As of October 1, 2025, the Australian Government has made home ownership significantly more accessible through a major expansion of the Home Guarantee Scheme, now rebranded as the Australian Government 5% Deposit Scheme. For aspiring homeowners across Victoria, particularly in the Donnybrook, Craigieburn, and greater Melbourne regions, this change represents one of the most substantial shifts in first home buyer support in recent years.
At MKJ Conveyancing, we've been closely monitoring these developments and are seeing the impact firsthand. With unlimited places now available and critical barriers removed, more Victorians than ever can step into home ownership with confidence. Here's what you need to know about these game-changing reforms and how they might affect your home buying journey.
What Has Changed? The Key Improvements to the Scheme
The expansion of the Home Guarantee Scheme introduces several transformative changes that directly address the most common barriers facing first home buyers:
Unlimited Places Available: Previously, the scheme operated on a limited quota system, with only a set number of guarantees available each financial year. This often meant eligible buyers missed out simply because places had been filled. From October 1, 2025, every eligible first home buyer can access the scheme with no waiting lists or competitive allocation processes.
Removal of Income Caps: One of the most significant barriers has been eliminated entirely. The previous income thresholds of $125,000 for individuals and $200,000 for joint applicants no longer apply. This means high-earning professionals, including tradespeople, healthcare workers, and other skilled workers who were previously excluded, can now benefit from the scheme.
Increased Property Price Caps: In Victoria, the property price cap has been raised from $800,000 to $950,000. This substantial increase opens up a much broader range of properties across Melbourne's metro areas and regional Victoria, giving buyers access to better-quality homes in more desirable locations.
Simplified Regional Access: The Regional First Home Buyer Guarantee has been merged into the main scheme, creating a single, streamlined process for both metropolitan and regional buyers.
How the 5% Deposit Scheme Works
The mechanics of the scheme remain straightforward but powerful. Eligible first home buyers can purchase a residential property with a deposit as low as 5% of the property value (or just 2% for single parents or legal guardians).
Here's what makes this so valuable: traditionally, buyers need at least a 20% deposit to avoid Lenders Mortgage Insurance (LMI), a non-refundable premium that can cost tens of thousands of dollars. Under the 5% Deposit Scheme, Housing Australia provides a guarantee to participating lenders, eliminating the need for LMI entirely.
For example, on a $750,000 property in Craigieburn or Donnybrook:
Traditional route: You'd need $150,000 (20% deposit) or face LMI costs of $15,000-$30,000 with a smaller deposit
Under the 5% Deposit Scheme: You only need $37,500 (5% deposit) with no LMI costs
This can save buyers between $20,000 and $50,000 in upfront costs, making home ownership achievable years sooner.
Who Is Eligible? Understanding the Requirements
To qualify for the Australian Government 5% Deposit Scheme, you must meet specific criteria relating to your personal circumstances, the property, and your home loan:
Personal Eligibility Requirements:
Be an Australian citizen or permanent resident at the time you sign your home loan agreement
Be at least 18 years of age
Have saved a minimum deposit of 5% of the property value (but less than 20%)
Be a first home buyer OR not have owned property in Australia in the last 10 years
Intend to live in the property as your primary residence (not for investment purposes)
Plan to move into the property within 6 months of settlement or occupancy certificate issuance
Property Requirements:
Must be a residential property (house, townhouse, apartment, or land to build)
Purchase price and property value must be at or below $950,000 in Victoria
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