For years, the single biggest hurdle to buying a first home in Perth was not the repayments. It was the deposit. Saving 20 per cent of a property’s value, plus Lenders Mortgage Insurance on top, could mean a six-figure target that kept moving as prices rose. The Australian Government 5% Deposit Scheme changes that maths, and a major expansion on 1 October 2025 made it more accessible than ever. Here is how the scheme actually works, what the Perth price caps are, and what it does and does not do for you.
What the 5% deposit scheme is
The scheme, formerly known as the Home Guarantee Scheme and the First Home Guarantee, let us eligible first home buyers purchase a property with a deposit of as little as 5 per cent. Normally, if you borrow more than 80 per cent of a property’s value, your lender requires Lenders Mortgage Insurance (LMI), a premium that protects the lender and can add tens of thousands of dollars to your costs. Under the scheme, the government guarantees up to 15 per cent of the property’s value to your lender. That means the lender treats you as though you had a 20 per cent deposit, so no LMI is charged.
You are not borrowing the guarantee, and it is not a cash payment to you. It is a promise to the lender that fills the gap between your 5 per cent and the 20 per cent threshold. You still take out and repay a normal home loan for the rest.
What changed on 1 October 2025
The expansion that took effect on 1 October 2025 was the most significant since the scheme launched, and it removed the limits that used to lock buyers out.
There are now no income caps. Previously, singles had to earn under $125,000 and couples under $200,000 combined. Those limits have been scrapped entirely, so first home buyers at any income level can apply.
There are now unlimited places. The scheme used to be capped at a set number of guarantees each financial year, and buyers often missed out by being too late in the queue. That cap is gone, so every eligible applicant can access the scheme without competing for a spot.
Property price caps were lifted across the country, and the separate Regional First Home Buyer Guarantee was folded into the one main program. For first home buyers, no LMI, no waitlist, and no income test is a genuinely different starting point than even a year ago.
The Perth and WA price caps
The scheme works within property price caps that reflect local markets, and this is the number Perth buyers most need to know. The cap for Perth and the wider metropolitan area is $850,000, while regional WA is capped at $600,000. The home you buy must be priced at or below the relevant cap for its location, and both the purchase price and the lender’s valuation need to come in under that limit.
For Perth buyers this was a large jump. The metro cap previously sat at $600,000, which excluded a big slice of the market. At $850,000, a far wider range of houses, townhouses, and apartments now qualify. A 5 per cent deposit on a property at the top of the metro cap is $42,500, compared with $170,000 for a traditional 20 per cent deposit on the same home. If your savings have been the bottleneck, our low deposit home loans page walks through how this pathway is structured.
A worked example for Perth
Say you find a Perth townhouse at $720,000. Under the scheme, your minimum deposit is 5 per cent, or $36,000. The government guarantees the slice that takes you up to the 20 per cent mark, so you avoid LMI that could otherwise have cost in the region of $25,000 to $30,000 on a loan that size. Your loan would be around $684,000, which you repay as a standard mortgage.
Compare that with the old approach: a 20 per cent deposit on the same home is $144,000. For most first home buyers, the difference between saving $36,000 and saving $144,000 is the difference between buying now and buying in five years. To see how a 95 per cent loan looks in monthly terms before you commit, run the figures through our loan repayment calculator.
Who is eligible
The scheme is aimed at first home buyers, though it also extends to people who have not owned property in Australia in the past ten years. You generally need to be an Australian citizen or permanent resident, buying the home to live in rather than as an investment, and the property must fall under the relevant price cap. There is also a 2 per cent deposit stream for eligible single parents or legal guardians with at least one dependent, which lowers the bar even further for those families.
Working out whether your income, savings, and target price line up is exactly the kind of thing worth checking early. Our first home buyer home loans page is a good starting point, and a quick conversation can confirm where you stand.
What the scheme does not remove
This is the part that gets glossed over in a lot of the excitement. The scheme reduces your deposit and removes LMI, but it does not change responsible lending rules. Lenders still assess your income, expenses, and ability to service the loan. A smaller deposit also means a larger loan, which means higher monthly repayments and more interest paid over the life of the mortgage.
Because you are borrowing 95 per cent of the value, your repayments are more sensitive to interest rate movements, so it pays to stress test your budget at a rate above today’s level. You should also budget for the other costs of buying, including conveyancing, inspections, and moving, plus a buffer for strata or maintenance if you are buying an apartment or townhouse. Checking your true borrowing capacity first, using our borrowing power calculator, keeps your expectations grounded in what a lender will actually approve.
How it compares with other low deposit options
The scheme is not the only route into the market with a small deposit. WA’s own Keystart home loans offer low deposit lending without LMI for eligible buyers, with their own income and property limits. Buyers with family support might instead consider guarantor or family assist loans, where a relative’s equity is used as additional security. The right choice depends on your income, your deposit, and the type of property you want, which is precisely where tailored advice earns its keep.
Stacking the scheme with WA stamp duty relief
The federal scheme also pairs neatly with WA’s stamp duty changes for first home buyers. With no duty payable on an eligible home up to $600,000, no LMI under the scheme, and a possible $10,000 First Home Owner Grant on a new build, the combined upfront saving can be substantial. Layering these benefits correctly is one of the most valuable things a broker can help you do, because the timing and eligibility of each piece matters.
How a broker makes the scheme work for you
Not every lender participates in the scheme, and not every participating lender assesses applications the same way. As an experienced Perth brokerage with access to a wide panel of lenders, we help you find a participating lender that suits your situation, confirm your eligibility against the price cap and other criteria, and prepare an application that gives you the best chance of a clean approval. Because we are paid by the lender, our guidance costs you nothing.
Take the first step today
The 5 per cent deposit scheme has genuinely lowered the barrier to a first home in Perth, but the smartest buyers still plan carefully. If you want to know whether you qualify, how much you can borrow, and what your repayments would look like, talk to us. Call 0489 082 257 or book a free appointment, and we will help you build a clear, realistic plan to get into your first home sooner.
Frequently Asked Questions
How much deposit do I actually need?
A minimum deposit of 5% of the property’s value is required for eligible first home buyers, while eligible single parents and legal guardians may be able to purchase with as little as 2%. The government guarantees the difference up to 20%, allowing buyers to avoid paying Lenders Mortgage Insurance (LMI).
What is the property price cap in Perth?
The current property price cap is $850,000 for homes located in Perth and the metropolitan area, and $600,000 for properties in regional Western Australia. Both the purchase price and the lender’s valuation must fall within the relevant cap.
Is there still an income limit?
No. Income caps were removed on 1 October 2025, meaning eligible applicants can access the scheme regardless of their income level, provided all other eligibility requirements are met.
Do I have to compete for a place like before?
No. The annual limit on guarantees was removed on 1 October 2025, making the scheme uncapped and available to all eligible buyers rather than operating on a limited allocation basis.
Will my repayments be higher with a 5% deposit?
Yes. A smaller deposit means borrowing more money, which generally results in higher monthly repayments and more interest paid over the life of the loan. Lenders will still assess your ability to comfortably manage the repayments before approving your application.
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We’re Here to Help
Contact our team if you have questions about home loans, refinance/">refinancing, or other lending options. Call us, book a time to speak, or send us an email and we will get back to you.
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info@centrallendingsolutions.com.au
Central Lending Solutions is a Perth-based mortgage brokerage with over 20 years of experience in the finance industry. Our team helps clients compare lenders and navigate the home loan process from enquiry through to approval.
