Nearly 1,500 properties purchased through Australia's 5% deposit scheme for first home buyers have been converted into investments, according to new data.
The scheme, which guarantees loans for buyers with a 5% deposit, has also been used by hundreds of Australians earning over $300,000 a year.
Scheme details
First-time buyers can borrow up to 95% of a property's value, with the government guaranteeing the loan and waiving lenders' mortgage insurance.
Housing Australia, which administers the program, provided the data in response to a Senate estimates question in June.
From its launch in 2020 until May 2026, the scheme released 1,486 homes because they were converted into investment properties. These conversions are a small fraction of the 208,000 total guarantees issued.
Greens criticism
Barbara Pocock, the Greens' housing spokesperson, said the scheme was intended to help lower-income first home buyers.
"It shouldn't benefit the wealthy and property investors," Pocock said.
Guardian Australia asked Housing Minister Clare O'Neil whether investment purchases undermine the scheme's purpose. A spokesperson said: "When a participant transitions out of the scheme, and the government is no longer guaranteeing their mortgage, the owner is entitled to decide what they do with their home."
If buyers stop living in the property, they are no longer covered by the guarantee and must negotiate with their bank, but are not forced to sell or refinance.
Broker and bank perspectives
Bob Tasevski, a Mortgage Choice broker, said buyers would typically avoid being forced off the guarantee as banks might charge unpaid lenders' mortgage insurance.
"Banks generally wouldn't waive that unless there's a special reason for it," Tasevski said.
NAB's executive for home ownership, Lin Lu, said the bank asks customers to advise if their circumstances change. "When this occurs, we'll work with them to understand their individual situation and discuss the options available to them," Lu said.
The government did not directly answer whether it could rule out more buyers fraudulently renting out properties without notifying lenders. A spokesperson said Housing Australia monitors rental listings, property data, transactions, and address changes to ensure homes remain owner-occupied.
High-income borrowers
Since the scheme was amended in October 2025 to include high-income earners, it has enabled over 5,600 home purchases per month, up from 3,400 the previous year.
New data reveals 155 singles earning over $300,000 and 92 couples earning over $400,000 have used the scheme. The highest-earning recipient was a couple earning over $674,000.
Treasurer Jim Chalmers dismissed criticism of high earners' access, saying: "There are some markets around the country, where people, even on relatively good incomes, have found it difficult to get a toehold in the market."
Financial performance
Participants are in strong financial positions, with 89% ahead on repayments. Since the scheme began, 1,392 of 207,000 guarantees have fallen over 90 days behind, with 436 still in arrears by May.
Of the 45,300 homes bought since expansion to May, only two households were in arrears. The government has paid out on 13 defaults, totaling $604,537.
