Saving a 20% deposit is the single biggest hurdle for most first home buyers in Perth, and it is one of the main reasons the first home guarantee scheme exists. This federal initiative lets eligible buyers get into the market with as little as a 5% deposit and no lenders mortgage insurance, which can shave years off the time it takes to buy. It was recently expanded and officially renamed the Australian Government 5% Deposit Scheme, though most buyers still know it by its original name. Below, we walk through how it works, what it means for buyers in Perth and around Western Australia, and how a mortgage broker fits into the process.
What Is the First Home Guarantee Scheme?
This scheme is a federal government initiative, administered by Housing Australia, that helps eligible buyers purchase a home with a smaller deposit than a bank would normally require. Instead of saving the usual 20%, eligible buyers can borrow with as little as a 5% deposit under the General stream, or 2% under the Single Parent stream, without paying lenders mortgage insurance (LMI). The government guarantees the gap to the lender, which is what removes the LMI cost.
As of 1 October 2025, the scheme was expanded and formally renamed the Australian Government 5% Deposit Scheme. The changes removed the previous income caps and the annual cap on the number of places available, and increased the property price caps in most regions, including WA. It is still widely referred to by its original name, so you will see “first home guarantee” and “5% deposit scheme” used interchangeably.
Who Can Apply? Eligibility for WA Buyers
To be eligible, you generally need to:
- Be an Australian citizen or permanent resident, aged 18 or over
- Be a genuine first home buyer, or not have owned property in Australia in the past 10 years
- Intend to live in the property as your principal place of residence
- Take out the loan on a principal and interest basis, not interest-only
- Meet your chosen lender’s own serviceability and credit requirements
There are two entry points into the scheme. The General stream covers most first home buyers and requires a minimum 5% deposit. The Single Parent stream is for eligible single parents or legal guardians with at least one dependent child, and only requires a minimum 2% deposit. Since October 2025, there is no income cap for either stream, and the scheme no longer operates on a limited annual allocation, so eligible WA buyers are not competing for a fixed number of places.
Property Price Caps in Perth and Regional WA
Every property bought under the scheme has to fall under a price cap, and the cap depends on where it is. For Western Australia, the current caps are:
- Perth metro and regional centres: $850,000
- Other WA areas: $600,000
Because suburbs like Fremantle, East Fremantle, Cottesloe and Melville sit within the Perth metropolitan area, properties there fall under the higher metro cap rather than the regional one. Price caps are reviewed periodically and can change, so it is worth confirming the current figure for your specific suburb before you start making offers, rather than relying on a number you read months ago. If you are house-hunting around the western suburbs, a local mortgage broker in Fremantle can confirm exactly which cap applies to your target property.
How a Mortgage Broker Helps You Apply
Not every lender participates in the scheme, and the list of participating lenders changes from time to time. This is where a broker earns their keep: rather than you calling around banks to find out who is currently taking new scheme places and comparing their rates and conditions, a broker checks the current panel of participating lenders on your behalf and matches you to one that suits your situation.
From there, a broker typically handles:
- Confirming which of the currently participating lenders will work for your circumstances and property type
- Preparing your Home Buyer Declaration and supporting documents correctly the first time, so applications are not delayed by avoidable errors
- Sequencing your pre-approval so you have the full 90-day window to find and contract a property before it lapses
- Coordinating the scheme alongside any state grants or other lending you are also relying on
As Western Australia’s Broker of the Year, PPF Mortgage Brokers works with first home buyers across Fremantle, Cottesloe, Melville and East Fremantle every week, and understands both the local property market and which lenders are genuinely competitive on scheme places at any given time. This information is general in nature and does not take into account your personal financial situation. Speak with a broker before acting on anything in this guide.
Using the Scheme Alongside the WA First Home Owner Grant
This federal scheme helps with your deposit. The WA First Home Owner Grant is a separate, state-administered payment currently worth up to $10,000. They are assessed under different rules by different agencies, and eligibility for one does not automatically mean you qualify for the other. Many WA first home buyers end up using both towards the same purchase, but because the criteria differ, it is worth having a broker check your eligibility for each rather than assuming.
Applying for the Scheme: Step by Step
1. Check your eligibility against the citizenship, ownership history and income requirements above.
2. Speak to a mortgage broker or a participating lender. You cannot apply to Housing Australia directly; applications go through a participating lender.
3. Gather your documents, including proof of identity and a completed Home Buyer Declaration.
4. Get pre-approved. Once approved, you have 90 days to find a property and get it under contract.
5. Settle on your new home, with your lender and the government guarantee covering the deposit shortfall instead of LMI.
Common Questions
Is this the same as a guarantor loan?
No. A guarantor loan involves a family member using their own property as security for part of your loan. This is a government guarantee given directly to your lender, not to a person, so you do not need a guarantor to use it.
Which lenders take part in the scheme?
Participation is limited to a panel of approved lenders, and the exact list changes over time as places are reallocated. Rather than relying on an outdated list, ask your broker which lenders are currently accepting scheme applications and how their rates and conditions compare.
Can I use the scheme with the WA First Home Owner Grant?
Potentially, yes. The two programs are assessed separately, the deposit scheme is federal and the grant is state-based, so meeting the criteria for one does not guarantee you meet the other. A broker can check your eligibility for both before you commit to a property.
What happens if I want to refinance after using the scheme?
You can refinance once you no longer need the government guarantee, for example after your equity has grown past the 20% mark or your circumstances change. If you are considering this, our refinance team can walk you through whether it makes sense yet and what it involves.
How much deposit do I actually need to buy in Perth?
Under the scheme, as little as 5% of the purchase price for most buyers, or 2% for eligible single parents, provided the property is under the applicable WA price cap. Outside the scheme, most lenders still expect 20% or will charge LMI on the difference.
Conclusion
The first home guarantee scheme has made it genuinely easier for first home buyers to get into the Perth and WA property market sooner, particularly since the October 2025 changes removed the income caps and lifted the price limits. But eligibility rules, participating lenders and price caps all shift, and getting any one of them wrong can cost you time on a property you are trying to secure. As WA’s Broker of the Year, the team at PPF Mortgage Brokers works through the scheme with first home buyers across Fremantle, Cottesloe, Melville and East Fremantle every week. If you are ready to find out where you stand, get in touch with PPF Mortgage Brokers for a chat about your options.
This article is general information only and does not constitute personal financial advice. It does not take into account your objectives, financial situation or needs. Consider seeking advice from a licensed mortgage broker or financial adviser before making a decision.