Does the Australian Government 5% Deposit Scheme cover new builds?

One of the most useful supports for first home buyers building a new home is the Australian Government 5% Deposit Scheme, and a common question is whether it covers building at all, or only buying an established home. The answer is that it covers new builds in several forms, but the way it applies to land and construction has specific rules worth understanding.

What the scheme is now

On 1 October 2025 the federal Home Guarantee Scheme was renamed the Australian Government 5% Deposit Scheme. It is the same family of support that included the First Home Guarantee, now under a clearer name, and it is administered by Housing Australia. You do not apply to Housing Australia directly, you apply through a participating lender, and there are many on the panel including all the major banks.

The major 2025 changes

The scheme was significantly expanded from 1 October 2025. The Government removed the limit on places, so the number of guarantees is now uncapped, removed the income caps that previously applied, and increased the property price caps under all streams. Together these changes made the scheme far more widely available than it had been, particularly in higher priced markets where the old caps shut many buyers out.

How the scheme works

Under the scheme, an eligible first home buyer can buy with as little as a 5 per cent deposit, or 2 per cent for eligible single parents under the single parent stream. The Government guarantees the gap between your deposit and 20 per cent, up to 15 per cent of the value, which means you avoid Lenders Mortgage Insurance. Importantly, it is a guarantee to your lender, not a cash payment to you, and you own 100 per cent of the home from settlement, the Government holds no stake.

Yes, new builds are covered

The scheme is not limited to established homes. Eligible property types include a new home bought as a house and land package, vacant land bought with a separate contract to build a home, an off the plan home, and an existing residential property. So building a new home is squarely within what the scheme supports for eligible first home buyers.

How it applies to a build

For a build, the key rule is that the combined land price plus build cost must come in under your location price cap, and both the purchase price and the property value must be at or under the cap. You can usually arrange this either as one home loan covering both the land and the build, or as a land loan first and then a separate construction loan, though not every participating lender offers the second option. It is worth checking which structure your chosen lender supports before you commit.

The price caps

The scheme uses property price caps that vary by location, with higher caps in the capital cities and designated regional centres. As part of the October 2025 changes the caps were raised, with the Sydney cap lifted to 1,500,000 dollars, for example, and other locations set at their own levels. Because the caps differ by area and are updated over time, the reliable way to check the cap for a specific suburb is the postcode tool on the Housing Australia website rather than any single figure.

Eligibility basics

Beyond the price cap, the main eligibility points are that applicants must be Australian citizens or permanent residents and at least 18, must be first home buyers who have not owned residential property in Australia in the past 10 years, and must have saved the minimum deposit, 5 per cent, or 2 per cent for eligible single parents. With income caps removed, income is no longer a barrier to the scheme itself, though you still need to meet your lender normal serviceability rules.

Stacking with grants and stamp duty relief

For a new build, the scheme can often be combined with other help. Eligible first home buyers building a new home may also receive the First Home Owner Grant, and stamp duty relief may apply on a new home, both run by the states with their own rules. These are separate from the scheme and from each other, so the total help depends on your state. Note that the 5% Deposit Scheme and the separate Help to Buy shared equity scheme cannot be combined, you choose one pathway.

A note on the construction nuance

If you are using the scheme to build, the land and the build generally need to be set up so the combined value sits under the cap from the outset. You cannot simply buy land under a scheme place and then decide on the build in an open ended way later, the build needs to be lined up so the total can be assessed against the cap. This connects closely with how house and land pre-approval works and with using the grant when you build.

How to apply and get advice

Because you apply through a participating lender rather than Housing Australia, and because the build structure and the caps matter, this is a good area to get advice. A broker can check the cap for your location, confirm your eligibility, and structure the land and build so the scheme applies cleanly, which removes a lot of the guesswork.