First Home Guarantee Scheme 2026: 5% Deposit Rules

What Changed on 1 October 2025

Five rules changed on 1 October 2025, and most older articles about the First Home Guarantee still describe the scheme before that date. According to Housing Australia, the scheme now has "no income caps, no waitlists and no Lenders Mortgage Insurance", and it was renamed the Australian Government 5% Deposit Scheme.

The legal changes sit in the Housing Australia Investment Mandate Amendment (Delivering on Our 2025 Election Commitment) Direction 2025 (opens in a new tab), which started on 1 October 2025. It removes the "up to 35,000" limit on First Home Guarantees, repeals the income test provisions, replaces the price cap table, and says Housing Australia "must not issue any Regional First Home Buyer Guarantees on or after 1 October 2025."

Why the regional stream closing doesn't hurt regional buyers. The regional stream only existed because places were rationed. With unlimited places in the main stream, a buyer in Ballarat or Toowoomba now applies under the same first home buyer stream as a buyer in Melbourne, using the "rest of state" price cap for the area.

Who Qualifies for the First Home Guarantee

The first home buyer stream has 6 personal tests, all checked by your lender against the Home Buyer Declaration you sign. Grantsights checked each one against Housing Australia's Information Guide dated 1 July 2026.

1. Age. You must be at least 18 on your home loan date, which is the date you sign the loan agreement.
2. Citizenship or permanent residency. Every applicant must be an Australian citizen or permanent resident on the home loan date. A couple where only one partner is a citizen or permanent resident doesn't qualify, and neither does someone whose visa or citizenship has been approved but not yet granted.
3. Deposit. You need at least 5% of the property value saved, and less than 20%. If you'd have 20% or more after paying stamp duty and legal fees, the loan isn't eligible. The guide also warns against moving money to someone else to get under 20%.
4. No property in the last 10 years. Neither applicant can have held freehold land, a lease of 50 years or more, or a company title interest anywhere in Australia in the 10 years before the home loan date. That includes investment property, commercial property, vacant land and a share held with a former partner.
5. Owner-occupier. You must buy or build a home to live in, move in within 6 months of settlement (or of the occupancy certificate for a new build), and keep living there while the guarantee lasts.
6. One or two borrowers. You can apply alone or with one other person, such as a partner, friend or relative. Loans with 3 or more borrowers don't qualify.

You don't have to be a "first" home buyer. Because the test is 10 years, someone who sold a home in 2014 and has rented since can apply. That's different from state First Home Owner Grants, which generally exclude anyone who has owned and lived in a home since July 2000.

The single parent stream (formerly the Family Home Guarantee). According to Housing Australia's single parent Information Guide, you need a 2% deposit and must be single, meaning no spouse and no de facto partner, with at least 1 dependent child. You don't need to be a first home buyer, but you can't keep any other property after settlement. If you're separated but not divorced, you're not eligible. If you qualify for both streams, you must apply as a single parent.

The loan itself. It must be an owner-occupier loan with principal and interest repayments, a term of up to 30 years (plus up to 3 years of construction, which can be interest-only), and it must pass the lender's own credit checks. Being eligible for the guarantee doesn't mean a lender will lend to you.

2026 Property Price Caps by State and Territory

Price caps range from $400,000 on Christmas Island to $1,500,000 in Sydney. Both the purchase price and the lender's valuation must be at or under the cap, and for a land-and-build both costs together must fit under it. These caps come from Housing Australia's property price caps page (opens in a new tab) and the 1 July 2026 Information Guide, read on 30 October 2026:

Regional centres get the capital city cap. Housing Australia lists them as the Central Coast, Coffs Harbour-Grafton, Illawarra, Mid North Coast, Richmond-Tweed and Newcastle and Lake Macquarie in New South Wales, Geelong in Victoria, and the Gold Coast and Sunshine Coast in Queensland. A home in Wollongong, for example, can go up to $1,500,000, while one in Dubbo is capped at $800,000.

The caps sit well above state grant caps. Victoria's First Home Owner Grant stops at $750,000 and Western Australia's at $800,000 south of the 26th parallel, so a $900,000 new home in Melbourne can use the guarantee but gets no state grant. Our Victoria and Western Australia grant guides set out those state limits, and the South Australia guide covers a state grant with no cap at all.

Grantsights Analysis of 38,506 Guarantees by State

Victoria took 37.3% of all guarantees issued in 2024-25, the last full year Housing Australia has reported. Grantsights analysis of the state tables in Housing Australia's Trends and Insights Report 2024-25 adds up every guarantee issued by state, scheme and region:

Data: Housing Australia, Home Guarantee Scheme Trends and Insights Report 2024-25, tables 3, 5, 7, 9, 11, 13, 15 and 17, guarantees issued 1 July 2024 to 30 June 2025, downloaded 30 October 2026. Housing Australia suppresses very small counts (Family Home Guarantees in Greater Hobart and outside Darwin), so those cells are minimums and the total is 5 below the report's 38,511 homes purchased. "Outside the capital city area" uses the report's "rest of state" rows; Gold Coast, Geelong and other regional centres count as outside. These figures predate the October 2025 changes.

What the state tables show:

Victoria's share came from affordability, not population. According to Housing Australia, Victoria had 26% of the national population and 33% of the first home buyer market but 37% of guarantees, and its guarantees rose 42% in a year when Victorian median dwelling prices fell 1%. The report links lower participation elsewhere to "properties exceeding price caps" in faster-growing markets.

Nine of the ten busiest postcodes were Melbourne growth suburbs. Tarneit is a case in point. The report's top postcodes were 3029 (Tarneit) with 837 guarantees, 3064 (Donnybrook) with 689, 3978 (Clyde North) with 585 and 3030 (Werribee) with 416. The only non-Victorian postcode was 4207 (Eagleby, between Brisbane and the Gold Coast) with 299. Most were established homes: Housing Australia says 92% of Pakenham's guarantees were for existing dwellings.

Median buyers used close to the minimum. The median Greater Melbourne buyer under the First Home Guarantee paid $629,000 with a $37,000 deposit, about 5.9%. In Greater Sydney the medians were $707,000 and $44,000. For example, a regional Queensland buyer under the Family Home Guarantee had a median price of $380,000 and a median deposit of just $11,000.

The Family Home Guarantee went largely unused. Of 5,000 single parent places in 2024-25, only 1,088 were taken up (22%), while the first home and regional streams were both effectively full, according to Housing Australia. If you're a single parent who assumed the 2% option was always booked out, it wasn't.

Who used it. Housing Australia reported median incomes of $85,000 for single borrowers and $134,000 for joint borrowers, 59% joint applications, 19% of buyers under 25, and 12,040 key workers such as nurses and teachers (28% of guarantees). Since launch, the scheme has supported more than 320,000 Australians, according to the 5% Deposit Scheme page; Housing Australia's impact page put it at more than 330,000 as of 26 July 2026.

How the Guarantee Actually Works (and What It Costs You)

The guarantee covers up to 15% of the property value, and it protects the lender, not you. Housing Australia's Information Guide says it's "not a cash payment to you or a deposit for your home", and you won't receive any money.

Here's a hypothetical example, not a real buyer. On a $600,000 home:

If you default, you still owe the shortfall. The guarantee only pays the lender after your home is sold and the sale doesn't cover the loan. It doesn't cover missed repayments, doesn't stop repossession, and any debt left after the guarantee is paid is still yours. Housing Australia lists the risks plainly: more interest over the life of the loan, bigger impact if rates rise, less equity at the start, and owing more than the home is worth if prices fall.

How the guarantee ends. It stops when your scheduled repayments bring the loan to 80% or less of the original property value (extra repayments you can redraw don't count), when you refinance to a non-participating lender, sell, rent the home out, borrow more against it or stop living there without an exemption. Housing Australia's 2024-25 report says the average guarantee was discharged after 29 months, and 56% of guarantees issued in the scheme's first three years have already ended.

How the loans have performed. At 30 June 2025, 0.3% of scheme loans were 90 days or more in arrears and 0.9% of borrowers were on hardship arrangements. Housing Australia had paid 3 claims to lenders since launch.

How to Apply, Step by Step

Applying takes 5 steps, and the clock that matters is the 90-day window after pre-approval.

1. Check eligibility. Use Housing Australia's eligibility tool (opens in a new tab) for a quick check. It's only a guide; the lender decides.
2. Pick a participating lender. The list on 30 October 2026 had 55 lenders, from Commonwealth Bank, Westpac, ANZ and NAB to mutual banks and credit unions such as Bank Australia, Teachers Mutual Bank and Police Bank. You can apply to more than one, but must choose one before signing a contract. Brokers can help only if they're an authorised representative of a participating lender, and Housing Australia says to confirm that with the lender.
3. Reserve a place and get pre-approved. The lender submits your details and your signed Home Buyer Declaration (a Commonwealth statutory declaration) to Housing Australia. A reserved place is held for 14 days while you finish the application. You'll need your name, date of birth, Medicare number (or PMKeyS number for Defence), proof of citizenship or residency, and the lender's own documents.
4. Sign a contract within 90 days. Once pre-approved, you have 90 days to find a home and sign. For land, the block must be titled within that window. Off-the-plan settlements must happen within 90 days of the home loan date.
5. Settle and move in. Move in within 6 months. For a new build you must sign the building contract within 6 months of settlement, start within 12 months, finish within 36 months and move in within 6 months of the occupancy certificate. Owner-builder contracts aren't eligible.

Signing false information is a crime. Housing Australia's guide notes that a false statutory declaration carries a maximum penalty of 4 years' imprisonment, and the guarantee can be revoked. Housing Australia may check council records and title information.

Stacking With State Grants, Help to Buy and Super

You can combine the guarantee with most state support, but not with Help to Buy. Housing Australia's guide says the guarantee "does not prevent you from accessing other housing support programs" from state or territory governments.

Help to Buy is the alternative, not an add-on. According to Housing Australia, Help to Buy launched in December 2025 with 10,000 places a year and had supported more than 6,000 Australians by July 2026. It's only for Australian citizens (the guarantee also accepts permanent residents), and the 2026-27 income limits (opens in a new tab) are $103,000 for a single applicant and $165,000 for joint applicants or single parents. The government keeps a share of your home's value, so you pay back more if prices rise. For buyers on modest incomes in expensive cities, Help to Buy can mean a much smaller loan; for everyone else, the guarantee is simpler.

What Housing Australia Doesn't Tell You

Housing Australia's pages explain the rules well. They're quieter on the trade-offs, and the 2024-25 data fills some of that gap.

Unlimited places can push prices up where caps bind. Housing Australia's own report found guarantee use fell in markets with fast price growth and rose where prices were flat. With no income caps or place limits, more buyers now crowd into homes just under each cap. If you're buying near $950,000 in Melbourne or $850,000 in Perth, expect competition from other guarantee buyers.

The valuation, not the price, decides your deposit. If the lender values a $650,000 home at $620,000, your 5% is worked out on the lower figure and the gap comes out of your pocket. Housing Australia says the scheme "does not protect you" from a low valuation. A common mistake is spending every dollar of savings on the deposit and leaving nothing for that gap, stamp duty or moving costs.

Leaving early can bring back the insurance bill. If you move out, rent the home or refinance to a non-participating lender while your loan is above 80%, your lender may charge lenders mortgage insurance then. People underestimate how long it takes to reach 80% on scheduled repayments alone; Housing Australia's average exit was 29 months, and many buyers will take longer if prices don't rise.

You can't top up the loan for renovations. Housing Australia's guide says increasing the loan after settlement isn't permitted while the guarantee applies. If you're buying a home that needs work, budget for it from savings.

Partners and former partners count. In a joint application, both people must pass the 10-year test, and a share in a property held with an ex-partner counts. For a single parent, being separated but still married is a red flag that rules you out until the divorce is final.

Scams Around the 5% Deposit Scheme

Big government schemes attract fakes, and three official facts protect you: Housing Australia doesn't take applications from buyers, there's no waitlist to jump since October 2025, and the guarantee never involves money being paid to you.

• "Secure your place" offers. Anyone charging a fee to get you into the scheme is a red flag. Places are unlimited and only a participating lender or its authorised representative can apply for you.
• Grant and rebate messages. Scamwatch's unexpected money scams page (opens in a new tab) says government departments "will never ask you to pay money upfront to claim a grant or rebate."
• Changed bank details at settlement. Scamwatch's business email compromise page (opens in a new tab) warns about emails with new payee details. Before sending your deposit or settlement money, call your conveyancer or lender on a number you already have.
• Fake revenue office emails. The State Revenue Office Victoria's scams page (opens in a new tab) says real emails come from sro.vic.gov.au and its texts from "SRO VIC", and that scam emails often demand action within 60 minutes.

If you've lost money, Scamwatch says to contact your bank straight away, and IDCARE (1800 595 160) can help you limit the damage.

Is the Guarantee Right for You?

The honest answer is that the guarantee suits buyers with steady income who can comfortably repay a 95% loan and plan to stay put for several years. It's a poor fit if your job is insecure, if you might move or rent the home out within 2 or 3 years, or if paying more interest on a bigger loan would stretch you.

If you're close to 20% already, compare the interest cost of borrowing an extra 15% against a few more months of saving. If you're buying a new home, check your state's grant first: our First Home Owner Grant Australia guide lists every state's amount and cap. And if your new place needs lower power bills, the solar battery rebate guide covers the federal battery discount.

Sources Checked

All sources were read or downloaded on 30 October 2026.

• Housing Australia, Australian Government 5% Deposit Scheme (opens in a new tab), property price caps (opens in a new tab) and participating lenders (opens in a new tab)
• Housing Australia, Australian Government 5% Deposit Scheme Information Guide for first home buyers and for single parents, both dated 1 July 2026 (linked from the scheme page)
• Housing Australia, Home Guarantee Scheme Trends and Insights Report 2024-25 (opens in a new tab) and Our impact (opens in a new tab) (to 26 July 2026)
• Housing Australia, Australian Government Help to Buy Scheme (opens in a new tab) and Help to Buy income and threshold updates 2026-27 (opens in a new tab)
• Federal Register of Legislation, Housing Australia Investment Mandate Amendment (Delivering on Our 2025 Election Commitment) Direction 2025 (opens in a new tab), commenced 1 October 2025
• Scamwatch, unexpected money scams (opens in a new tab) and business email compromise scams (opens in a new tab) (read in a browser)
• State Revenue Office Victoria, Scams and staying safe online (opens in a new tab)