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5 Percent Deposit Govenment Guarantee Loan
The 5% Deposit Scheme is a powerful government initiativedesigned to fast-track homeownership for eligible Australians. Traditionally,saving a 20% deposit can take years, creating a significant barrier to entry.This program dramatically lowers that hurdle, requiring only a 5% deposit topurchase your first home.
The key advantage: No Lenders Mortgage Insurance (LMI). Typically,a deposit below 20% requires you to pay LMI, a costly premium that protects thelender, not you. Under this scheme, the government guarantees a portion of yourloan, allowing you to bypass this expense entirely. This can save you tens ofthousands of dollars upfront, money better spent on your new home.
It's a practical solution offering real flexibility-whetheryou're looking at an established apartment, a new townhouse, or a brand-newbuild. The goal is simple: to make your path to ownership clearer, faster, andmore affordable.
Eligibility Criteria for the 5% Deposit Scheme
To ensure you can benefit from this opportunity, you mustmeet the following clear criteria. Think of this as your pre-applicationchecklist.
1. Who You Are
• You must be an Australian citizen orpermanent resident aged 18 or over.
• You must be a first home buyer. Thismeans you have not owned a property in Australia in the last 10 years.
2. The Property
• The property must be purchased at or belowthe price cap for its location (city/regional area).
• It must be purchased to live in as your primaryplace of residence (owner-occupier). Investment properties are noteligible.
• Eligible properties include new or existinghouses, townhouses, units or apartments.
• Vacant land with signed building contract.
3. The Finance
• You must have a minimum 5% of the purchaseprice for the deposit.
• Your home loan must be a principal andinterest loan with a maximum term of 30 years.
• The loan must be obtained through a participatinglender approved for the scheme.
4. Application Details
• You can apply as an individual or jointly withone other eligible applicant (e.g., a partner or family member).
FAQ`s
Under the scheme you are a "First HomeBuyer" if you haven’t owned property in Australia in the past 10years.
Yes. You can apply jointly with one other eligibleperson, such as a sibling or friend, if they also meet the scheme'scriteria.
If your spouse or partner is not a first home buyer,it may affect your joint eligibility.
No, the scheme allows a maximum of two applicants.You can apply either on your own or jointly with one other eligibleperson (such as a partner, friend, or family member).
You cannot rent out the property till such time it issupported by the government guarantee.
Please get in touch with us and we will explain the options available to you should you want to rent out the property.
You must live in the home as your main residence tillsuch time the property is supported by the government guarantee. Get in touchwith us if your situation has changed and you cannot live in the propertyanymore.
Yes. Selling the property pays off the home loan,which ends the government guarantee.
Genuine savings are funds accumulatedconsistently over time (typically shown via bank statements), demonstratingfinancial discipline to lenders.
If you do not have funds accumulated over time, get in touch with us and we will be able to help you qualify for genuine saving using other methods.
Yes.Agifted depositfrom immediate family is usually acceptable.
Interestrates vary by lender. Most lenders would price the scheme loan “as if” the LVR is 80 percent. It's crucial tocompare offers from multiple lenders.
Yes, you can refinance, to another participatinglender.
No. The scheme usually requires principal and interest repayments.
The guarantee ceases while your loan's Loan-to-Value Ratio(LVR) is below or equal to 80%. Get in touch with us and we mightbe able to help you in getting a lower rate when the guarantee ends.
Yes.You can often combine it with benefits like the First Home Owner Grant(FHOG), provided you meet each scheme's separate eligibility rules
The guarantee can help you avoid paying LMI with a lowdeposit, which may reduce upfront costs. However, LMI can sometimes beworth considering if you want a non-participating lender, different features,or don’t qualify for the guarantee (for example buying an investment property).Compare total cost over time, not just the deposit.
