Coalition to Block Permanent Residents from 5% Deposit Scheme — What Migrants Need to Know

Coalition to Block Permanent Residents from 5% Deposit Scheme — What Migrants Need to Know

The Coalition has pledged to restrict the federal government's 5% deposit scheme exclusively to Australian citizens if it wins the upcoming federal election, effectively shutting out permanent residents who currently benefit from the program. The announcement, reported by The Adviser on 16 April 2026, marks a significant policy shift that could reshape home loan access for hundreds of thousands of migrants.

What Is the 5% Deposit Scheme?

The Home Guarantee Scheme — which includes the First Home Guarantee — allows eligible buyers to purchase a home with as little as a 5% deposit without paying Lenders Mortgage Insurance. The federal government guarantees the remaining portion of the loan. Under current Labor policy, both Australian citizens and permanent residents are eligible.

The Coalition's proposed change would remove permanent residents from eligibility, affecting:

• New permanent residents who have not yet obtained citizenship
• Skilled migrants on permanent visas (subclass 189, 190, 491 permanent)
• Partner visa holders with permanent resident status
• Chinese and other migrant communities who often take several years to apply for citizenship

Why This Matters for Migrant Borrowers

For many permanent residents, the 5% deposit scheme was a critical pathway into homeownership at a time when property prices in Melbourne, Sydney, and Brisbane remain elevated. Without access to the scheme, they face two immediate challenges:

1. A larger deposit requirement: Most lenders require a 20% deposit to avoid LMI, or at minimum 10-15% with LMI added on top.
2. Narrower lender options: Major banks have rigid criteria around residency and deposit size; non-bank lenders offer more flexibility.

What Are the Alternatives?

For permanent residents who may no longer qualify under a Coalition government, the options include:

Non-bank lenders like MPFG Capital assess applications based on the full picture — serviceability, property value, and genuine savings — rather than simply whether a borrower holds citizenship. Our MPFG Priz and MPFG Bright products are available to permanent residents and can be structured to work with deposits from 10%.

The Broader Policy Context

This announcement comes amid ongoing debate about housing affordability. Critics argue excluding permanent residents will reduce demand and help prices, while housing advocates warn it deepens inequality and penalises those who have made Australia their home. The Property Council and housing researchers have flagged the move could create a two-tier housing market.

With the federal election approaching, borrowers in the permanent resident category should not wait to see which policy prevails — preparing finances and understanding non-bank alternatives now puts you in the strongest position regardless of the outcome.

Key Takeaway

If you are a permanent resident planning to purchase property in 2026, understand that your access to the 5% deposit scheme may change with a change of government. Speaking with a specialist non-bank lender now ensures you know your full range of options and are not caught off-guard by any policy shift.

This article is general information only and does not constitute financial advice. MPFG Capital holds ACL 553698. Lending criteria, terms, and conditions apply.