The First Home Guarantee Scheme (5% deposit scheme) is designed to change that. By allowing eligible buyers to secure a home loan with as little as a 5 per cent deposit and avoid costly Lenders Mortgage Insurance, the scheme makes it possible to enter the property market sooner and save tens of thousands along the way.
At WOW Homes, we’ve built our reputation on helping Perth first home buyers take that crucial first step. With expert guidance, affordable home designs, and a clear understanding of the scheme, we make sure our clients don’t just buy a house but build a home that’s right for their future.
What is the First Home Guarantee Scheme?
The First Home Guarantee Scheme, often referred to as the 5% deposit scheme, is a Federal Government initiative designed to make buying your first home more achievable. Traditionally, lenders require a 20% deposit to approve a home loan, which can mean years of saving before you’re able to step into the property market. Under this scheme, eligible first home buyers can secure a home with just a 5% deposit.
One of the biggest advantages is avoiding Lenders Mortgage Insurance (LMI). Normally, LMI is charged when your deposit is below 20%, and it can add tens of thousands of dollars to your overall loan cost. With the First Home Guarantee Scheme, that extra expense is removed, helping you direct your money towards your home loan instead of fees.
How Does the 5% Deposit Scheme Work?
Most banks and lenders traditionally ask for a 20% deposit before approving a home loan. For many first home buyers, this means years of saving while property prices continue to climb. The 5% deposit scheme changes this by allowing you to buy with a much smaller deposit, while still giving your lender the confidence they need to approve your loan.
Here’s the difference in simple terms:
- Traditional path (20% deposit): To buy a $600,000 home in Perth, you would normally need $120,000 upfront. On top of that, if you had less than 20%, you’d also be hit with costly Lenders Mortgage Insurance (LMI).
- Using the First Home Guarantee Scheme (5% deposit): That same $600,000 home would require just a $30,000 deposit. Because the government acts as a guarantor for up to 15% of the property’s value, you won’t have to pay LMI.
The savings are significant. LMI on a $600,000 loan can easily exceed $20,000–$25,000, depending on the lender and loan structure. Not only does the scheme remove this upfront cost, but it also reduces the interest you would have paid if the LMI was added to your loan balance. Over the life of your mortgage, that can mean tens of thousands of dollars saved.
For Perth first home buyers, this could be the difference between renting for another decade and securing a place of your own much sooner. Instead of watching property prices move further out of reach, you can step into the market with a realistic 5% deposit and start building equity straight away.
Who is Eligible for the Scheme?
The First Home Guarantee Scheme (5% deposit scheme) has been designed to support a wide range of Australians looking to buy their first home. To take advantage of it, you’ll need to meet some key eligibility requirements.
First, you must be a first home buyer or someone who hasn’t owned property in Australia for the past 10 years. This includes investment properties and commercial holdings, not just owner-occupied homes.
You also need to be an Australian citizen or permanent resident, and at least 18 years of age at the time you apply. Importantly, the home you purchase must be your primary residence. Buyers are required to move in within six months of settlement and remain as owner-occupiers for as long as the loan is guaranteed.
Applications can be made individually or jointly. This means couples, siblings, or even friends can apply together, provided both applicants meet the eligibility requirements.
From 1 October 2025, the scheme becomes even more accessible. There will be no income caps, no limits on available places, and higher property price caps, opening the door for more people in Perth’s growing housing market to take advantage of the benefits of the expanded scheme.
Property Price Caps Across Australia
The First Home Guarantee Scheme (5% deposit scheme) has property price caps that vary depending on where you buy. These caps ensure the scheme supports affordable housing while giving first home buyers access to a wide range of properties. From 1 October 2025, many of these caps will rise, giving buyers more choice in the market.
Here’s a full breakdown of the updated property price caps:
Location | Current Property Price Cap | Property Price Cap effective 1 October 2025 | Minimum 5% Deposit Required for Upper Price Limit |
NSW – capital city and regional centre | $900,000 | $1,500,000 | $75,000 |
NSW – other | $750,000 | $800,000 | $40,000 |
VIC – capital city and regional centre | $800,000 | $950,000 | $47,500 |
VIC – other | $650,000 | $650,000 | $32,500 |
QLD – capital city and regional centre | $700,000 | $1,000,000 | $50,000 |
QLD – other | $550,000 | $700,000 | $35,000 |
WA – capital city | $600,000 | $850,000 | $42,500 |
WA – other | $450,000 | $600,000 | $30,000 |
SA – capital city | $600,000 | $900,000 | $45,000 |
SA – other | $450,000 | $500,000 | $25,000 |
TAS – capital city | $600,000 | $700,000 | $35,000 |
TAS – other | $450,000 | $550,000 | $27,500 |
ACT | $750,000 | $1,000,000 | $50,000 |
NT | $600,000 | $600,000 | $30,000 |
Jervis Bay Territory and Norfolk Island | $550,000 | $550,000 | $27,500 |
For Perth buyers, this change is particularly significant. The WA capital city cap will rise from $600,000 to $850,000, meaning a 5% deposit of just $42,500 could secure a property at the top of the limit. In regional WA, the cap will increase from $450,000 to $600,000, lowering the deposit hurdle for buyers outside the metro area.
What are the Benefits of the First Home Guarantee Scheme?
The First Home Guarantee Scheme (5% deposit scheme) offers more than just a lower deposit, it’s a pathway that helps first home buyers overcome some of the biggest barriers to entering the market.
The most immediate benefit is faster access to the property market. Instead of waiting years to save the traditional 20% deposit, you can buy with as little as 5%, cutting down your saving time significantly. This is especially important in Perth, where property prices continue to rise and waiting too long could mean missing out.
By lowering the deposit hurdle, the scheme puts home ownership within reach for more Australians, making the idea of buying your first home a realistic short-term goal rather than a distant dream.
Another major advantage is avoiding Lenders Mortgage Insurance (LMI). On a Perth property priced at $600,000, skipping LMI can save you around $20,000–$25,000 upfront, plus the extra interest you would have paid if it was added to your loan. That’s money you can instead put toward your home loan repayments.
Perhaps the most valuable benefit is the ability to stop renting and start investing in your own mortgage sooner. Every repayment goes toward building equity in your home, giving you long-term financial security while freeing you from the rental cycle.
How to Apply for the 5% Deposit Scheme
Applying for the First Home Guarantee Scheme is straightforward, but it must be done through a Participating Lender or a mortgage broker who works with one. You can’t apply directly to Housing Australia, as the guarantee is tied to your home loan application.
Here’s how the process works step by step:
- Check your eligibility – Confirm you meet the key requirements: first home buyer status (or no ownership in the last 10 years), citizenship or permanent residency, and the ability to live in the property as an owner-occupier.
- Speak with a Participating Lender or broker – They will assess your personal circumstances and confirm whether the scheme is available to you.
- Submit your application – Your lender or broker will apply for a place in the scheme on your behalf. Once reserved, your spot is held for 14 days while you complete the rest of your application.
- Provide your documents – These typically include:
- Proof of citizenship or residency (such as your passport or birth certificate)
- Proof of income (your latest ATO Notice of Assessment)
- A signed statutory declaration confirming you meet the scheme’s requirements
- Personal details like Medicare card information or other supporting ID
- Secure your place – Once your documents are submitted and verified, Housing Australia will confirm your guaranteed spot. You then have 90 days to find and sign a contract for a home.
- Find your property – Ensure the home you’re purchasing (or land plus build package with WOW Homes) is within the price caps.
- Loan approval and settlement – Your lender will finalise the loan, and once settlement is complete, you can move into your new home.
From start to finish, the timeline is designed to give first home buyers enough flexibility to find the right home, while ensuring the guarantee is reserved in their name. With the right guidance, many Perth buyers move from pre-approval to settlement in just a few months.
Changes from 1 October 2025
From 1 October 2025, the First Home Guarantee Scheme will undergo some of its most significant updates yet, making it more accessible to a wider group of Australians.
The key changes include:
- No income caps – Previously, singles had to earn under $125,000 and couples under $200,000 to qualify. From October, there are no income limits at all.
- No limits on scheme places – Instead of a set number of spots each year, every eligible first home buyer can now apply.
- Increased property price caps – The caps are rising across the country, giving buyers access to more properties in higher price brackets.
- Regional scheme rolled into the main program – With no limits on places, there’s no longer a need for a separate Regional First Home Guarantee. All buyers are included under the one scheme.
What this means for Perth buyers
For Perth’s first home buyers, these changes open the door wider than ever before. The increase in the WA capital city price cap from $600,000 to $850,000 means you’ll have more choice of homes within reach of the scheme. In regional WA, the jump to $600,000 makes building or buying outside the metro area far more achievable.
Combined with the removal of income caps and place limits, it’s now easier than ever to secure your spot. Instead of competing for a limited allocation, Perth buyers can plan with confidence, knowing the scheme will be available when they’re ready to build or buy.
FAQs About the First Home Guarantee Scheme
How much deposit do I need?
With the scheme, you only need a minimum 5% deposit of the property’s value. For example, if you’re buying a $600,000 home in Perth, your deposit could be as little as $30,000.
Can I apply with someone else?
Yes. You can apply individually or jointly with another person, such as a partner, sibling, or even a friend. Both applicants must meet the eligibility requirements.
Do I have to be a first home buyer?
The scheme is designed for first home buyers, but you may also qualify if you haven’t owned property in Australia for the last 10 years. This includes investment or commercial properties.
What types of properties are eligible?
You can buy a new or existing residential property that you’ll live in as your main residence. If you’re building a new home, such as a house and land package with WOW Homes, both the land and build contract together must stay within the property price caps.
What happens if I move out or refinance?
The guarantee only applies while you live in the property as an owner-occupier. If you move out, rent the property, or refinance with a non-participating lender, the guarantee may end. In some cases, this could mean you’ll need to pay Lenders Mortgage Insurance (LMI) or other additional costs.
Why Choose WOW Homes as Your First Home Builder in Perth?
At WOW Homes, we specialise in helping first home buyers turn the dream of ownership into reality. With years of experience in the Perth market, our team understands the unique challenges buyers face and how the First Home Guarantee Scheme (5% deposit scheme) can make the process easier.
We provide step-by-step guidance, from understanding the scheme and working with participating lenders through to designing and building a home that suits your lifestyle. We take the stress out of navigating finance and paperwork so you can focus on the exciting part, choosing your first home.
Our homes are designed to be affordable, stylish, and tailored for first home buyers, with packages that comfortably sit within the scheme’s property price caps. This means you don’t have to compromise on quality or design to qualify.
As a Perth-based builder, we also bring valuable local knowledge. From finding land in the right location to ensuring your home build fits within the price cap requirements, WOW Homes knows how to make the most of the opportunities available in Western Australia’s housing market.
When you choose WOW Homes, you’re not just building a house — you’re partnering with a team committed to helping you achieve your first home goals, backed by a scheme that makes it possible sooner.
Take the First Step Towards Your New Home
The First Home Guarantee Scheme (5% deposit scheme) is transforming the way Australians enter the property market. By lowering the deposit requirement, removing the need for costly Lenders Mortgage Insurance, and expanding property price caps, the scheme makes home ownership achievable much sooner than saving for the traditional 20% deposit.
For Perth buyers, this means a real chance to stop renting and start investing in your own future. With more options available from October 2025, now is the perfect time to explore how the scheme can work for you.
At WOW Homes, we’re here to guide you through the process every step of the way, from understanding your eligibility to building a home that fits your lifestyle and budget.
Not sure if you’re eligible for the First Home Guarantee Scheme, Family Home Guarantee or other initiatives? Contact WOW Homes today to see how we can help you buy your first home in Perth with as little as a 5% deposit.
Additional Reading
Understanding No Deposit Home Loans for First-Time Buyers
What is a Guarantor Home Loan? Guide for First Home Builders in Perth
How Long Does Finance Approval Take for First Home Builders in WA?