay it off every month. This creates a positive credit record that lenders want to see. Click here to read our blog about how to build a credit score in Australia: A guide for Migrants.

Consider using a mortgage broker: Getting independent advice from an experienced mortgage broker can be invaluable in this process. Brokers understand the first home scheme inside out. They compare options across multiple lenders and can help migrants navigate requirements they understand well.

Regional areas may offer better opportunities: Regional properties typically have Lower prices, less competition from other buyers, more affordable properties for your budget.

Frequently Asked Questions about the First Home Guarantee

1. Do I have to pay back the government’s 15% guarantee?

No. The First Home Guarantee is not a loan or a grant. The government acts as your guarantor to the lender, not a cash payment to you. You don’t owe the government any money. You only repay your home loan to the bank.

2. Can I use the First Home Guarantee if I’m a permanent resident (not a citizen)?

Yes! You must be permanent resident or Australian citizen to qualify. If you recently received your permanent residency, you’re eligible. This makes the first home scheme particularly valuable for migrants who haven’t had years to save a massive deposit.

3. What happens if I can’t afford the repayments later?

The guarantee protects the lender, not you. It doesn’t help with missed payments or prevent foreclosure. If you default on your loan and the property is sold, you’re still responsible for any remaining debt. The government pays the bank the guaranteed portion, but you still owe the money. Contact your lender immediately if you’re struggling. They often have hardship programs to help.

4. Can I rent out a room while living in the house?

Yes, as long as you live in the property as your primary residence. You must move into the property within 6 months of settlement and continue living there while the guarantee applies. Having a housemate or renting a room is fine. But you cannot convert the entire property into a rental or investment property while the guarantee is active. Learn more about the Australian Government 5% Deposit Scheme in First Home Buyer website.

5. How long does it take to get approved for the scheme?

Your lender will assess your eligibility and submit an application to Housing Australia to reserve a guarantee place for you, held for 14 days. Once pre-approved, you have 90 days to find a home and sign a contract. Processing times can vary based on the number of applications.

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