First Home Loan Deposit Scheme (FHLDS)
Is Now the
Australian Government 5% Deposit Scheme
Buy Your First Melbourne Home With As Little As a 5% Deposit
If you have been searching for the First Home Loan Deposit Scheme (FHLDS), the scheme still exists in an expanded form, and it has a new name.
The original First Home Loan Deposit Scheme became part of the Home Guarantee Scheme in July 2022. From 1 October 2025, the Home Guarantee Scheme was renamed and expanded as the Australian Government 5% Deposit Scheme.
For eligible first-home buyers, that means you may now be able to:
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Buy with a minimum 5% deposit
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Avoid paying Lenders Mortgage Insurance (LMI)
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Apply without an income cap
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Access the scheme without competing for a limited number of places
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Buy an established home, townhouse, apartment or eligible new property
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Purchase in Melbourne for up to $950,000, subject to the applicable location price cap
But getting access to the scheme is only half the job.
You still need to buy the right property, at the right price, without turning your first-home advantage into an expensive first-home mistake.
What Is the Australian Government 5% Deposit Scheme?
Normally, a buyer purchasing with less than a 20% deposit may be required to pay Lenders Mortgage Insurance (LMI).
Under the Australian Government 5% Deposit Scheme, Housing Australia provides a guarantee to an approved participating lender for part of the loan.
For an eligible first-home buyer, this can allow the lender to provide finance with a deposit starting from 5% of the property's assessed value without requiring LMI.
The Government does not give you the remaining 15% of the purchase price. It does not lend you the deposit, and it does not own part of your property. Instead, the Government guarantee supports the lender, allowing an eligible borrower to obtain a loan at a higher loan-to-value ratio without LMI.
This distinction is important, and not to be confused with the Government's other scheme where they co-own a certain percentage of the property.
Example
If an eligible first-home buyer purchases a property valued at $800,000:
Typical 20% deposit: $160,000
5% deposit: $40,000
Difference: $120,000
So, instead of potentially spending years accumulating the additional deposit, the scheme may allow an eligible buyer to enter the market sooner. You will, however, be borrowing more money. That makes choosing the right property and the right price even more important. And we will explain why later.
What Happened to the First Home Loan Deposit Scheme?
If you have found older articles referring to:
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FHLDS
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First Home Loan Deposit Scheme
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First Home Deposit Scheme
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First Home Guarantee
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Home Guarantee Scheme
They are referring to earlier versions or names of the Government's low-deposit home ownership program.
The current program is the Australian Government 5% Deposit Scheme.
The previous FHLDS initiatives were brought under the Home Guarantee Scheme from 1 July 2022. And this Home Guarantee Scheme was subsequently renamed the Australian Government 5% Deposit Scheme from 1 October 2025.
So if someone is still telling you there are only 10,000 FHLDS places available or quoting the old FHLDS income limits, that information is outdated.
Who Is Eligible for the 5% Deposit Scheme?
For the first-home buyer stream, you generally need to:
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Be at least 18 years old
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Be an Australian citizen or permanent resident
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Have saved a minimum deposit of 5% of the property's assessed value
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Be a first-home buyer, or not have owned property or land in Australia during the previous 10 years
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Purchase an eligible residential property within the applicable price cap
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Buy the property as an owner-occupier
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Meet the lending requirements of a participating lender
You can generally apply individually or jointly with one other eligible person. That person does not necessarily need to be your spouse — eligible buyers may potentially purchase together with a partner, family member or friend, subject to the scheme and lender requirements.
There is no longer an income cap
One of the major changes introduced from October 2025 was the removal of the previous income limits.
There are also now unlimited scheme places and no waiting list for eligible applicants.
Melbourne 5% Deposit Scheme Property Price Cap
Under this scheme, eligible properties must be worth no more than a Price Cap. This Price Cap varies between states and even regions. For properties in Victoria, the current 5% Deposit Scheme price caps are:
Melbourne: $950,000
Geelong: $950,000
Rest of Victoria: $650,000
Both the purchase price and the property's value as assessed by the participating lender must fall within the relevant cap.
That can create an important trap. Real Estate Sales Agents love selling to first home buyers. They are the easiest to be sold to and most ended up overpaying for what the property is worth.
First Home Buying a property for $940,000 does not automatically mean it qualifies simply because the contract price is below $950,000. Your lender still needs to assess the property and confirm that the transaction satisfies the scheme requirements.
What Properties Can You Buy?
The Australian Government 5% Deposit Scheme can potentially be used for a range of residential properties, including:
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Established houses
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Townhouses
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Apartments and units
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New homes
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House-and-land packages
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Eligible off-the-plan purchases
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Vacant land combined with an eligible building contract
The property must satisfy the scheme requirements and remain within the applicable location price cap.
For Melbourne buyers, that creates considerably more choice than simply chasing new estates on the metropolitan fringe.
Depending on your budget, priorities and borrowing capacity, an established property in a proven suburb may sometimes make considerably more sense than a brand-new property marketed specifically to first-home buyers.
New does not automatically mean better.
And a government scheme does not automatically make a property a good investment.
The 5% Deposit Is an Opportunity. Not Permission to Overpay
This is where first-home buyers need to be careful. Having access to a smaller deposit can bring your purchase forward.
But it can also mean:
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Starting with less equity
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Borrowing more
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Paying more interest
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Having less protection if property values fall
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Becoming more sensitive to interest-rate movements
Housing Australia's own information warns that buying with a small deposit increases financial exposure because the buyer is borrowing a larger proportion of the property's value.
So the objective should not simply be: “What can I buy with 5%?”
The better question is: “What should I buy with the borrowing capacity and deposit I have?”
There is a very big difference in mentality.
First Home Buyers Need More Than Finance Approval
A bank assesses whether it is prepared to lend you money. A selling agent represents the seller. The Government scheme helps overcome part of the initial deposit barrier.
None of them is responsible for determining whether the property you are buying is actually a good purchase for you.
That is where an experienced Buyer's Advocate can add another layer of protection.
At Concierge Buyers Advocates, we help Melbourne first-home buyers assess the purchase itself.
That can include:
Property strategy
We help determine what property type, locations and price range make sense for your circumstances rather than simply starting with whatever appears on realestate.com.au.
Property search
We search suitable established, new and off-market opportunities across Melbourne based on your buying brief.
Property assessment
We assess location, land, property condition, layout, planning considerations, surrounding development and other factors that can affect desirability and future resale.
Price and comparable-sales analysis
Before you make an offer, we analyse comparable sales and market conditions to determine what we believe the property is worth.
Negotiation and auction bidding
We negotiate with the selling agent or represent you at auction, removing much of the emotion from the purchase.
Due diligence coordination
We can coordinate with your mortgage broker or lender, conveyancer, building inspector and other professionals involved in the transaction.
One person looking after the buyer
The selling agent works for the vendor. We work for you.
Don't Let a Government Incentive Choose Your Property
Government schemes change. Taxation laws changes. Property market changes.
But the properties remain.
To build wealth for early retirement, your first property should eventually give you a large enough equity for your second home, an investment property, or one of the largest assets (not liability) you ever own.
You might have heard of the mass media screaming problems of Negative Equity arising from
So don't buy something merely because:
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It qualifies for the scheme
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The developer is offering incentives
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The selling agent says it is a great deal
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It fits your maximum borrowing capacity
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Someone on social media says the suburb is about to boom
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You are frightened of missing out
Start with the finding the good Grade A asset. Then determine whether the scheme can help you buy it. Not the other way around.
Buying Your First Home in Melbourne?
Concierge Buyers Advocates has been helping property buyers in Melbourne since 2016.
We combine market research, property analysis and on-the-ground experience to help buyers make faster and more confident purchasing decisions.
For first-home buyers, our job isn't to convince you to buy.
It is to help you identify what is worth buying, and what you should walk away from.
Because while saving thousands of dollars in LMI is useful, avoiding the wrong $900,000 property is considerably more useful, and can help you avoid years of heartaches.
Ready to start?
Tell us:
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Your budget
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Your deposit
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Your preferred Melbourne suburbs
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Your property requirements
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Whether you have finance pre-approval
We'll help you work out the next step.
Australian Government 5% Deposit Scheme FAQs
Is the First Home Loan Deposit Scheme still available?
The original First Home Loan Deposit Scheme is no longer operated under that name. The FHLDS initiatives became part of the Home Guarantee Scheme in July 2022. From 1 October 2025, the Home Guarantee Scheme was renamed the Australian Government 5% Deposit Scheme.
Can I really buy a home with a 5% deposit?
Eligible first-home buyers can potentially purchase with a minimum deposit of 5% of the property's assessed value through a participating lender. Normal lending and serviceability requirements still apply.
Do I have to pay Lenders Mortgage Insurance?
Eligible loans under the Australian Government 5% Deposit Scheme do not require Lenders Mortgage Insurance.
Is there an income limit for the 5% Deposit Scheme?
No. The current Australian Government 5% Deposit Scheme does not have an income cap.
Are places limited?
No. Under the current scheme there are unlimited places for eligible applicants and no waiting list.
What is the maximum property price in Melbourne?
The current price cap for the Australian Government 5% Deposit Scheme in Melbourne is $950,000. Geelong also has a $950,000 cap, while the rest of Victoria generally has a $650,000 cap. Buyers should confirm the applicable cap for the exact property location with their participating lender.
Can I use the scheme to buy an investment property?
No. The first-home buyer stream is intended for owner-occupiers. You need to buy or build the property to live in, and ongoing occupancy requirements apply.
Can I buy an apartment or townhouse?
Yes. Eligible houses, townhouses, apartments, new homes, house-and-land packages, certain off-the-plan properties and eligible land-and-build arrangements can qualify, provided all scheme requirements are satisfied.
Does the 5% Deposit Scheme mean the Government is giving me 15% of the purchase price?
No. The Australian Government does not give the buyer the missing deposit. Housing Australia provides a guarantee to the participating lender for up to part of the property's value. You remain responsible for your home loan and repayments.
Is the 5% Deposit Scheme the same as Help to Buy?
No. They are different programs.
The 5% Deposit Scheme uses a Government guarantee to help eligible buyers obtain a loan with a smaller deposit without LMI.
Help to Buy is a shared-equity program under which the Australian Government can contribute up to 30% towards an eligible existing home or up to 40% towards an eligible new home, with different eligibility requirements.
Can Concierge Buyers Advocates help me apply for the scheme?
Applications for the scheme are handled through participating lenders and their authorised representatives. We can recommend mortgage brokers who can initiate the approval process, while we help you with the property-buying side of the process, identifying your brief, finding the suitable Melbourne properties, analysing value, inspecting, conducting due diligence, negotiating, reduce problems with the purchase process and manage the purchase with the other professionals involved.
Information on this page is general in nature and does not constitute financial, credit, taxation or legal advice. Government scheme eligibility, lending criteria and property price caps can and do change with little warnings. Buyers should confirm their eligibility and current requirements with Housing Australia and an authorised participating lender before entering into a property purchase.