Get the Right 5% Deposit Scheme in Australia, No LMI

The Australian Government 5% Deposit Scheme is a federal government guarantee - not a cash grant. When you purchase a home under the scheme, the government guarantees the gap between your 5% deposit and the 20% threshold lenders normally require before waiving Lenders Mortgage Insurance (LMI). You borrow 95% of the purchase price from a participating lender. The government's guarantee - issued by Housing Australia directly to that lender - means your loan is treated as though you have a 20% deposit. LMI is not charged.

What that saves you is real money. LMI on a $1,000,000 Sydney property purchased with a 5% deposit is approximately $43,000. The scheme eliminates that cost entirely for eligible buyers.

The scheme has been running since January 2020 and has helped more than 248,000 Australians into home ownership. In 2024–25, it supported more than 1 in 3 first home buyers nationally - up from 1 in 10 in its first year. The October 2025 reforms made it the most accessible it has ever been.

Key facts at a glance:

The expansion of the scheme on 1 October 2025 was the most significant reform to first home buyer support in Australia in years. It was originally planned for January 2026 but brought forward by three months. Three specific changes took effect.

Change 1: Income caps removed entirely.

Before October 2025, individual applicants earning above $125,000 per year or couples earning above $200,000 combined were ineligible. In Sydney, where dual incomes are often required just to service a mortgage, this excluded a significant proportion of buyers. From 1 October 2025, there is no income test. Whether you earn $80,000 or $350,000, you can apply.

Change 2: Annual place limit abolished - scheme is now unlimited.

The old scheme offered 35,000 places per year. When those ran out - sometimes within months - eligible buyers were left waiting for the next financial year. From 1 October 2025, there is no annual cap. Every eligible first home buyer who applies through a participating lender can access the scheme. There is no waitlist.

Change 3: Sydney property price cap raised from $900,000 to $1,500,000.

This is the change with the most practical impact for buyers in Sydney's Hills District, Greater Western Sydney, and inner suburbs. Under the old $900,000 cap, only approximately 31% of Sydney properties were accessible under the scheme. Under the new $1,500,000 cap, approximately 67% of the Sydney market is now in scope. A buyer with $60,000 saved can purchase a $1,200,000 Sydney property through the scheme with no LMI - something that was not possible before October 2025.

In dollar terms - a before-and-after example: A couple in Castle Hill looking at a $1,100,000 home with a 5% deposit ($55,000) would previously have been blocked on two grounds: over the old $900,000 cap and potentially over the income threshold. Under the October 2025 rules, they access the scheme, avoid approximately $50,000+ in LMI, and proceed with the same $55,000 deposit.

Lenders Mortgage Insurance (LMI) is an insurance premium charged by lenders when a borrower has less than a 20% deposit. It protects the lender - not you - against losses if you default and the property sells for less than the outstanding loan balance. You pay the premium. The bank gets the protection.

LMI is calculated as a percentage of the loan amount, and that percentage increases as your deposit shrinks. With a 5% deposit, the cost is substantial.

Indicative LMI costs for NSW buyers with a 5% deposit:

Figures are indicative estimates based on published calculator data (Finder, Hunter Galloway). Actual LMI varies by lender and insurer. Use a lender-specific LMI calculator or contact us for an accurate figure for your purchase.

The 5% Deposit Scheme replaces LMI with a government guarantee at no cost to you. You simply do not pay it.

One clarification buyers often ask about: the government guarantee is issued by Housing Australia to the participating lender. It is not a cash payment to you and it is not a second mortgage. You borrow from your lender in the normal way - the guarantee just means the lender waives the LMI requirement. You remain fully responsible for your loan repayments.

Core eligibility criteria (from 1 October 2025)

To be eligible, you must meet all of the following:

• Australian citizen or permanent resident. Both applicants must individually meet this if applying jointly. Temporary residents are not eligible.
• Aged 18 or over.
• First home buyer or not having owned property in Australia in the past 10 years. Both applicants must individually meet this in a joint application. If you owned property but sold it more than 10 years ago, you may be eligible.
• Minimum 5% deposit saved in genuine savings. If you have saved more than 5%, your lender may require you to contribute more.
• Property within the price cap for its location. Both the purchase price and the lender's assessed property value must fall at or below the cap. For house and land with separate contracts, the combined land price and build cost must also come in under the cap.
• Owner-occupier purchase only. The property must be your principal place of residence. You must move into the property within 6 months of settlement (timing varies by property type - confirm with your participating lender).
• Principal and interest loan only. Interest-only loans are not eligible (except during a construction period for new builds).
• Applied through a participating lender. There are more than 30 approved participating lenders. You cannot apply directly to Housing Australia.

Property types covered: Established homes, new homes, off-the-plan apartments, house and land packages, and vacant land with a build contract all qualify, as long as the property is residential and sits within the relevant price cap.

Joint applications: You can apply jointly with one other person - a partner, friend, sibling, or other family member. Both applicants must individually satisfy the first home buyer criteria. Maximum of two applicants per application.

What if I've owned an investment property previously? If you have owned any residential property in Australia - including an investment property - you are generally ineligible unless that ownership ended more than 10 years ago. The rules around prior ownership are narrow. Contact us before assuming you do or don't qualify.

Self-employed applicants: Self-employed buyers are eligible on the same terms as PAYG employees. The difference is in documentation: typically two years of tax returns, business financials, and an ATO Notice of Assessment. We match self-employed first home buyers to participating lenders whose assessment approach suits complex income structures.

Does HECS/HELP debt affect eligibility? HECS/HELP is not a bar to the scheme itself. However, it is included in the lender's serviceability assessment and reduces your borrowing capacity. We factor this in when working out your numbers.

NSW property price caps (from 1 October 2025)

Both the purchase price and the lender's assessed property value must fall at or below the cap. Always verify your specific suburb using the government's Postcode Search Tool at firsthomebuyers.gov.au - the boundary between Sydney and "rest of NSW" can split suburbs.

The scheme applies nationwide. Property price caps vary by state and region. Below is the full national reference table - useful if you're buying interstate or comparing markets.

Source: MFAA (confirmed from Housing Australia, October 2025). Regional centres are: NSW - Illawarra, Newcastle and Lake Macquarie; VIC - Geelong; QLD - Gold Coast and Sunshine Coast. Always verify your specific postcode using the Postcode Search Tool at firsthomebuyers.gov.au before committing to a purchase.

NSW buyers: Our focus is the Sydney and NSW market. The $1,500,000 cap covers the Hills District, Greater Western Sydney, and most of greater Sydney - including areas that were previously out of reach under the old $900,000 limit.

Most eligible buyers should combine the 5% Deposit Scheme with at least one other program. The combined value of stacking them can be significant.

Worked examples – the maths at a glance

Below are three real scenarios with approximate savings. Numbers are indicative.

Got questions or need help working out your numbers? Book a free call with us.

"The scheme ran out - there are no more places." This was true under the old scheme, which had an annual cap of 35,000 places. That cap was removed on 1 October 2025. The scheme is now unlimited. There is no waitlist.

"I earn too much to qualify." Before October 2025, individual applicants earning above $125,000 and couples earning above $200,000 combined were excluded. Those income caps were removed on 1 October 2025. There is no income test.

"Sydney properties are too expensive for the scheme." The old Sydney cap of $900,000 covered approximately 31% of the Sydney market. The new $1,500,000 cap (from October 2025) means approximately 67% of Sydney is now accessible under the scheme.

"The 5% Deposit Scheme is a cash grant." It is not. The scheme is a government guarantee to your lender. No money is paid to you, and no second mortgage is created. You borrow from the lender in the normal way - the guarantee means LMI is waived. You remain fully responsible for your loan repayments.

"I need to apply to Housing Australia directly." You cannot apply directly to Housing Australia. The application is made through a participating lender as part of your home loan application.

"All participating lenders offer the same rates." More than 30 lenders are on the scheme panel. Their interest rates, loan features, and serviceability assessment approaches vary significantly. The lender that approves your application might not be offering the best rate. We compare them for your specific profile.

"I can't use the scheme because I'm self-employed." Self-employed applicants are eligible on the same terms as PAYG employees. The difference is in the documentation the lender requires.

"The 5% Deposit Scheme is the same as LMI." No. LMI is a cost you pay to protect the lender. The scheme is a government guarantee that replaces the need for LMI - at no cost to you.

"My partner's property history doesn't affect my FHBAS eligibility." This is one of the most expensive misconceptions we see. The NSW stamp duty exemption (FHBAS) is assessed based on both your and your spouse/de facto partner's entire property ownership history. If your partner has ever owned property anywhere in Australia - even if they are not named on the title of the property you're buying - you are ineligible for FHBAS. Always check both partners' history before assuming you qualify for the stamp duty exemption.

We know the October 2025 changes inside out. The scheme changed materially on 1 October 2025 - unlimited places, no income cap, higher price caps, and expanded eligibility for buyers who haven't owned property in the past 10 years. We understand exactly how these changes affect buyers in Sydney's Hills District, Greater Western Sydney, and across NSW.

Not all participating lenders are the same. There are more than 30 lenders on the scheme's panel - major banks, regional banks, mutuals, and non-bank lenders. Their interest rates differ. Their serviceability assessment policies differ. Their approach to self-employed income, HECS debt, and casual employment differs. We compare them for your specific profile and find the one that gives you the best combination of rate, features, and approval likelihood.

We calculate your total government support before you start searching. We work out your complete picture: which schemes you qualify for, the total dollar value of combined support, the property price range that keeps all eligible programs available simultaneously, and the deposit amount you actually need. That conversation changes what you look at, what you budget, and what you can afford.

We manage the process from strategy to settlement. The 5% Deposit Scheme involves Housing Australia, a participating lender, and - if you're also using FHSS - the ATO. If you're claiming FHOG, your lender lodges that. If you're claiming FHBAS, your solicitor handles it at settlement. We coordinate across all parties so nothing falls through.

$0 broker fees. We are paid a commission by the lender at settlement - not by you. Under the National Consumer Credit Protection Act, we are legally required to act in your best interests, not the lender's. This is the Best Interests Duty, and it applies to every recommendation we make.

"We help first home buyers understand exactly what's available before they start looking - not after they've found something they can't afford or that doesn't qualify for the scheme. That conversation changes everything."
- Sumit, Director & Senior Loan Specialist, RyRo Loan Centre

RyRo Loan Centre is based in Norwest in Sydney's Hills District. We help first home buyers across greater Sydney access the 5% Deposit Scheme, compare participating lenders, and maximise their combined government support.

Hills District: Castle Hill, Kellyville, Rouse Hill, Baulkham Hills, Norwest, Bella Vista, Glenhaven, Round Corner, Cherrybrook, Pennant Hills, West Pennant Hills, Beecroft, Carlingford. The Hills District has seen consistent property price growth. New apartment developments and house and land packages in Schofields, Box Hill, and Marsden Park often sit within FHOG and FHBAS thresholds - making full three-scheme stacking possible for eligible buyers.

Greater Western Sydney: Parramatta, Westmead, Merrylands, Blacktown, Penrith, Seven Hills, Guildford, Auburn, Granville. Large portions of Greater Western Sydney remain under the $800,000 FHBAS full stamp duty exemption threshold. Buyers here can often access the 5% Deposit Scheme, the full stamp duty exemption, and - for new homes under $600,000 - the FHOG simultaneously.

Northwest growth corridors: Schofields, Box Hill, Marsden Park, Riverstone, The Gables, Windsor. New house and land packages in these corridors are among the most common properties where the full combination of FHOG, FHBAS, and the 5% Deposit Scheme applies.

Broader Sydney: With the Sydney cap now at $1,500,000, buyers in higher-priced suburbs that were previously out of reach may now qualify. We assess eligibility for first home buyers across all of Greater Sydney, Inner West, Northern Suburbs, Eastern Suburbs, the South, and the Sutherland Shire.

Before you speak to a lender

• Confirm you are an Australian citizen or permanent resident
• Confirm you (and your co-applicant, if any) have not owned residential property in Australia in the past 10 years
• If also claiming FHBAS stamp duty exemption: confirm neither you nor your spouse/de facto partner has ever owned or co-owned property anywhere in Australia
• Check your credit file (free check via a credit bureau - Equifax, Illion, or Experian)
• Reduce or close credit cards and buy-now-pay-later accounts you don't need (they reduce borrowing capacity even if unused)
• Avoid changing jobs in the 3 months before applying
• Compile income documents: 3 recent payslips, most recent tax return and PAYG summary (or for self-employed: 2 years' tax returns, business financials, ATO Notice of Assessment)
• Compile bank statements showing genuine savings history (3–6 months minimum)
• Calculate your HECS/HELP balance - it reduces your borrowing capacity
• If using FHSS: check your voluntary super contributions and obtain your ATO FHSS Determination before signing any purchase contract
• Identify your target suburb and confirm the price cap at firsthomebuyers.gov.au using the Postcode Search Tool
• Understand which other government schemes you qualify for and want to combine

Getting pre-approved

• Contact RyRo for your free scheme assessment (or another mortgage broker / participating lender directly)
• Submit documentation for assessment
• Confirm scheme eligibility and identify the best participating lender for your income profile
• Confirm your scheme combination: FHOG? FHBAS? FHSS?
• Receive pre-approval letter - includes scheme eligibility confirmation submitted to Housing Australia by your lender
• Your scheme place is held for 14 days; pre-approval is valid for 90 days and renewable

Searching and making an offer

• Search within your cap ($1,500,000 in Sydney; $800,000 rest of NSW)
• If also using FHBAS: stay under $800,000 for full stamp duty exemption, or under $1,000,000 for partial concession
• If also using FHOG: property must be new and priced under $600,000 (new homes) or $750,000 (house and land packages)
• Engage a solicitor or conveyancer before you find a property - not after
• For private treaty: make offer subject to finance and building/pest inspection
• For auction: building, pest, and finance must all be confirmed before bidding

Exchange to settlement

• Pay 10% deposit at exchange - FHOG is not available at this point; it's paid at or after settlement
• Solicitor handles FHBAS stamp duty application and communicates with lender
• Confirm building insurance from exchange - you bear risk on the property from that moment
• Keep your employment and financial position stable - changes can affect formal approval
• Prepare for moving costs, utility connections, and any immediate maintenance

Approximate timeline: Pre-approval: 2–5 business days (with documents ready). Property search: weeks to months depending on market. Formal approval once property identified: 1–3 weeks. Exchange to settlement: typically 4–6 weeks.