If you are a first home buyer in Gippsland, you may be able to buy with a 5 per cent deposit and pay no lenders mortgage insurance, thanks to changes to the federal government’s deposit scheme. That is a big shift from the old 20 per cent rule. It also comes with a catch most national articles gloss over: the price cap that applies in Traralgon, Sale or Warragul is not the same as the one for Melbourne, and getting that wrong can cost you real money. Here is how it actually works where you live, and how the right home loan sits alongside it.
What the 5% Deposit Scheme is
The Australian Government’s 5% Deposit Scheme, administered by Housing Australia, lets eligible first home buyers purchase with as little as a 5 per cent deposit without paying lenders mortgage insurance.
Normally, if you borrow with less than a 20 per cent deposit, your lender charges lenders mortgage insurance, often called LMI. It protects the lender, not you, and on a typical purchase it can run into the tens of thousands of dollars. Under the scheme, the government guarantees the gap between your 5 per cent deposit and the 20 per cent mark, so the lender does not charge LMI. The guarantee is not a cash payment and the government does not take a share of your home.
From 1 October 2025 the scheme was expanded. The old income caps were removed, the annual limit on places was scrapped, and the property price caps were lifted. In practice that means it is now open to far more first home buyers than before, provided you buy within the price cap for your area.
The price cap that applies in Gippsland
This is the part to get right, because it is where buyers in our region trip up.
Victoria has two price caps under the scheme. The higher cap of $950,000 applies only to Melbourne and to Geelong, which is the single Victorian location the government counts as a regional centre. Every other part of regional Victoria, including the whole of Gippsland, sits under the lower cap of $650,000. Those figures come straight from the official property price caps published on the government’s first home buyers site.
So if you are buying in Traralgon, Morwell, Moe, Sale, Bairnsdale, Leongatha or Warragul, the cap you are working to is $650,000, not the $950,000 figure you will see quoted in Melbourne-focused articles. The property’s price and the lender’s valuation both need to come in at or under that cap.
One practical warning. Some suburbs carry more than one postcode, and the cap can differ between them. Before you fall for a particular house, it is worth confirming the exact cap for that postcode using the government’s postcode search tool, or asking us to check it for you. It is a quick step that saves you chasing homes you can’t use the scheme for.
Who is eligible
The core eligibility rules are straightforward. To use the scheme you generally need to:
- Be an Australian citizen or permanent resident, aged 18 or over
- Be a first home buyer, or not have owned property in Australia in the past 10 years
- Buy as an owner-occupier and move in within the required timeframe
- Have a deposit of at least 5 per cent
- Buy within the price cap for your area
- Apply through one of the lenders on the Housing Australia panel
There is no longer an income test, and there is no cap on the number of places, so you do not have to race anyone for a spot. You apply through a participating lender, not directly to Housing Australia, which is one of the things we help you sort out.
What stacks on top in Victoria
The federal scheme is not the only support available, and the real value often comes from combining it with Victorian state concessions.
If you are buying or building a brand new home valued up to $750,000, you may be eligible for the Victorian First Home Owner Grant of $10,000, according to the State Revenue Office. It applies to new or never-occupied homes, not established ones.
On stamp duty, Victorian first home buyers pay no land transfer duty on a home valued up to $600,000, with a sliding concession applying between $600,001 and $750,000, as set out by the SRO. On a purchase at the lower end, that exemption alone can save you tens of thousands.
Stacked together, the 5 per cent deposit scheme, the grant and the stamp duty saving can take a serious chunk out of what you need upfront. Which ones you qualify for depends on your situation and the type of home, so it pays to map them out properly before you start looking.
How we help you pull it together
The scheme rules are clear enough on paper. The harder part is working out which combination applies to you, confirming the cap for the exact home you want, and getting your application through a participating lender cleanly. That is the work we do.
We help first home buyers across Gippsland understand their deposit, check the right price cap for their town, line up the federal scheme with the Victorian grant and stamp duty concessions, and present a strong application. The goal is simple: get you into your first home sooner, without paying for insurance or missing a concession you were entitled to
Let's work out your first home plan
Buying your first home feels like a lot, especially when the rules differ depending on where you buy. It does not have to be overwhelming. A clear conversation early sorts out what you are eligible for and what you need in place.
Let’s have a chat. We will walk you through the scheme, confirm the cap for your town, and map out every grant and concession you can use, so you can start looking with confidence, here in Gippsland.
FAQs
Can I really buy my first home in Gippsland with a 5% deposit?
If you are eligible for the Australian Government’s 5% Deposit Scheme, yes. You can buy with a 5 per cent deposit and pay no lenders mortgage insurance, as long as your purchase is within the price cap for your area and you meet the other eligibility rules.
What is the price cap for the scheme in Gippsland?
Gippsland sits under Victoria’s “other areas” cap of $650,000, not the $950,000 cap that applies only to Melbourne and Geelong. Because some suburbs have more than one postcode with different caps, it is worth confirming the exact cap for your postcode before you commit.
Is there an income limit to use the scheme?
No. From 1 October 2025 the income test was removed, along with the limit on the number of places. As long as you meet the eligibility criteria and buy within the price cap, you can apply.
Can I combine the scheme with the First Home Owner Grant and stamp duty savings?
Often, yes. The federal 5% Deposit Scheme can sit alongside Victorian supports such as the $10,000 First Home Owner Grant for new homes up to $750,000, and the first home buyer stamp duty exemption for homes up to $600,000. Which ones apply depends on your circumstances and the type of home, so it is worth getting them mapped out.
Do I apply to the government directly?
No. You apply through one of the lenders on the Housing Australia panel. We can help you work out which participating lender suits your situation and prepare your application.
