Can you use the 5% Deposit Scheme to buy a new or off-the-plan townhouse?
Yes. The Australian Government 5% Deposit Scheme lists off-the-plan townhouses and apartments, house-and-land packages and vacant land with a separate building contract among the properties it covers. Eligible first home buyers can buy with a deposit as low as 5% and no Lenders Mortgage Insurance, but both the purchase price and the lender's valuation must be at or below the price cap for the location. These details come from Housing Australia's First Home Buyers website and its Information Guide dated 1 July 2026, checked on 7 October 2026.
Checked October 2026. Rules, rates and prices change, so confirm anything that matters with the source linked below.
How the scheme works
Housing Australia backs part of your home loan, so a lender can accept a deposit of as little as 5% of the Property Value without charging Lenders Mortgage Insurance (LMI). The backing covers the lender, not you. It is not a cash payment or a deposit, and you remain responsible for all costs and repayments. For the scheme, the pre-agreed limit is up to 15% of the Property Value.
Property Value is the figure your lender assesses when the loan is set up, and it can differ from the contract price. You cannot apply to Housing Australia directly. You apply through a Participating Lender as part of a home loan application, and that lender confirms your eligibility.
From 1 October 2025, the changes to the scheme meant no income caps and no waitlists. Housing Australia's scheme page says single parents and legal guardians can use a minimum 2% deposit, and that route is not covered here.
Browse new townhouses
See the townhouse developments selling now, with bedrooms, prices and completion dates, city by city.
Who is eligible
The Information Guide sets out these tests for first home buyers:
- Citizenship: you, or both of you if applying jointly, must be an Australian citizen or permanent resident at the Home Loan Date, which is the date you sign your loan agreement. Temporary residents do not qualify, and applicants who are only eligible for or awaiting citizenship or a permanent visa do not qualify yet.
- Deposit: at least 5% of the Property Value but less than 20%. If you have 20% or more saved after other costs such as stamp duty and legal fees, your loan is not eligible.
- Property ownership: you must not have held freehold land, a lease of 50 years or more, or a company title interest in Australian land in the 10 years before the Home Loan Date.
- Owner-occupier: you must buy or build a home to live in, not an investment.
- Age and structure: you must be at least 18, and you can apply alone or as two joint borrowers. Loans with three or more borrowers do not qualify.
Price caps by state
Both the purchase price and the Property Value must be at or below the cap. For vacant land with a separate building contract, the combined land price and build cost must be under the cap.
| State or territory | Capital city and regional centres | Rest of state |
|---|---|---|
| New South Wales | $1,500,000 | $800,000 |
| Victoria | $950,000 | $650,000 |
| Queensland | $1,000,000 | $700,000 |
| Western Australia | $850,000 | $600,000 |
| South Australia | $900,000 | $500,000 |
| Tasmania | $700,000 | $550,000 |
| Australian Capital Territory | $1,000,000 (all areas) | Same cap |
| Northern Territory | $750,000 (capital city) | $600,000 |
The regional centres are the NSW Central Coast, Coffs Harbour-Grafton, Illawarra, Mid North Coast, Richmond-Tweed, Newcastle and Lake Macquarie, Geelong in Victoria, and the Gold Coast and Sunshine Coast in Queensland. Housing Australia's postcode search tool shows the cap for a suburb, and it says to check the suburb and postcode with your lender.
Timing rules for off-the-plan and new builds
The scheme uses fixed timeframes that cannot be changed.
| Type of purchase | What the Information Guide requires |
|---|---|
| Off-the-plan apartment or townhouse | Sign the contract of sale before the home loan settlement date. Settlement must be within 90 days of your Home Loan Date. Move in within 6 months of loan settlement. |
| House-and-land package | Have a contract for the land and an eligible building contract in place before loan settlement. |
| Vacant land with a separate building contract | Buy the land by contract of sale, then enter an eligible building contract within 6 months of loan settlement. |
| All new builds | Start building within 12 months of loan settlement, finish within 36 months, and move in within 6 months of the occupancy certificate. |
For build contracts, the builder must be licensed and registered, the contract must carry the relevant insurance, be at arm's length with a fixed price, and not be an owner-builder contract. Several eligibility tests are measured at the Home Loan Date, which for an off-the-plan purchase falls within 90 days before settlement. Ask your lender how that fits a contract signed long before then.
Two worked examples
Perth townhouse at $780,000. Western Australia's capital city cap is $850,000, so the price is under it. If the lender's valuation is also $780,000, the minimum deposit is 5%, or $39,000. A 20% deposit would be $156,000. The loan is up to 95%, or $741,000. Stamp duty and legal costs are extra.
Melbourne townhouse at $910,000. Victoria's capital city cap is $950,000. If the lender values the completed townhouse at $960,000, the Property Value is over the cap and the loan does not qualify, even though the contract price was below it. The purchase price and the Property Value must both be at or below the cap, so the lender's figure decides.
If you are comparing projects, you can browse new townhouses in Melbourne.
After you settle
To keep the benefit, you must meet the ongoing rules. The guide says it stops applying if you stop living there without an exemption, rent the property out, sell it, borrow extra funds against it, repay the loan in full, or if the loan balance falls to 80% or less of the Property Value. If it stops while your balance is above 80% of the Property Value, your lender may charge LMI or other costs under its own policies. Housing Australia also says you cannot use the scheme together with Help to Buy.
Common questions
- Can I use the 5% Deposit Scheme to buy off the plan?
Yes. Off-the-plan apartments and townhouses are listed as eligible, subject to the price cap and timing rules. The contract must be signed before loan settlement, settlement must fall within 90 days of the Home Loan Date, and you move in within six months. Ask your lender how those dates fit your project's settlement estimate.
- Does the scheme replace state grants and stamp duty relief?
No. Housing Australia says benefiting from the scheme does not stop you from using other programs run by the Australian, state or territory governments, and you should check those programs with the relevant organisation. State grants and duty relief have their own price caps and tests, such as those covered in our other state guides.
- Is there an income limit?
Not since 1 October 2025, when the changes to the scheme meant no income caps. You still need to meet the other tests, and your lender applies its own credit policy and loan approval criteria. Being eligible for the scheme does not mean a lender will approve your loan.
- Can I buy with a friend or family member?
Yes, up to two joint borrowers, such as partners, friends or family members. For joint applications, you must meet the eligibility checks based on your combined circumstances, and both of you must be citizens or permanent residents and satisfy the property ownership rule.
- What if the valuation comes in lower than the price?
You may need a larger deposit or your loan amount may be reduced, and the scheme does not protect you from the effect of a lower valuation. If the Property Value assessed by the lender is above the cap, the property is not eligible. Raise this with your lender early for off-the-plan contracts.
Keep reading
- How does finance work when buying off the plan?
- How do deposits and deposit bonds work when buying off the plan?
- How does buying off the plan work, step by step?
- Is stamp duty charged on the land only, or on the townhouse as well?
- What should you check in an off the plan contract?
- NSW First Home Owner (New Homes) Grant: who gets it and how it works
Sources
- Australian Government 5% Deposit Scheme, First Home Buyers (Housing Australia)
- Property price caps, First Home Buyers (Housing Australia)
- 5% Deposit Scheme Information Guide for first home buyers, 1 July 2026, Housing Australia
- 5% Deposit Scheme eligibility checker, First Home Buyers (Housing Australia)
This is general information, not financial, tax or legal advice. Get advice that suits your situation before you buy.