Your situation
The other conditions
Caps are as published by Housing Australia for the scheme year from 1 July 2026; check the current table at housingaustralia.gov.au before relying on one. Regional centres in NSW are Newcastle and Lake Macquarie and the Illawarra; in Queensland the Gold Coast and Sunshine Coast; in Victoria, Geelong. LMI figures are indicative mid-points, from the deposit and LMI calculator.
What the guarantee does
Housing Australia guarantees the lender for the part of the loan above 80 per cent of the value, up to 15 per cent. The lender treats the loan as though you had a 20 per cent deposit, so no lenders mortgage insurance is charged and the rate is usually the lender's normal owner-occupier rate. You still borrow 95 per cent; the guarantee is for the lender, not a grant to you, and nothing is repaid to the government.
No income test, no place limit. Both were removed on 1 October 2025. The conditions that remain are the ones in the list above, plus the price cap. Friends, siblings or other pairs can apply together; both must meet the conditions.
Single parents and guardians. The same scheme has a 2 per cent deposit stream for eligible single parents and single legal guardians with a dependent child, who need not be first home buyers. The conditions differ slightly; ask.
Serviceability still applies. Being eligible for the guarantee does not mean a lender will lend. Income, expenses and the assessment rate decide the loan size exactly as usual; the borrowing capacity calculator shows where that lands, and the stamp duty calculator the state concessions that sit alongside the scheme.
Where it fits against the alternatives
Against saving to 20 per cent. On a $750,000 purchase the difference between a 5 and a 20 per cent deposit is $112,500. For many buyers that is years, during which prices and rents move; the scheme trades a larger loan and higher repayments for being in sooner. Neither is right for everyone.
Against a guarantor. A guarantor achieves the same LMI outcome with no price cap and no first-home condition, at the cost of a parent's property being involved. Some buyers use both: the scheme for the purchase and a guarantor for a later upgrade.
Against Help to Buy. The shared-equity scheme reduces the loan rather than the deposit, with the government holding a share of the property. It has income caps and cannot be combined with the 5% Deposit Scheme.
Understanding which cap applies to the suburbs you are actually looking at, before the search starts, is what makes the scheme useful rather than a disappointment at contract stage.