New figures reveal thousands of above-cap borrowers accessed the guarantee since income limits were scrapped
The majority of Australian first-home buyers are relying on the federal government's 5% deposit scheme, and one in three new entrants since October earn above the scheme's former income ceiling for higher earners, according to data from Housing Australia.
Economists have warned that the rising number of high-income participants in the first-home guarantee scheme is contributing to higher property prices, by boosting the purchasing power of buyers who would likely have entered the market regardless.
The scheme, introduced under the former Coalition government, allows eligible first-home buyers to borrow up to 95% of a property's value, with the government guaranteeing the loan and waiving the need for lenders' mortgage insurance.
Labor removed the scheme's income caps — previously set at $125,000 for single borrowers and $200,000 for joint borrowers — last year, delivering on a pre-election commitment.
Figures from Housing Australia also show the scheme supported 15,924 single-borrower loans and 23,790 joint-borrower loans between 1 October, when the caps were lifted, and 30 April.
Of the 39,704 government-backed loans issued in that period, 13,979 went to borrowers who would have exceeded the former caps — 6,812 single borrowers earning above $125,000 and 7,167 joint borrowers earning a combined income above $200,000.
At the higher end of the income scale, close to 1,000 single applicants earning $200,000 or more, and 1,251 couples with combined earnings of $275,000 or above, secured a government-backed loan with a 5% deposit.
Amy Auster (pictured right), chief executive of Policy Institute Australia, said scrapping the caps had redirected support towards borrowers already in stronger financial positions.
“Government support traditionally goes to the people who need it the most,” Auster pointed out. “There's been an ongoing expansion of efforts to financially support first home buyers, and I understand why, but in the end it hasn't solved the problem.”
For independent economist Saul Eslake (pictured right), the scheme was likely being used by many buyers who would have purchased property regardless, while increasing their overall borrowing.
“The way it was expanded by Albanese goes to the heart of why we have the housing problems that we have,” he said. “Whenever governments do things that allow people to spend more on housing than they would have otherwise, they end up spending more on housing.”
Under standard lending rules, a borrower with $50,000 in savings would typically be limited to a $200,000 loan if a 20% deposit were required. Under the government's 5% deposit scheme, the same borrower could access financing of up to $1 million.
Property prices have risen sharply since the scheme's expansion. Labor increased the relevant price caps substantially, lifting eligibility thresholds to $1.5 million for homes in Sydney and other major NSW cities, $1 million in south-east Queensland, $950,000 in Melbourne and Geelong, $850,000 in Perth, $900,000 in Adelaide and $700,000 in Hobart, with adjusted thresholds for regional areas.
According to Cotality data, homes priced below these thresholds recorded slower price growth than homes above them in early 2025, but growth accelerated sharply once the scheme's caps were widened.
While Labor has presented the scheme as a means of lowering deposit barriers and increasing home ownership, the data suggests most participants were already active first-home buyers who simply switched to using the guarantee.
Government-backed 5% deposit loans averaged 5,670 per month between October and April. By comparison, Australian Bureau of Statistics figures show first-home buyers overall took out an average of 10,181 loans per month across the same period, from October to March.
That figure represents an increase of less than 3% on the preceding six months, when the monthly average stood at 9,900, indicating the scheme has had limited impact on overall home ownership rates to date. First-home buyer activity has since declined as the broader housing market moves into a downturn.
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