The 5% Deposit Scheme in Melbourne: who qualifies and how it works
Since October 2025, any eligible first home buyer can buy with a 5% deposit and no lenders mortgage insurance. Here is how it works in Victoria.
Published
For many young buyers, the barrier is not the repayment — it is the deposit. The 5% Deposit Scheme removes the need to save 20% or pay lenders mortgage insurance, and since October 2025 it is open to far more people.
How it works
The government guarantees part of your loan to the lender — up to 15% of the property value — so the lender treats a 5% deposit as if it were 20%. You avoid lenders mortgage insurance, which on a large loan can run to tens of thousands of dollars. The guarantee protects the lender, not you: you still owe the full loan, and the lender’s normal credit assessment applies.
Who qualifies
- Australian citizens or permanent residents aged 18 or over
- One or two applicants
- No interest in Australian property in the previous 10 years
- You must live in the property, moving in within six months of settlement
- A deposit of at least 5% and less than 20%
Victorian price caps
| Area | Price cap |
|---|---|
| Melbourne and Geelong | $950,000 |
| Rest of Victoria | $650,000 |
Both the purchase price and the lender’s valuation must be at or below the cap.
Combine it with stamp duty relief
Victorian first home buyers pay no stamp duty on homes up to $600,000 and reduced duty up to $750,000. Between $750,000 and $950,000 you can use the 5% Deposit Scheme but pay full duty — which needs to be in your budget on top of the deposit. Our stamp duty calculator shows the figure.
The trade-off
A 5% deposit means a 95% loan: higher repayments, more interest over the life of the loan and less buffer if prices fall. It is a tool to get in sooner, not a reason to stretch to the cap.
How a broker helps
The scheme runs through participating lenders, and their credit policies differ. We match you with a participating lender whose policy suits your income — including if you are self-employed or recently changed jobs.
Common questions
No. Income caps were removed on 1 October 2025.
No. You must live in the property, moving in within six months of settlement.
$950,000 for Melbourne and Geelong, and $650,000 in the rest of Victoria.
Sources
- Housing Australia — 5% Deposit Scheme eligibility and price caps (rules from 1 October 2025)
- State Revenue Office Victoria — first home buyer duty exemption and concession
General information
This article is general information only. It is not credit assistance, a credit product recommendation or an offer of finance, and it does not take into account your objectives, financial situation or needs. Any application is subject to the lender’s assessment and criteria.
Full licensing, remuneration and complaints information is set out under Licensing & disclosures.
Want this applied to your actual numbers?
Twenty minutes, no charge, no documents required. We will tell you honestly whether we can improve on what you already have.
Keep reading
Rentvesting in Melbourne: does it still work under the new rules?
Rent where you want to live, buy where you can afford. How rentvesting works, what the 2027 negative gearing and CGT changes mean, and what you give up as a first home buyer.
Read the article →Buying at auction in Melbourne: an auctioneer’s guide for buyers
How Victorian auctions work and how to bid well: statements of information, underquoting rules, cooling-off, pre-approval, deposits, bidding tactics and setting your limit.
Read the article →Offset account vs redraw: why the difference matters at tax time
Offset accounts and redraw facilities both save interest, but they are treated very differently for tax. When to use each, and the redraw mistake that costs investors deductions.
Read the article →