First Home Buyer Loans in Australia - 5% Deposit, No LMI
Last updated: 10 May 2026 · Reading time: 8 minutes
Buying your first home in Australia in 2026 is more achievable than at any point in the past decade. From 1 October 2025, the federal government’s First Home Guarantee — now branded the Australian Government 5% Deposit Scheme — was overhauled: no income caps, unlimited places, and significantly higher property price caps in every state. This page explains every scheme, who qualifies, and how Professional Home Loans helps you find the right ones to buy sooner.
How first home buyers can buy with a 5% deposit and no LMI
The single biggest barrier for most first home buyers isn’t borrowing power — it’s the deposit. Saving 20% of the purchase price to avoid Lenders Mortgage Insurance (LMI) takes most buyers years longer than it should, and rising prices often outrun their savings.
The Australian Government 5% Deposit Scheme removes that barrier. Eligible first home buyers can purchase with a 5% deposit, and the federal government guarantees the next 15% of the property value to your lender. Because the lender treats it as a 20% deposit, no LMI is charged. The guarantee is not a cash payment, and you still own 100% of the home from settlement.
For a $700,000 property, that means putting in $35,000 instead of $140,000, and skipping LMI worth roughly $20,000 to $30,000 depending on the lender. For a $1,000,000 Brisbane property, the LMI saving alone can exceed $40,000.
What changed on 1 October 2025 — 3 reforms every first home buyer needs to know
The federal government reformed the scheme significantly on 1 October 2025. Three changes matter:
- Income caps removed. Previously, singles earning over $125,000 and couples over $200,000 combined were excluded. There is now no income test at the scheme level, although your lender still assesses your ability to service the loan.
- Place limits abolished. The scheme used to allocate a fixed number of guarantees each financial year (35,000 in 2024–25). Spots are now unlimited — every eligible applicant gets one.
- Property price caps lifted. Sydney rose from $900,000 to $1,500,000, Brisbane from $700,000 to $1,000,000, Melbourne from $800,000 to $950,000, and regional caps lifted across the board.
Permanent residents are now eligible alongside Australian citizens. The scheme has supported more than 240,000 first home buyers since it launched in 2020, and in 2024–25 it backed roughly one in three first home purchases nationally.
Property price caps in 2026
The price cap that applies depends on the state and the postcode of the property you’re buying. These caps were updated on 1 October 2025 and remain current at the time of writing. Always confirm your specific suburb using the Housing Australia postcode tool before signing a contract — boundaries can split suburbs.
| State | Capital city & regional centres* | Other areas |
|---|---|---|
| New South Wales | $1,500,000 | $800,000 |
| Victoria | $950,000 | $650,000 |
| Queensland | $1,000,000 | $700,000 |
| Western Australia | $850,000 | $600,000 |
| South Australia | $900,000 | $500,000 |
| Tasmania | $700,000 | $550,000 |
| Territory | All areas |
|---|---|
| Australian Capital Territory | $1,000,000 |
| Northern Territory** | $600,000 |
| Jervis Bay Territory & Norfolk Island | $550,000 |
| Christmas Island & Cocos (Keeling) Islands | $400,000 |
*Regional centres at the higher cap: NSW — Newcastle, Lake Macquarie, Illawarra (Wollongong); VIC — Geelong; QLD — Gold Coast, Sunshine Coast. **From 1 July 2026, the Northern Territory splits into two caps: Darwin $750,000 and rest of NT $600,000.
Both the purchase price and the lender’s assessed property value must be at or below the cap. For house-and-land packages on separate contracts, the combined land price plus build cost must come in under the cap.
Are you eligible? Full criteria checklist
To qualify for the 5% Deposit Scheme in 2026, every applicant must meet all of the following:
At least 18 years old
Australian citizen or permanent resident
First home buyer — you and your co-applicant must not currently own residential property in Australia. The “fresh start” rule allows applicants who haven’t owned property in Australia for 10 or more years to re-qualify
Buying as an owner-occupier — investment purchases don’t qualify
Intending to move in within the required timeframe (typically six months for an existing home; 12 months to start building, 24 months to finish, for a new build)
Have at least a 5% deposit, generally as genuine savings held for three months or more (gift policies vary by lender)
Buying a property within the price cap for that postcode
Applying through one of the participating lenders on the Housing Australia panel
Loan is principal-and-interest (interest-only is not permitted)
Maximum two borrowers on the application
Single parents and single legal guardians with at least one dependent should consider the Family Home Guarantee (2% deposit, no LMI), which is a separate stream and does not require you to be a first home buyer.
What it can save you
The savings stack quickly when the federal scheme is combined with state grants and stamp duty concessions. The figures below assume a 95% loan-to-value loan and use indicative LMI estimates that vary by lender.
| Scenario | Property | Without scheme | With 5% Deposit Scheme | Approx. LMI saved |
|---|---|---|---|---|
| Sydney apartment, NSW first home buyer | $750,000 (under $800K stamp duty exemption) | $37,500 deposit + $26,000 LMI + $0 stamp duty | $37,500 deposit, no LMI, no stamp duty | ~$26,000 |
| Brisbane new home + QLD FHOG | $700,000 | $35,000 deposit + $30,000 LMI + $0 stamp duty | $35,000 deposit, no LMI, no stamp duty, +$30,000 FHOG | ~$60,000 combined |
| Melbourne first home, VIC FHB | $650,000 | $32,500 deposit + $22,000 LMI + $11,000 stamp duty | $32,500 deposit, no LMI, partial stamp duty concession | ~$30,000 combined |
| Sydney established home, NSW FHB | $900,000 | $45,000 deposit + $35,000 LMI + $35,300 stamp duty | $45,000 deposit, no LMI, ~$15,700 stamp duty (concession) | ~$54,500 combined |
LMI estimates based on standard 95% LVR pricing across the participating-lender panel; actual figures vary. Stamp duty figures based on the relevant state schedules current at May 2026.
Other Federal Schemes you can use alongside the 5% Deposit Scheme
The 5% Deposit Scheme is one of four federal pathways for first home buyers. Each has different rules and most can be stacked.
Help to Buy (shared equity). Launched 5 December 2025. The federal government takes up to 40% equity in a new home or 30% in an existing home, dramatically reducing the loan you need to service. You contribute as little as a 2% deposit. Income-tested: singles up to $100,000, couples and single parents up to $160,000. You cannot use Help to Buy and the 5% Deposit Scheme on the same purchase — they are alternatives. Help to Buy generally suits buyers on lower incomes who want a smaller mortgage; the 5% Deposit Scheme suits those who want full ownership from day one.
Family Home Guarantee. 2% deposit, no LMI, for eligible single parents and single legal guardians with at least one dependent. You don’t have to be a first home buyer to qualify.
First Home Super Saver Scheme (FHSS). Lets you make voluntary contributions to your super and withdraw them — plus deemed earnings — for a first home deposit. You can contribute up to $15,000 per financial year with a lifetime cap of $50,000 of eligible contributions (plus associated earnings). Contributions are taxed inside super at 15% rather than your marginal rate, and a 30% tax offset applies on release. A couple can each contribute, potentially withdrawing up to $100,000 combined. Apply for an FHSS determination through your myGov account before you sign a contract.
State and territory grants and stamp duty concessions
State-level support stacks on top of the federal schemes. The headline programs current at May 2026:
New South Wales — First Home Buyer Assistance Scheme (FHBAS). Full stamp duty exemption on homes up to $800,000 (new or existing); concessional rate from $800,001 to $1,000,000. Vacant land: full exemption to $350,000, concessional rate to $450,000. The First Home Owner Grant is $10,000 for new homes up to $600,000.
Victoria — First home buyer duty exemption and concession. Full stamp duty exemption on homes up to $600,000; sliding-scale concession from $600,001 to $750,000. The Victorian First Home Owner Grant is $10,000 for new homes up to $750,000. The off-the-plan duty concession (open to all buyers, not just first home buyers) was extended to contracts signed before 21 April 2027.
Queensland — First home concession and FHOG. First home buyers pay no stamp duty on new homes or vacant residential land with no price cap (effective 1 May 2025). For established homes, full first home concession applies up to $709,999, with partial concession to $799,999. The Queensland First Home Owner Grant is $30,000 for new homes valued under $750,000 — but only for contracts signed by 30 June 2026, after which it reverts to $15,000.
Other states and territories have their own rules — Western Australia, South Australia, Tasmania, the ACT and the Northern Territory each offer concessions with different thresholds. We’ll confirm what applies to you during your strategy session.
How the Application Process works — Step by Step
The application is made through a participating lender (or a broker on the panel), not directly to Housing Australia. Here’s how Professional Home Loans takes you from first conversation to settlement.
- Eligibility check and strategy call (30 minutes). We review your income, deposit, credit profile, citizenship status, and the schemes you may stack. We also confirm your borrowing capacity and the price cap that applies in the suburbs you’re targeting.
- Document gather. You provide payslips, two most recent ATO Notices of Assessment, three months of bank statements, ID, and details of any HECS, BNPL or other debt.
- Lender match. We compare participating lenders and identify the one with the best combination of policy fit (employment type, deposit source, credit profile) and pricing. Not every participating lender approves the same applicant.
- Loan application and scheme reservation. We lodge the application and the lender reserves your scheme place with Housing Australia. Most lenders aim to move from inquiry to submission within two weeks.
- Pre-approval. Once the lender issues conditional approval, you have a clear price range and can make offers with confidence. Pre-approval typically lasts 90 days.
- Property search and contract. When you find a property, we coordinate with your conveyancer to ensure the contract is structured correctly — particularly the finance clause and any state stamp duty paperwork.
- Valuation, full approval and settlement. The lender orders a valuation; we work through any conditions; the loan moves to unconditional approval; the conveyancer manages settlement.
- Post-settlement support. We stay engaged through the life of your loan, reviewing your rate annually and helping you refinance if better options emerge.
Eligibility Criteria
To be eligible for the First Home Guarantee, you generally need to meet the following criteria:
Be an Australian citizen(s)
Be at least 18 years of age
Earn under a certain income threshold (check the Housing Australia website for the latest figures)
Intend to live in the property as your principal place of residence
Be a first home buyer (or not have owned a property in Australia in the last [check current time period])
Meet the lending criteria of a participating lender
Documents First Home Buyer Checklist
Driver licence and one secondary ID (Medicare card or passport)
Two most recent payslips (or last two ATO NOAs and Tax Returns if self-employed)
Three months of transaction-account statements
Three months of savings-account statements (showing the deposit accumulating)
Most recent statements for any credit cards, personal loans, BNPL accounts, HECS/HELP balance
Statement showing First Home Super Saver Scheme determination (if using FHSS)
Tenancy ledger or rental statement (often used to demonstrate genuine savings)
Gift letter from family, if any portion of the deposit is gifted
Signed contract of sale (once offer is made)
Building and pest inspection reports (if relevant)
Why use a mortgage broker for your first home loan
Around 77% of all new home loans in Australia are now arranged through mortgage brokers, according to MFAA data for the December 2025 quarter. For first home buyers, the case is particularly strong: not every participating lender on the panel approves applicants the same way, and the lender that suits a salaried applicant with a clean credit file is often the wrong one for a self-employed applicant, a buyer with HECS debt, or a couple where one partner is on probation.
Professional Home Loans is independent, FBAA-accredited, and bound by the Best Interests Duty that applies to all Australian mortgage brokers — meaning we are legally required to put your interests ahead of our own when recommending a loan. We have access to more than 50 lenders, including all the major scheme participants, and we don’t charge first home buyers a fee — we’re paid by the lender once your loan settles.
We also specialise in helping professionals — doctors, lawyers, accountants, engineers, allied health workers and others — who often qualify for additional LMI waivers at 90% LVR or higher outside the federal scheme. If your income or employment profile fits, we’ll show you both pathways and let you choose.
About the Author: Tom Luu
Tom Luu is a specialist mortgage broker and the founder of Professional Home Loans. With over 9 years of experience in the Australian mortgage industry, Tom specializes in complex lending scenarios, particularly for medical professionals, expats, and temporary visa holders. He is dedicated to helping clients navigate the nuances of Australian credit policies to secure the best possible financial outcomes.
Experience: 9+ Years in Mortgage Broking
Credentials: Credit Representative Number 486574
Expertise: Visa Home Loans, Professional LMI Waivers, and Expat Finance.
Free 30-Minute Finance Strategy Session For Professionals
Discover How To Get Approved With A Lower Interest Rate & Save Up To $40,000 In Fees
FAQs – First Home Buyer
1. What is the Australian Government 5% Deposit Scheme?
It’s the federal program (formerly called the First Home Loan Deposit Scheme, then the Home Guarantee Scheme, then the First Home Guarantee) that allows eligible first home buyers to purchase a property with a 5% deposit without paying Lenders Mortgage Insurance. The government guarantees up to 15% of the property value to the lender, but it is not a cash payment to you. You still borrow 95% of the purchase price and own 100% of the home.
2. Do I still need to meet income limits to qualify in 2026?
No. Income caps were removed on 1 October 2025. Your lender still assesses whether you can afford the loan, but there’s no income ceiling at the scheme level. High-income earners can now use the scheme to save on LMI.
3. How much deposit do I actually need?
You need at least 5% of the property value (2% for the Family Home Guarantee), plus enough to cover stamp duty if you’re not exempt, plus legal fees, building inspections and moving costs. On a $700,000 purchase, budget around $40,000 to $45,000 in total upfront cash if you’re a NSW first home buyer (no stamp duty), or $55,000 to $65,000 in a state where stamp duty applies.
4. Can permanent residents apply, or is it citizens only?
Both Australian citizens and permanent residents are eligible. The previous citizens-only restriction was changed when the scheme was expanded.
5. Can I apply with a friend or sibling, or only with a partner?
Up to two borrowers can apply on a single loan. Joint applications are accepted from couples (married or de facto), and from siblings, parents and friends, subject to lender policy. Each applicant must meet the eligibility criteria individually.
6. What’s the difference between the 5% Deposit Scheme, Help to Buy and the First Home Owner Grant?
The 5% Deposit Scheme is a government guarantee to your lender that lets you buy with a low deposit and no LMI — you own 100% of the home. Help to Buy is a shared-equity program where the government takes up to 40% ownership of the property; you own the rest and need only a 2% deposit. The First Home Owner Grant is a cash payment from your state or territory, generally for new builds. You can combine the 5% Deposit Scheme with the FHOG and stamp duty concessions, but you cannot use the 5% Deposit Scheme and Help to Buy on the same purchase.
7. Can I use the scheme to buy an investment property?
No. The property must be your principal place of residence. If you move out and rent it after settlement, the lender may revoke the guarantee.
8. What types of property qualify?
New and existing houses, townhouses, apartments, off-the-plan purchases, house-and-land packages, and vacant land with a separate building contract. The land price plus build cost must be under the cap for new builds.
9. What happens if the property valuation comes in higher than the price cap?
You’re disqualified from the scheme for that purchase. Both the purchase price and the lender’s assessed property value must be at or below the cap. This is why we check the price cap and likely valuation range for any suburb you’re targeting before you start house-hunting.
10. Do I get the same interest rate as a 20% deposit borrower?
Yes. Participating lenders are required to offer their standard owner-occupier rates under the scheme — there’s no premium for the low deposit. This is one of the most valuable elements of the program, because LMI-funded 95% LVR loans outside the scheme often carry higher rates and capitalised insurance.
11. Can I refinance later?
Yes, but only to another participating lender, and you generally can’t increase the loan amount or change to interest-only without losing the guarantee. Once your loan balance falls below 80% of the property value, the guarantee falls away and you can refinance freely.
12. How fast can the process move?
If your documents are in order, we can typically have you submitted to a lender within two weeks and pre-approved within three to four weeks. Settlement timing then depends on the contract — usually 30 to 60 days after the property is signed.