By Chaice Paterson, CEO & Founder, Low Deposit Homes | Updated June 2026

If you’ve been told you need a 20% deposit to buy your first home, you’ve been working off old information. Under the Federal Government’s 5% Deposit Scheme in 2026, you can buy a $1 million new build in Queensland with around $54,500 in cash on hand — not $122,000. That’s the entire reason Low Deposit Homes exists, and that’s what this article walks through: exactly how the scheme works, who qualifies, what’s changed, and the real numbers.

What Is the 5% Deposit Scheme?

The 5% Deposit Scheme (formerly the First Home Guarantee) is a Federal Government program that lets eligible first home buyers purchase with a 5% deposit and zero Lenders Mortgage Insurance. The government acts as guarantor for the 15% gap that would normally trigger LMI, so the lender treats your loan as if you’d put down 20%.

For the official source, see the Housing Australia Home Guarantee Scheme page.

Two things changed in October 2025 that most buyers still don’t know about:

• The income caps were removed. It used to be $125K single / $200K couple. Now there’s no income cap at all.
• The place caps were removed. There used to be a limited annual allocation that ran out late in the year. Now the scheme is uncapped — every eligible buyer can use it.

That’s why this matters right now: the program is the most accessible it has ever been.

How Much Deposit Do I Actually Need Under the Scheme?

For a $1,000,000 new build in metropolitan Queensland, here are the actual numbers:

For a $750,000 new build in North Melbourne, the comparison is $30,000 cash on hand versus $109,000 established — a $79,000 saving (worksheet numbers).

This number — $54,500 versus $122,000 — is the entire reframe. Most clients walk into the discovery call believing they need $122K. They walk out understanding they need $54.5K. That’s the difference between buying now and waiting another five years.

“When I show clients the deposit gap on the funding worksheet — established price, then new build price with the grants applied — that’s when it clicks. They’ve been told their whole life they need 20%. The number is half that. And on a new build, half that again.” — Chaice Paterson, founder of Low Deposit Homes

Who Qualifies for the 5% Deposit Scheme in 2026?

To qualify in 2026, you need to:

• Be an Australian citizen or permanent resident, aged 18+
• Be a genuine first home buyer (or not have owned property in Australia in the past 10 years)
• Intend to live in the property as your principal place of residence
• Have at least 5% genuine savings (the bank’s definition of genuine savings — rent ledger can count)
• Purchase a property within the price cap for your region (next section)

Important: there is no income cap, and no place cap. If you meet the criteria above, the scheme is available.

What Are the Property Price Caps?

The caps depend on whether your purchase is metropolitan or regional, and which state. For Queensland and Victoria — where Low Deposit Homes operates:

• Brisbane and major regional QLD centres: $1,000,000
• Other QLD regional: $700,000
• Melbourne and Geelong: $950,000
• Other VIC regional: $650,000

These caps are absolute. A contract price of $1,001,000 disqualifies you from the scheme. That’s why we deliberately structure QLD packages between $975,000 and $995,000 — to land cleanly inside the cap with maximum home for the money.

Can I Use the 5% Deposit Scheme on a New Build?

Yes — and you should. The scheme works on both new builds and established homes, but stacking it with a new build unlocks two more wins:

• Stamp duty exemption. First home buyers on new builds in QLD and VIC pay zero stamp duty in most cases. On a $1M property in QLD that’s $15,000 in your pocket.
• Depreciation deductions. If you eventually convert the property to an investment (a common LDH client strategy), a brand-new build delivers significantly more depreciation than an established home. For higher-income clients this can mean $15,000+ per year in deductions.

A $1M established home requires roughly $122,000 in upfront costs. A $1M new build under the same scheme requires roughly $54,500. The maths isn’t close.

How Does the Scheme Stack With Other Grants?

The 5% Deposit Scheme stacks cleanly with:

• First Home Owner Grant (FHOG): $30,000 in QLD on new builds under $750K (drops to $15,000 after 30 June 2026). $10,000 in VIC.
• First Home Super Saver Scheme (FHSSS): Withdraw up to $50,000 individual / $100,000 couple from voluntary super contributions toward your deposit.
• State stamp duty exemptions: Built into the structure for new builds.

It does NOT stack with Help to Buy. Help to Buy is an alternative scheme with shared government equity — you pick one or the other. We assess which is better for your situation on the discovery call.

What’s the Catch?

The scheme is genuinely powerful, but worth understanding the constraints:

• You must live in the property. It’s not an investment scheme — you need to move in within a reasonable window and live there as your principal residence (typically 6–12 months minimum).
• Lender selection matters. Not every lender is a participating lender. Within participating lenders, criteria around genuine savings, HECS treatment, and dependent classification vary widely. Wrong lender choice can mean a 4-week delay or a hard decline. This is where we add real value — Low Deposit Homes routes every client through a finance team that knows the scheme cold.
• Genuine savings rules apply. Some lenders won’t accept a gift unless you’ve held it for 3 months. Others accept rent ledger as genuine savings. We work the right lender for your savings situation.

How Do I Apply?

You don’t apply directly to Housing Australia — the application goes through a participating lender. The Low Deposit Homes process:

1. Free 15-minute consultation — we confirm your eligibility, run the numbers, and identify the right structure for your situation
2. Finance pre-approval — through our preferred lender panel
3. Package selection — fixed-price, turnkey new build in QLD or VIC
4. Contracts and finance — land + build contracts signed, unconditional approval secured

Real Client Story: Erik and his partner in South-East Queensland

Erik came to us as an Australian permanent resident with a partner who was a first home buyer. They had savings sufficient for a meaningful deposit, but didn’t want to either drain their cash position or pay non-recoverable Lenders Mortgage Insurance. Target corridors were Wynnum on Brisbane’s bayside or Beaudesert for value-for-block-size, with package prices in the $850,000-$900,000 range — comfortably under the $1,000,000 Queensland metro 5% Deposit Scheme cap.

Frequently Asked Questions

Can both my partner and I use the 5% Deposit Scheme together?

Yes. As long as both applicants meet the eligibility criteria — Australian citizens or permanent residents over 18, genuine first home buyers, intending to live in the property — both can be on the application. The scheme applies to the purchase, not to each applicant individually, so you don’t get “two scheme allocations.”

Can I use the 5% Deposit Scheme for an established home?

Yes, the scheme works for established homes as well as new builds. But you’ll lose access to the new build stamp duty exemption and the $30K QLD FHOG, so the total cash on hand needed is significantly higher. For most first home buyers, a new build under the scheme is mathematically better.

What happens if I or my partner owned a property before?

You need to be a genuine first home buyer — or to have not owned property in Australia in the past 10 years. If only one of you qualifies, options include applying solo on a single income (if serviceability works), waiting out the 10-year window, or considering Help to Buy under different rules. We assess this on the discovery call.

Is there a waitlist for the 5% Deposit Scheme?

No. As of October 2025, the place caps were removed — the scheme is uncapped. Every eligible buyer can use it. This is a significant change from previous years when allocations ran out late in the financial year.

Can I combine the 5% Deposit Scheme with the First Home Owner Grant?

Yes. The 5% Deposit Scheme and the FHOG are independent programs and stack cleanly. If your contract is under $750,000 (the QLD FHOG cap), you can claim the $30,000 FHOG AND use the 5% Deposit Scheme for no-LMI financing on the same property.

Ready to Find Out What You Qualify For?

Book a free 15-minute consultation with Low Deposit Homes — Book your free call | Call 1800 920 172

We’ve helped 1000+ families get into their first home. The consultation is free, there’s no obligation, and you’ll walk away with a clear path forward.

Low Deposit Homes operates under Winning Homes Australia Pty Ltd (ACN 633 321 758). All deposit calculations are indicative and based on general scenarios. Individual circumstances may vary. Government grant eligibility is subject to assessment by the relevant authority. This guide is for informational purposes and does not constitute financial advice.