Australian government 5% deposit scheme

family entering a home while carrying their possessions

The Australian Government 5% deposit scheme formally the Home Guarantee Scheme is an Australian initiative to support eligible buyers purchase their home sooner.

The scheme allows first home buyers with less than a 20% deposit, purchase a property and avoid paying lenders mortgage insurance (LMI). It enables clients to complete the transaction with as little as a 5% deposit (first home buyers) or 2% (single parents and legal guardians).

Under this Scheme, National Housing Finance and Investment Corporation (NHFIC) will secure a portion of the home loan that is approved through a participating lender. The list of approved lenders can be found here.

Any guarantee of the home loan is for up to a maximum amount of 15% (first home buyers) or 18% (second home buyers) of the value of the property (as assessed by the eligible lender). This guarantee is not a cash payment or a deposit.

Under the new Australian Government 5% deposit scheme, there are multiple new changes:

No income caps.
Increased purchase thresholds for different states and locations across Australia, this can be checked here.
Unlimited spots and no waiting list.

The scheme also allows applicants access to other government programs – like the First Home Super Saver Scheme or First Home Owner Grant.