Australia's First Home Guarantee — expanded and renamed the Australian Government 5% Deposit Scheme from 1 October 2025 — lets eligible first home buyers purchase with as little as a 5% deposit and no Lenders Mortgage Insurance, because the government guarantees part of the loan to the lender. This calculator models your purchase under the scheme: deposit eligibility, the guarantee amount, your loan, and an estimate of the LMI you avoid.
How the Scheme Works
Normally, borrowing more than 80% of a property's value triggers LMI — a premium that protects the lender, costs the borrower thousands, and is usually added to the loan. Under the scheme, you contribute a deposit of 5% to under 20%, and Housing Australia guarantees the gap up to 20% of the property value (at most 15 percentage points), bringing the lender's effective exposure to a standard 80% LVR loan. The guarantee is not a grant and not shared equity: you own 100% of the home, owe 100% of the loan, and the government simply stands behind part of it.
$$\text{Guarantee} = (20% \times \text{Price}) - \text{Your deposit} \qquad \text{Loan} = \text{Price} - \text{Deposit}$$
Current Settings (from 1 October 2025)
The October 2025 expansion removed the income caps entirely, made places unlimited (no more annual quotas), and raised property price caps substantially. This calculator's price table has been updated to the current caps:
| State | Capital city / regional centre | Rest of state | | --- | --- | --- | | NSW | $1,500,000 | $800,000 | | VIC | $950,000 | $650,000 | | QLD | $1,000,000 | $700,000 | | WA | $850,000 | $600,000 | | SA | $900,000 | $500,000 | | TAS | $700,000 | $550,000 | | ACT | $1,000,000 | $1,000,000 | | NT | $600,000 | $600,000 |
Eligibility still requires: first home buyer status (no property owned in Australia in the past 10 years), Australian citizenship or permanent residency, age 18+, buying as an owner-occupier through a participating lender, with genuine savings behind the deposit. The related Family Home Guarantee stream allows eligible single parents to buy with a 2% deposit.
Worked Example — Melbourne, $750,000, 5% Deposit
- Deposit (5%): $37,500 — inside the eligible 5%–<20% band ✔
- Price vs VIC capital cap ($950,000): eligible ✔
- Guarantee: 20% × $750,000 − $37,500 = $112,500 (the 15% the government stands behind)
- Loan amount: $712,500 (95% LVR)
- Estimated LMI avoided: $17,813 — this tool estimates savings at 2.5% of the loan amount. Real LMI premiums vary by lender, LVR, and loan size and at 95% LVR often run higher than this estimate, so treat the figure as a conservative floor, not a quote.
Without the scheme, that LMI would typically be capitalized into the loan — borrowed, and paid interest on, for decades. Avoiding it also means your repayments start against a $712,500 balance rather than ~$730,000+, the quieter second saving.
Using the Result Well
Check all three verdicts, not just the savings: a deposit below 5% fails the band (keep saving, or investigate the Family Home Guarantee if you are an eligible single parent), a deposit of 20%+ makes the scheme unnecessary (you avoid LMI anyway), and a price above your region's cap fails the price test even with an eligible deposit. Scheme eligibility does not replace lender assessment — you must still service the loan at the lender's buffered rates, and a 95% LVR loan is a large commitment whose repayments the mortgage calculator can project. The scheme combines with state first-home owner grants and stamp duty concessions, which are separate applications with separate rules. Because scheme settings have changed twice in recent years, confirm the current caps and your eligibility with Housing Australia or a participating lender before relying on them for a purchase decision.
Frequently Asked Questions
Does the government own part of my home?
No. Unlike shared-equity schemes, the 5% Deposit Scheme is a guarantee to your lender, not a stake in your property. You hold full ownership and keep all capital growth; the guarantee simply removes the lender's need for mortgage insurance.
What happened to the income caps and limited places?
They were abolished in the 1 October 2025 expansion. Before that date, singles were capped at $125,000 income and couples at $200,000, and only 35,000 places were released per year. Neither restriction applies now — if older articles or advice told you that you earn too much for the scheme, that advice is out of date.
Can I use the guarantee for an investment property?
No. The property must be your principal place of residence — you must move in within six months of settlement and live there while the guarantee is active. It also cannot be combined with owning other property; the 10-year no-ownership rule applies.