If you're buying a home in NSW, the rules around government deposit support changed materially on 1 October 2025. The old First Home Guarantee, Regional First Home Buyer Guarantee, and Family Home Guarantee were folded into a single program called the Australian Government 5% Deposit Scheme. Income caps are gone, the annual place limits are gone, and the property price caps were lifted — for NSW, that's now $1.5 million in Greater Sydney plus the Newcastle/Lake Macquarie and Illawarra regions, and $800,000 across the rest of the state.
I'm Kyle Manson — I run CFC Finance out of Parramatta and I've spent a lot of time over the past few months walking clients through what this reshuffle actually means in practice. Below is a plain-English summary of where federal and NSW policy now sit, how they interact, and the questions I get asked most often.
Key Takeaways
- The Australian Government 5% Deposit Scheme replaced the older guarantee schemes on 1 October 2025.
- No income caps and no annual place limits — eligible buyers can apply any time of year.
- NSW price caps: $1.5M in Sydney and regional centres (Newcastle/Lake Macquarie, Illawarra), $800,000 elsewhere in NSW.
- NSW first home buyer stamp duty: full exemption up to $800,000, partial concession up to $1,000,000.
- Help to Buy (federal shared-equity scheme) runs alongside, with its own income and price caps.
- Policy settings change with budget cycles, so it's worth checking what currently applies before you lodge.
How the Australian Government 5% Deposit Scheme Works
The 5% Deposit Scheme lets eligible buyers purchase a home with a 5% deposit and avoid Lenders Mortgage Insurance, because the government underwrites the portion of the loan above 80% LVR. That's the headline benefit. The shift on 1 October 2025 was that the cap, place, and income restrictions that used to slow people down were largely removed, which has opened the scheme up to a much broader group of buyers in NSW.
To give you a sense of the scale: under the older First Home Guarantee, a buyer purchasing a $650,000 home in the Hills District with a 5% deposit could save a substantial amount in LMI — often in the order of $20,000 to $25,000, depending on the lender. That mechanic is unchanged. What's changed is how many people can access it and across what price points.
I'd recommend confirming current eligibility with me or directly with Housing Australia before you commit to a property, because lender-side policy still applies on top of the scheme rules.
Stamp Duty Concessions in NSW
NSW continues to offer stamp duty concessions for first home buyers. As a general guide:
- Full exemption on properties up to $800,000
- Partial concession on properties between $800,000 and $1,000,000
- Standard stamp duty applies above $1,000,000
For an $800,000 purchase, the saving is typically in the range of $31,000, which is money you can redirect toward your deposit rather than transaction costs. That has a flow-on effect on your loan-to-value ratio, your serviceability buffer, and the lender options open to you.
A quick illustration: if you have $80,000 saved and you're buying at $750,000 in the Illawarra, the duty exemption means that full $80,000 can be applied to the deposit instead of being split between deposit and duty. The numbers shift depending on lender LMI policy, but the principle is the same — the concession works with the 5% Deposit Scheme, not against it.
NSW Revenue publishes the current thresholds and eligibility criteria, and they do shift from time to time, so it's worth checking before you sign a contract.
Shared Equity — The Federal Help to Buy Scheme
Shared equity is where the government takes a percentage ownership stake in your home so you can borrow less. The current national program is Help to Buy, expanded in the 2025 federal budget. In broad terms:
- The government can contribute up to 40% of the purchase price for a new home or 30% for an existing home.
- Income caps apply (around $100,000 for singles and $160,000 for couples — confirm current figures before applying).
- Property price caps apply on a state-by-state basis.
- You retain full occupancy rights; the government's share grows or shrinks with the property's value.
The interaction with your loan is the part most people want to understand: if the government takes a 30% share of a $700,000 purchase, you're financing the remaining $490,000 (plus your deposit), which keeps your repayments lower. The trade-off is sharing future capital gains — if the property grows to $900,000, the government's 30% becomes $270,000, not the original $210,000. That's worth thinking through carefully before signing on.
NSW previously ran its own shared-equity program; eligibility and availability of any state-level shared equity has changed in recent years, so I'd check the current position with me before assuming you can stack state and federal schemes.
Regional NSW — What Changed on 1 October 2025
The old Regional First Home Buyer Guarantee is gone as a separate program. It's been absorbed into the 5% Deposit Scheme, which is good news for regional buyers because the price cap in the recognised regional centres of Newcastle/Lake Macquarie and the Illawarra is now the same $1.5 million as Greater Sydney. Across the rest of regional NSW, the cap sits at $800,000.
What that means in practice: if you're buying in places like Bathurst, the Hunter Valley, the Central Coast, or Wollongong, the policy framework is more workable than it used to be. The scheme still interacts with each lender's serviceability rules, so the loan you can actually settle depends on both — the government cap and the lender's view of your income and expenses.
If you're weighing up a move outside Sydney's commuter belt, this is one of the things I'd most recommend modelling carefully, because lender appetite varies considerably outside the metro.
Fixed vs Variable When You're Using a 5% Deposit
There's no rule that says a 5% Deposit Scheme loan has to be fixed or variable — that's a structure decision based on your circumstances. Two patterns I see often:
- Fixed for 2–3 years while you build equity, then review. Predictable repayments while your LVR is high.
- Split loans — part fixed, part variable — so you can keep an offset account active on the variable portion while locking in certainty on the rest.
Either way, the loan structure isn't set and forget. Once your LVR drops below 80%, you have more refinancing options, including products with offset accounts, redraw, and different rate tiers. Planning that progression in advance is a useful conversation to have early, even if you don't act on it for a year or two.
Frequently Asked Questions
What's the new Australian Government 5% Deposit Scheme called and when did it start? The scheme started on 1 October 2025 and consolidates the previous First Home Guarantee, Regional First Home Buyer Guarantee, and Family Home Guarantee into a single program administered by Housing Australia.
Are there still income caps? No. Income caps were removed as part of the 1 October 2025 changes.
Are there still annual place limits? No. The 35,000 / 10,000 / 5,000 place limits were removed — eligible buyers can apply any time of year.
What are the NSW property price caps? $1.5 million in Greater Sydney and the regional centres of Newcastle/Lake Macquarie and Illawarra; $800,000 in the rest of NSW.
Can I use the 5% Deposit Scheme and the NSW stamp duty concession together? Generally yes, if you meet the eligibility for both. The two are separate programs (one federal, one state) and they're designed to work alongside each other.
Can I use Help to Buy and the 5% Deposit Scheme at the same time? They're separate programs with different eligibility rules. I'd walk through which one (or which combination) fits your situation before you apply.
Ready to Talk Through Your Situation?
Policy settings in this area move with budget cycles and ministerial decisions, so the right answer for you depends on what's current at the time you apply and on the lender's view of your income, deposit, and the property. That's the part I'm here for.
Book a quick chat with me(opens in new window) and I'll walk you through which current scheme fits your numbers, what your borrowing capacity looks like, and what to have ready before you start your search. If you'd prefer, you can also reach out to our team(opens in new window) and we'll come back to you the same business day.
General Information Only
This article is general information only and does not take into account your personal objectives, financial situation or needs. It is not legal, tax or financial product advice. Before acting on any of the above, consider whether it's appropriate for your circumstances and seek advice from a qualified professional where relevant. CFC Finance — Manson Solutions Pty Ltd ABN 33 633 819 271, Credit Representative 505383 authorised under Australian Credit Licence 390094.
Last updated: 26 May 2026.
Frequently Asked Questions
Does the First Home Guarantee remove the need for Lenders Mortgage Insurance?
Yes, the First Home Guarantee allows eligible buyers to borrow up to 95% of the property value without paying LMI. The government underwrites the lender's risk on the portion of the loan above 80% LVR, removing the insurance cost entirely.
How does the NSW stamp duty exemption affect my borrowing capacity?
The stamp duty exemption for first home buyers on properties up to $800,000 means you can apply your full savings as a deposit rather than splitting it between deposit and duty. This can lower your loan to value ratio and improve your borrowing position with lenders.
What happens to my equity if I use the Shared Equity Home Buyer Helper scheme?
The NSW government takes an equity share of up to 40% for new homes or 30% for existing homes and receives that percentage of any capital gain or loss when you sell or buy them out. If your property value increases, the government's share increases proportionally.
Can I refinance a loan that used the First Home Guarantee?
Yes, you can refinance once your loan to value ratio drops below 80% without needing the guarantee or paying LMI. Many buyers use the guarantee initially, build equity, then refinance to access more flexible loan features or lower rates.
Do regional NSW buyers have access to different government schemes?
Yes, regional buyers can access schemes with different price caps and less competition for allocations compared to Greater Sydney. Some programs offer specific incentives for purchases outside metropolitan areas, which can affect your deposit requirements and loan structure.
