The Australian Government 5% Deposit Scheme is an initiative that helps home buyers to buy a home sooner. The Scheme supports home buyers who have saved a small deposit, and meet other eligibility criteria, to get a loan to buy a home. There are two Guarantees available to suit different types of home buyers.
- Low deposit options
- No income caps
- No LMI - save on upfront fees
- Wide choice of home types
- Government backing
- Unlimited spots and no waiting list
Home buyers usually need a deposit of 20% of the Property Value to get a home loan, and those with a smaller deposit may require Lenders Mortgage Insurance (LMI).
Under the Australian Government 5% Deposit Scheme, Housing Australia provides a Guarantee to the lender, so home buyers only need a 2% or 5% deposit depending on the type of Guarantee. This helps home buyers to buy a home sooner, with lower upfront costs.
Home buyers are responsible for meeting all costs and repayments for home loans associated with the Australian Government 5% Deposit Scheme, including but not limited to stamp duty, application fee and legal costs.
- 1. Eligible home buyer
Home buyer meets all Australian Government 5% Deposit Scheme eligibility criteria. - 2. Small deposit
Home buyer saves minimum deposit of 2% or 5% of Property Value, depending on Guarantee. - 3. Government Guarantee
Housing Australia provides Guarantee to Participating Lender to enable home buyer to borrow up to 95% or 98% of Property Value, depending on Guarantee. - 4. Home loan from Participating Lender
Participating Lender provides home loan. - 5. Home ownership
Home buyer buys and moves into their home.
A Guarantee protects the Participating Lender, not the home buyer. It is not a cash payment to a home buyer, or a deposit for a home – home buyers will not receive any funds. It essentially means that if a home buyer defaults on their home loan, and selling the property doesn’t cover the outstanding amount they owe on their mortgage, then Housing Australia ‘guarantees’ to pay the lender a shortfall up to a pre-agreed limit.
For the First Home Buyers, the pre-agreed limit is up to 15% of the Property Value; and for Single Parents it is up to 18%. The exact amount is set during the application process and depends on the deposit and the Property Value when purchased.
For the Australian Government 5% Deposit Scheme, the Property Value is assessed by the Participating Lender, and it may be different to the purchase price. Home buyers need to meet Scheme eligibility criteria and also the lender’s own lending criteria.
Home buyers need to meet a range of eligibility criteria to qualify for the Australian Government 5% Deposit Scheme. These depend on the type of Guarantee, and include the following:
- Citizenship – be an Australian citizen(s) or permanent resident(s) at the Home Loan Date*
- Deposit – minimum 5% (First Home Buyer) or 2% (Single Parents) of the Property Value
- Property ownership –
- First Home Buyer: must be a first home buyer or not have owned a property in Australia in the last 10 years (applies to both in a joint application) at the Home Loan Date*
- Single Parents: must be a buyer who currently doesn’t own property or not have any other property interest once your new home settles
- Owner-occupier – you must buy or build a home to live in (investment properties are not eligible)
- Loan type – owner-occupier loan with Principal and Interest repayments from a Participating Lender, up to 30 years (plus up to 3 years to build a new home)
- Applicant type –
- First Home Buyer: Individuals or buying with one partner, friend or family member
- Single Parents: Single parents or single legal guardians of one or more dependent children
- Minimum age – must be at least 18 years old
Home Loan Date*
The Home Loan Date is the date you sign your home loan agreement with your Participating Lender. You should confirm this date with the lender, as this date can vary between buyers and lenders.
| First Home Buyers |
Single Parents |
|
| Minimum deposit | 5% of property value |
2% of property value |
| Number of applicants | Maximum of 2 applicants |
Single applicants only |
| Prior property ownership | First home buyers or people who have not owned a property or land in Australia in the last 10 years. |
Single parent or single legal guardian of one or more dependent children who do not have any other property interest once your new home settles. |
| Purchase location | Australia wide |
|
| Citizenship | Must be an Australian citizen or an Australian permanent resident, at least 18 years old |
|
| Property price cap | You can check the property price threshold for your property's suburb and postcode using the official Property Price Cap Tool | |
Use the Eligibility Tool on Housing Australia’s website www.housingaustralia.gov.au for a quick check of the main eligibility criteria to help you work out which Guarantee you might be eligible for.
Also look at the information on Housing Australia’s website and the Information Guide that you can download from the website.
Submit a Home Loan enquiry to start your application, or speak with one of our Home Loan Consultants to discuss the most suitable Guarantee for you. They will assess your eligibility and submit an application to Housing Australia to reserve a Guarantee place for you.
This place is held for 14 days, to give you time to complete your application and apply for a home loan.
Work with one of our Lending Specialists to complete your application. You’ll need to provide documents such as proof of citizenship of permanent residency, your ATO Notice of Assessment from last financial year, and a signed Commonwealth Statutory Declaration confirming you meet the Australian Government 5% Deposit Scheme eligibility criteria.
Once all your documents are provided, we will request Housing Australia to secure your Guarantee Place, allowing you time to find a home.
If you are eligible, our Lending Specialist will notify you that your place is pre-approved. You then have 90 days to find a home and sign a contract of sale.
Note that your home loan will also need to be approved by Auswide Bank, based on our own lending criteria.
Use the Postcode Search Tool on Housing Australia’s website to check the price cap for the location you want to buy in. The tool is only a guide – confirm the price cap with your Lending Specialist for any property you are considering buying.
Once you find your new home and sign a contract of sale, your Lending Specialist will manage the final approvals.
Once settlement is completed, it is time to move in!
To retain the Guarantee on your home loan, you must meet ongoing requirements, such as living in the property as an owner-occupier.
If these criteria aren’t met, the Guarantee may no longer apply, and you could be required to pay LMI or other additional costs.
More For First Home Buyers
The First Home Owners' Grant is a national scheme funded by the states and territories and administered under their own legislation. Under the scheme, a one-off grant is payable to first home owners that satisfy all the eligibility criteria.
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