First home in Australia: who qualifies for the 5% deposit and Help to Buy

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Kooky

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Two Australian Government schemes can change how much a buyer needs to save before a first purchase, and how much of the home the buyer ends up owning. They are often mentioned in the same breath, and they are not the same thing. The Australian Government 5% Deposit Scheme is a guarantee given to a lender. The Australian Government Help to Buy Scheme is shared equity: the Government pays part of the price and owns part of the home. A buyer uses one or the other, never both, and each one comes with its own tests, its own deadlines and its own duties after settlement.

What follows is drawn from the Australian Government's First Home Buyers website and the 5% Deposit Scheme Information Guide for first home buyers, prepared by Housing Australia and dated 1 July 2026. It covers eligibility, deposits, the homes that qualify, price caps, the application path and the duties that continue after settlement. These are the general rules. Whether a particular buyer or a particular home meets them is decided by the lender and by Housing Australia, case by case.

Australian Government First Home Buyers website; 5% Deposit Scheme Information Guide, Housing Australia, 1 July 2026.

Two schemes, two different mechanisms

The 5% Deposit Scheme was formerly known as the Home Guarantee Scheme, according to the First Home Buyers website. Under it the Government gives a guarantee to the buyer's lender, so that the lender can offer a home loan against a small deposit. No money goes to the buyer. The buyer borrows almost the whole price and remains responsible for every cost and every repayment.

Help to Buy works the other way round. The Government contributes cash toward the purchase price, up to 30 per cent for an existing home and up to 40 per cent for a newly built one, and holds an equity share in the home in return. The buyer borrows much less, and one day settles up with the Government on the basis of what the home is then worth.

The First Home Buyers website says that since 1 October 2025 the 5% Deposit Scheme has had no income caps, no waitlists and no Lenders Mortgage Insurance, and it lists the scheme as having unlimited places. Help to Buy is narrower by design. Applications opened on Friday 5 December 2025, the scheme has 10,000 places each year, and it carries income caps.

Both schemes share one practical feature. A buyer cannot apply to Housing Australia directly. Every application is made by a Participating Lender, as part of a home loan application, and the lender's own credit rules apply on top of the scheme's.

What the guarantee does, and what it does not

The Information Guide describes the guarantee as a pre-agreed limit of up to 15 per cent of the Property Value. The exact amount is set during the application, from the loan amount and the Property Value at purchase. Property Value is a defined term: it is the value assessed by the lender, and the guide notes that it may differ from the purchase price.

The guide is direct about whom the guarantee protects: the lender, not the buyer. It is not a cash payment and it is not a deposit. According to the guide, it can be claimed only after the borrower has defaulted, the property has been sold, the net sale proceeds and other available funds have been applied to the debt, and a shortfall remains. It does not cover missed repayments, it does not prevent default, and it does not stop a lender from taking action such as repossession. Any debt left after the sale proceeds and the guarantee payment have been applied stays with the borrower.

A worked example, with figures chosen for round numbers and not taken from any market data: a home with a purchase price and a Property Value of A$800,000, bought with the minimum deposit. Five per cent of A$800,000 is A$40,000. The loan is the remaining A$760,000, which is 95 per cent of the value. A guarantee at the full 15 per cent would be A$120,000. The buyer still owes, and repays, the whole A$760,000.

Who qualifies for the 5% Deposit Scheme

The Information Guide sets the tests at a single moment, the Home Loan Date, which it defines as the date the buyer signs the loan agreement.

Citizenship or residency. The applicant must be an Australian citizen or a permanent resident at the Home Loan Date. Temporary residents do not qualify, nor do people whose application for residency is still pending. In a joint application both borrowers must pass, so a couple in which only one partner is a citizen or permanent resident is not eligible as joint applicants.

Age. Each applicant must be at least 18 at the Home Loan Date.

One or two borrowers. An application is individual, with a sole borrower, or joint, with two named borrowers. The guide says the two may be partners, friends or family. A loan with three or more borrowers is not eligible.

The ownership test. The guide's wording is that the applicant must be a first home buyer or must not have owned a property in Australia in the last 10 years. It then spells out what counts. In the 10 years before the Home Loan Date the applicant must not have held, in Australia, a freehold interest in real property including land, a lease of land of 50 years or more, or a company title interest in land. The test is broad: it applies whether the property was residential or commercial, an investment or a home, and whether or not the applicant ever lived in it. For joint applicants it applies to both.

Owner-occupation. The home must be bought or built to live in. Investment properties are not eligible. In the Home Buyer Declaration the applicant states that they will move in within six months of settlement, or of the occupancy certificate for a new build, and will keep living there while the guarantee applies.

Income. There is no income test. The First Home Buyers website states that the scheme has had no income caps since 1 October 2025.

Single parents and legal guardians form a separate stream with a minimum deposit of 2 per cent, according to the same website. Its detailed rules are set out in a separate Information Guide, which this guide does not cover beyond that figure.

The declaration is a legal document. The Information Guide warns that false or misleading information can carry criminal penalties, including up to four years' imprisonment under the Statutory Declarations Act 1959 of the Commonwealth, and can also lead to the loss of the scheme's cover and to extra costs.

The deposit test: at least 5 per cent, less than 20

The deposit rule has a floor and a ceiling. The Information Guide requires savings of at least 5 per cent of the Property Value and less than 20 per cent.

The ceiling is the part buyers tend to miss. The guide says an applicant must use as much of their savings as possible, and that if they would have 20 per cent or more left after covering costs such as stamp duty and legal fees, the loan is not eligible. In the A$800,000 example above, 20 per cent is A$160,000: a buyer who could put that much toward the home after costs falls outside the scheme. The guide also rules out transferring cash or assets to another person in order to pass the test.

Because the test is measured against the lender's Property Value and not simply the contract price, a valuation that comes in below the price changes the numbers. The guide lists this among the risks that stay with the buyer: a lower valuation can mean a larger deposit is required or a smaller loan is offered.

Which homes qualify, and the building deadlines

The property must be residential, the buyer must be the registered owner at settlement, and both the purchase price and the Property Value must be at or below the price cap for the location. Within those limits the Information Guide lists four kinds of purchase: an existing home, a house and land package, vacant land with a separate build contract, and an off-the-plan apartment or townhouse.

For anything that involves construction, the guide adds conditions on the build contract and a set of deadlines. The contract must be with a licensed and registered builder, carry the required insurance, be at a fixed price and be at arm's length; an owner-builder arrangement is not eligible. For a house and land package, both the land contract and an eligible build contract must be in place before settlement, as one contract or as two. A buyer who already owns a block cannot use the scheme for a new loan to build on it. The land must also be titled before the guarantee can be issued, within the 90-day pre-approval period described further down.

The loan itself must be an owner-occupier home loan from a Participating Lender, on principal and interest repayments, with limited exceptions for interest-only loans. The maximum term is 30 years, plus up to three years to build a new home, a period that may include interest-only payments. Construction risk is not covered by the guarantee: the guide leaves cost increases, delays and a builder's insolvency with the buyer.

Property price caps by state and territory

The price cap is the test that most often decides whether a given listing is in or out. The Information Guide says both the purchase price and the Property Value must not exceed the cap for the location, and that for a house and land package or for vacant land with a separate build contract the combined cost of land and building must stay under the cap as well.

The caps below are those printed in the Information Guide dated 1 July 2026 and on the scheme's price caps page on the First Home Buyers website. Neither states the date from which they apply. They are the caps of the 5% Deposit Scheme. The caps of the one remaining state are not covered here.

"Regional centres" is a defined list, not a description. In New South Wales it means the Central Coast, Coffs Harbour-Grafton, the Illawarra, the Mid North Coast, Richmond-Tweed, and Newcastle and Lake Macquarie. In Victoria it means Geelong. A home in one of those areas takes the capital city cap. The other states in the table have no regional centre on the list, and for the Northern Territory the higher cap is given for the capital city alone.

The First Home Buyers website offers a postcode search for the caps and describes that tool as only a guide. The cap for each home under consideration has to be confirmed with the Participating Lender. Help to Buy has price caps of its own, by location, shown in a separate tool; those figures were not read for this guide and the table above should not be taken to apply to it.

Applying through a lender, and keeping the guarantee

For the 5% Deposit Scheme, the First Home Buyers website describes four stages: an eligibility check, the lender's assessment and application, the search for a home once pre-approved, and final approval and settlement. The documents it lists are short: full name, date of birth, Medicare number, proof of citizenship or residency, and a completed Home Buyer Declaration form.

Two clocks run during the process, according to the Information Guide. A place is held for 14 days while the buyer completes the scheme application and the home loan application. After pre-approval, the buyer has 90 days to find a home and sign a contract of sale. The guide describes no extension to that period. A buyer may apply through more than one Participating Lender, but has to choose one before signing a contract of sale.

After settlement the guarantee does not last for the life of the loan. The Information Guide lists the events that end it:

• it becomes clear the loan was never eligible;
• the buyer stops living in the property without an approved exemption;
• the buyer rents the property out;
• the loan is repaid in full, which includes refinancing with a lender outside the scheme;
• the principal balance falls to 80 per cent or less of the Property Value through scheduled repayments;
• the buyer borrows more against the property from the Participating Lender;
• the home is sold.

In the A$800,000 example, 80 per cent of the Property Value is A$640,000, so the guarantee would fall away once scheduled repayments had brought the A$760,000 loan down by A$120,000. Prepayments that can be redrawn are not counted, the guide adds.

The other endings can cost money. If the guarantee ends while the loan is still above 80 per cent of the Property Value, the guide says the lender may require Lenders Mortgage Insurance or other costs. That is the consequence of moving out or letting the home. Renting it out is not permitted while the guarantee applies, and the guide's own advice to a participant who wants to move out is to speak to the Participating Lender about the options first.

Refinancing is allowed within limits. A participant can move to another Participating Lender and keep the benefit, provided the loan is not increased, the term is not extended and nothing else changes that affects eligibility. Once the purchase has settled, the loan amount cannot be increased under the scheme.

How Help to Buy shares the purchase

Help to Buy replaces part of the loan with the Government's money. According to the First Home Buyers website, the contribution is up to 30 per cent of the purchase price for an existing home and up to 40 per cent for a newly built home. The buyer needs a deposit of at least 2 per cent and a home loan from a Participating Lender for the rest, and Lenders Mortgage Insurance is not required.

The website gives its own example. A buyer purchases an A$800,000 existing home with a deposit of A$16,000, a loan of A$544,000 and a Government contribution of A$240,000. The three parts add up to the price. The deposit is 2 per cent, the loan is 68 per cent of the value, and the Government's equity share is 30 per cent. In the example the buyer repays the loan over 30 years on monthly principal and interest payments.

For a newly built home at the same price, and assuming the contribution were set at the full 40 per cent, the Government's share would be A$320,000. With the same A$16,000 deposit the loan would be A$464,000, or 58 per cent of the value. That is an illustration of the maximum, not a figure from the scheme; the contribution in a real case is "up to" the stated share.

The Government's share is not a loan with an interest rate and it is not a gift. The website says it must eventually be repaid, and that any payment is based on the property's value at the time of the payment, with the Government sharing gains and losses in proportion. Using the website's 30 per cent share and two invented valuations: if the home were later worth A$900,000, the 30 per cent share would be A$270,000, which is A$30,000 more than the A$240,000 contributed. If it were worth A$700,000, the share would be A$210,000, which is A$30,000 less. The valuations are assumptions made to show the mechanism and say nothing about where prices will go.

To secure its share, Housing Australia takes a second mortgage over the home. The buyer signs that document before settlement.

Who qualifies for Help to Buy

The First Home Buyers website sets out the Help to Buy tests as follows.

Citizenship and age. Every applicant must be an Australian citizen and at least 18. Permanent residency, which is enough for the 5% Deposit Scheme, is not listed as enough here.

One or two applicants. A buyer applies alone or with one other person, and both must meet the criteria.

Income. Annual taxable income must be at or below A$103,000 for an individual applicant and A$165,000 for single parents and joint applicants. Income is assessed on the Notice of Assessment issued by the Australian Taxation Office for the previous financial year. The website says the income caps and other thresholds are indexed to wages each year, so the figures move.

No other property. Applicants cannot own or beneficially own property in Australia or overseas. The website notes exceptions for single parents who co-own a property and want to buy out the other owner or sell their interest.

Not only first home buyers. The website says Help to Buy is open to both first home buyers and previous homeowners. A person who owned a home some years ago and owns nothing now may fall outside the 10-year test of the 5% Deposit Scheme and still be within Help to Buy, if the income and other tests are met.

A home to live in. The property must be the buyer's principal place of residence. Investment properties are not eligible and renting out the property is not allowed.

No doubling up. Applicants cannot receive other Australian Government assistance for the purchase, including shared equity schemes, or state or territory loans or guarantees. The website says stamp duty concessions, grants and other exemptions can still be used. The Information Guide for the 5% Deposit Scheme states the same boundary from its side: that scheme cannot be used together with Help to Buy.

The homes that qualify are a new or existing house, townhouse, apartment, unit or duplex priced at or below the cap for its location; a vacant block for a new home; or a property to be knocked down and rebuilt. For the last two, the buyer must have signed an eligible building contract with an eligible builder. The scheme is available in all states and territories.

From conditional approval to settlement under Help to Buy

The website sets the Help to Buy process out in five stages, and the timing differs from the guarantee scheme in one respect that buyers and their advisers should know: an extension exists.

The conditional approval letter states the buyer's maximum purchase price, which gives the search a hard limit from the first inspection. The 90 days to find a home and sign a contract run from that letter, and Housing Australia may approve one extension of up to another 90 days.

Two recommendations on the website bear on the contract itself. It strongly recommends independent legal and financial advice before an offer is made, and it strongly recommends a "subject to finance" clause in the contract of sale. The buyer's own solicitor or conveyancer handles the contract and the deposit; the lender coordinates with Housing Australia; and Housing Australia's conveyancer approaches the buyer before settlement so the scheme documents can be signed.

Living with a Government share, and paying it back

Joining Help to Buy starts a continuing relationship. The website lists the obligations: the participant must keep meeting the eligibility criteria while in the scheme, maintain the home and keep it insured. There are reviews, for which the participant supplies the home insurance certificate, updated taxable income details and information about key changes in personal circumstances. The website says the reviews assess the participant's ability to make incremental payments.

There are three ways the Government's share is repaid, according to the website:

1. incremental repayments from savings, each of which increases the buyer's own share of the home;
2. a buy-back of all or part of the Government's equity, funded by additional lending, when the buyer can afford it;
3. the sale of the home.

In each case the amount follows the value of the property at the time of the payment, as in the illustration earlier. The pages read for this guide do not state a minimum amount for a voluntary repayment, and they do not say what follows when a participant's income later rises above the cap. Those points are for the scheme's Customer Guide and the Participating Lender.

A guarantee lets a buyer borrow nearly the whole price alone. Shared equity means a smaller loan, and a share of the home that belongs to the Government until it is bought back.

One further federal measure is listed alongside the two schemes on the First Home Buyers website. The First Home Super Saver Scheme lets a buyer use up to A$50,000 of voluntary superannuation contributions, plus associated earnings, toward a first home, and the website says it can be combined with the other schemes.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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