Permanent resident? The 5% Deposit Scheme counts you in. Help to Buy waits for citizenship

Permanent residents can buy a first home through the 5% Deposit Scheme, which lets buyers purchase with a deposit of as little as 5 per cent and no lenders mortgage insurance. They cannot use Help to Buy, the government’s shared equity scheme, until they become Australian citizens. Housing Australia runs both, yet the two draw their lines in different places.

The name dates from 1 October 2025, when the old Home Guarantee Scheme was rebranded and lost its income caps and place limits. In the year since, the scheme has supported 102,594 Australians, according to Housing Australia figures released on 1 October by the Housing Minister, Clare O’Neil. The release says one in two first home buyers now use a first home buyer scheme. On the government’s estimate, which assumes median prices and a 5 per cent deposit, buyers avoided A$1.4 billion in mortgage insurance over that year, around A$23,700 on a national median-priced home.

Ten years, and only in Australia

The government’s FAQ puts the residency rule in one line: “The Scheme is only available to Australian Citizens and Permanent Residents.” Other visa types are not covered, and the lender confirms whether a visa counts as permanent residency. Lenders’ own credit rules still apply.

The ownership test looks back a decade. Applicants must be buying their first home, or must not have owned a home or land in Australia in the past 10 years, counted from the sale of the last property to the signing of the new loan. The legal instrument behind the scheme, the Housing Australia Investment Mandate, frames the test around a freehold interest in “real property in Australia”, along with certain leasehold and company title interests in Australian land. Neither the Mandate nor the FAQ mentions property overseas.

Help to Buy’s published criteria do: applicants cannot own or beneficially own property “in Australia or overseas”, with exceptions for some single parents. Its legal instrument, the Help to Buy Program Directions, counts only interests in Australian land as disqualifying. On the published criteria, though, a couple who have become citizens and still own a flat in Pune are ruled out by the flat alone. The 5% scheme’s written test asks only about property here.

The certificate comes first

Under Help to Buy, the government takes an equity share of up to 30 per cent of an existing home or 40 per cent of a new one, and the buyer needs a deposit of at least 2 per cent. There are 10,000 places a year. From 1 July 2026, taxable income on the notice of assessment for the year to 30 June 2026 must be at or below A$103,000 for a single applicant and A$165,000 for joint applicants and single parents. The thresholds are indexed every year, and the scheme cannot be combined with other government loans or guarantees.

For a permanent resident, those tests come second. Every applicant must be a citizen at the time of application, and the scheme’s FAQ says anyone applying for citizenship must wait until their certificate has been issued.

Fewer citizens, more mortgages

At the 2021 Census, 48.3 per cent of people born in India were not Australian citizens, against 11.0 per cent of the whole population. The Census asked only whether each person was a citizen, so that figure does not separate permanent residents from people on temporary visas.

In 2021, homes with someone born in India were more likely to carry a mortgage: 46.3 per cent of occupied private dwellings with at least one India-born occupant were owned with a mortgage, against 35.0 per cent of all occupied private dwellings, and 9.9 per cent were owned outright, against 31.0 per cent. The median monthly repayment in those homes was A$2,167, against A$1,863 across all mortgaged homes.

Price caps under the 5% Deposit Scheme moved in July

The home’s price, and the lender’s valuation of it, must both come in at or below a cap. It is A$1.5 million in Sydney and the NSW regional centres, A$950,000 in Melbourne and Geelong, and A$1 million in Brisbane, the Gold Coast, the Sunshine Coast and the ACT. Perth sits at A$850,000, Adelaide at A$900,000 and Hobart at A$700,000, with lower caps elsewhere in each state.

Two cap settings changed on 1 July 2026, under an amendment the Housing Minister made on 8 May. Darwin’s cap rose from A$600,000 to A$750,000, while the rest of the Northern Territory stayed at A$600,000. The NSW regional centres, until then Illawarra and Newcastle and Lake Macquarie, now also take in Coffs Harbour-Grafton, the Mid North Coast, Richmond-Tweed and the Central Coast, already inside Greater Sydney.

A promise to the lender

The guarantee is made to the lender. It covers the part of the loan above 80 per cent of the home’s value, the level above which lenders commonly charge mortgage insurance, and ends once the balance falls to 80 per cent. On a default, the FAQ says: “The Government backing protects your lender, not you.”

The scheme charges no fee, though stamp duty and legal fees remain the buyer’s. Owners must move in within six months of settlement and stay while the guarantee lasts, or the lender may require mortgage insurance after all. The loan is also bigger. At Melbourne’s A$950,000 cap, a 5 per cent deposit is A$47,500, leaving A$902,500 to borrow, A$142,500 more than with a 20 per cent deposit. Moneysmart, the government’s money guidance site, notes that borrowing less makes a loan cost less, and that saving longer means waiting longer to buy.

Buyers can apply alone or with one other person, such as a partner, friend or relative, and each borrower must meet the rules, residency included.

For a household of permanent residents, the two schemes are separated first by a single document. The 5% Deposit Scheme asks for proof of residency. Help to Buy waits for a citizenship certificate, and its income and ownership tests only matter once that is in hand.