What changed — and what is the rule now?
The Home Guarantee Scheme, run by Housing Australia, used to ration places and cap applicants’ income at $125,000 (singles) and $200,000 (couples). From 1 October 2025 the government brought forward its expansion: the guarantee is now open to every eligible first home buyer, with no income test and unlimited places. The Regional First Home Buyer Guarantee closed to new applications on the same date, and its role was folded into the main scheme. In July 2026 the cap for Darwin rose from $600,000 to $750,000 and four more NSW regional markets (Central Coast, Coffs Harbour–Grafton, Mid North Coast and Richmond–Tweed) joined the $1.5 million cap.
How the guarantee works
Normally a lender charges LMI above 80% LVR. Under the scheme the government guarantees the slice of your loan between your deposit and 20% of the value — so a participating lender treats a 95% loan as if it were 80% and charges no LMI. You still borrow (and repay) the full 95%; the guarantee only replaces the insurance.
Eligibility checklist (2026)
- Australian citizen or permanent resident, aged 18 or over; one or two applicants (partners, friends or family).
- First home buyer, or no interest in Australian property in the previous 10 years.
- Deposit of at least 5% (2% for single parents under the single-parent stream) and less than 20%.
- You must live in the home: move in within six months and stay while the guarantee applies.
- Owner-occupied, principal-and-interest loan of up to 30 years with a participating lender.
- Price — and the lender’s valuation — at or below the cap for the postcode.
Price caps by state
| State | Capital / listed centres | Rest of state | 5% deposit at cap | Repayment at cap (95% loan, 30 yrs) |
|---|---|---|---|---|
| NSW | $1,500,000 | $800,000 | $75,000 | $8,998 |
| VIC | $950,000 | $650,000 | $47,500 | $5,698 |
| QLD | $1,000,000 | $700,000 | $50,000 | $5,998 |
| WA | $850,000 | $600,000 | $42,500 | $5,099 |
| SA | $900,000 | $500,000 | $45,000 | $5,399 |
| TAS | $700,000 | $550,000 | $35,000 | $4,199 |
| ACT | $1,000,000 | — | $50,000 | $5,998 |
| NT | $750,000 | $600,000 | $37,500 | $4,499 |
Caps apply by suburb/postcode (Housing Australia’s postcode tool is definitive). NSW listed centres: Sydney + Newcastle, Lake Macquarie, Illawarra, Central Coast, Coffs Harbour–Grafton, Mid North Coast, Richmond–Tweed. Repayments at the 6.49% average variable rate.
Worked example: an $800,000 home
With the scheme, a buyer needs a $40,000 deposit plus purchase costs and borrows $760,000. At 6.49% over 30 years that is $4,799 a month ($2,214 a fortnight). Without the scheme, the same 95% loan would attract indicative LMI of about $34,983 (one lender’s May 2026 table) — added to the loan, that would cost another $221 a month for 30 years. Compared with saving a 20% deposit ($160,000), the trade-off is a bigger loan: $152,769 more interest over 30 years than an 80% loan at the same rate.
Watch-outs
FAQ
Is there still an income cap on the First Home Guarantee?
No. For applications from 1 October 2025 there are no income caps under the 5% Deposit Scheme, and the number of places is unlimited.
What are the 5% Deposit Scheme price caps in 2026?
Capital city and listed regional centre caps are NSW $1,500,000, VIC $950,000, QLD $1,000,000, WA $850,000, SA $900,000, TAS $700,000, ACT $1,000,000 and NT $750,000 (Darwin, from 1 July 2026). Rest-of-state caps are lower.
Do I pay LMI with a 5% deposit under the scheme?
No. The government guarantee covers the part of the loan above 80% of the value, so participating lenders do not charge lenders mortgage insurance.
What are repayments on an $800,000 home with a 5% deposit?
You would borrow $760,000; at the 6.49% average variable rate over 30 years that is about $4,799 a month.
Can I use the scheme for an investment property?
No. You must live in the property as your home and take a principal-and-interest owner-occupier loan.
Related home loan guides
Assumptions & sources
- RBA cash rate target 4.85%: raised 0.25 points on 3 November 2026, effective 4 November (the Monetary Policy Board voted 6–3). It was the fifth rise of 2026, after February, March, May and September. The Board’s next decision is at 2:30pm AEDT on Tuesday 8 December 2026.
- Average owner-occupier variable rate (P&I) 6.49%: Canstar estimate once the September rise was passed on (29 September 2026), in line with RBA Table F6 — new owner-occupier variable loans averaged 6.23% in August 2026, before the rise. Canstar’s average advertised rate across its whole database was 6.75% (13 October 2026) and the lowest variable rate was 5.89% (20 October 2026). As of 3 November no big-four bank had announced how it would pass on the November rise; passed on in full, it lifts the average to about 6.74%.
- Fixed rates: big-four 1–2 year fixed rates ranged from 6.49% (ANZ) to 6.81% (NAB 2-year) in October 2026; the lowest fixed rate on Canstar was 5.79% (1-year).
- APRA serviceability buffer: 3 percentage points above the loan rate (kept unchanged in APRA’s May 2026 review). From 1 February 2026 no more than 20% of a bank’s new owner-occupier lending (and separately investor lending) may be at a debt-to-income ratio of 6 or more.
- LMI: indicative full-doc premiums from one lender’s table published by Home Loan Experts (updated 18 May 2026); insurers price individually and state stamp duty on the premium may apply (none in NSW).
- 5% Deposit Scheme (First Home Guarantee): Housing Australia rules from 1 October 2025 — unlimited places, no income caps; Darwin cap raised to $750,000 from 1 July 2026.
- Repayments use standard amortisation (monthly, fortnightly or weekly compounding to match the payment) with the rate held constant for the whole term; real loans calculate interest daily and rates change.