Expanded 5% deposit scheme helps 102,594 first-home buyers in its first year

More than 102,000 first-home buyers used the expanded Australian Government 5% Deposit Scheme during its first year, according to new Housing Australia figures released by the federal government late on Thursday.

The scheme supported 102,594 purchases between 1 October 2025 and 30 September 2026. The largest numbers were recorded in Victoria, where 33,413 buyers used it, and New South Wales, with 28,158.

Queensland recorded 20,125 buyers, followed by Western Australia with 11,207, South Australia with 4,495, the ACT with 3,106, Tasmania with 1,588 and the Northern Territory with 502.

The program allows eligible first-home buyers to purchase with a deposit as small as 5 per cent. Housing Australia guarantees part of the loan, meaning participating lenders can offer finance without charging lenders mortgage insurance.

The government expanded the scheme on 1 October 2025 by removing income limits, increasing property price caps and removing the limit on available places.

What the first-year figures show

The government said buyers avoided an estimated $1.4 billion in lenders mortgage insurance during the first year of the expanded program. It calculated that a buyer purchasing a median-priced Australian home with a 5 per cent deposit could save about $23,700.

That saving concerns insurance rather than the purchase price or mortgage balance. Lenders mortgage insurance protects the lender if a borrower defaults and the property sale does not recover the debt. Avoiding the premium reduces the upfront cost, but it does not give the buyer a larger ownership stake.

Housing Australia’s data also indicated that 99 per cent of borrowers were ahead or on track with repayments. Thirteen claims have been paid since the guarantee program began, while participants have taken an average of about two and a half years to move off the scheme.

A borrower generally moves off the guarantee after building enough equity through repayments, property value movements or both. However, individual outcomes will vary according to the loan, purchase price and local market.

More than 280,000 buyers have now received a guarantee since May 2022, the government said. It estimates that about half of first-home buyers currently use a government buyer scheme, although that broader figure can include assistance beyond the 5% Deposit Scheme.

A smaller deposit does not mean a smaller loan

The main benefit is time: eligible buyers may be able to purchase without waiting until they have saved a conventional 20 per cent deposit. That can be significant for households whose savings are being eroded by rent and other living costs.

The trade-off is that a 5 per cent deposit normally leaves the buyer borrowing close to 95 per cent of the property’s value. A larger loan produces higher repayments and more interest than the same purchase made with a larger deposit.

Applicants must still satisfy a participating lender’s credit and serviceability requirements. The government guarantee does not cover repayments, protect the borrower from financial hardship or require a lender to approve an application.

Buyers should therefore compare the benefit of entering sooner with the cost of carrying a larger mortgage. Purchase expenses such as conveyancing, inspections, moving costs and any applicable stamp duty also need to be budgeted separately.

The new figures demonstrate that the expansion has become a major route into ownership rather than a small, capped program. They do not, by themselves, show whether a particular household should buy now or continue saving.

What it means for you

• Eligible first-home buyers may be able to purchase with a 5 per cent deposit without paying lenders mortgage insurance.
• Check repayments at rates above the lender’s current offer before deciding how much to borrow.
• Keep funds aside for inspections, legal work, moving costs and unexpected repairs rather than putting every dollar into the deposit.
• Compare participating lenders because rates, fees and approval criteria can still differ.