The First Home Buyer 5% Deposit Scheme Is Changing
From 1 October 2025, the Albanese Government will roll out one of the most significant changes to home ownership in decades - expanding access to the 5% deposit scheme for all first home buyers.
This update is designed to help more Australians overcome one of the biggest barriers to home ownership: saving a deposit. Here’s what you need to know and how it could impact your property journey.
What Is the 5% Deposit Scheme?
The scheme allows eligible buyers to purchase a property with just a 5% deposit, while the government guarantees part of the loan. This means you can:
Avoid paying Lenders Mortgage Insurance (LMI) – often saving tens of thousands of dollars.
Buy sooner instead of waiting years to save a large deposit.
Access more lenders, including smaller and regional banks, who will be supported to offer the scheme.
What’s Changing from October 2025?
Previously, access to the scheme was limited by strict income caps and property price thresholds. From 1 October, the rules change dramatically:
No Income Limits: Previously, anyone earning over $125,000 (or $200,000 as a couple) was ineligible for the scheme. From October 1st, whether you earn $80,000 or $500,000, you’ll be eligible. This opens the door to many households who were previously excluded.
Higher property price caps: In NSW, the property price cap increases from $900,000 to $1.5 million. Similar jumps apply in other states, to bring the caps closer to median house prices. This will allow access to a broader range of property options in more desirable suburbs, hopefully allowing you to purchase where you want to live long-term.
Unlimited places: No more limited quotas – all eligible first home buyers can access the scheme.
What Does This Mean in Real Terms?
The median home price in Australia is $844,000. A 5% deposit is $42,200 - the same size deposit buyers needed for a 20% deposit back in 2002.
A first home buyer in Sydney could now purchase a $1.2 million property with a $60,000 deposit. Under the new scheme, they’d avoid paying around $50,000 more in LMI and potentially cut up to 8 years of deposit-saving time. This makes suburbs that were previously out of reach far more attainable for first home buyers.
Why Timing Matters
This scheme was originally planned to come into effect in January 2026, however, has now been brought forward to October. Whilst the changes are exciting it is going to bring a large influx of buyers to the property market and increased competition. As confidence and borrowing capacity increases with continued rate cuts, property prices may rise quickly, especially in high demand areas. Buyers who move early will have more choice and potentially less bidding pressure.
In these markets, the key is to buy a quality asset fast, and being open to multiple options will increase your chances.
What Should First Home Buyers Do Now?
The scheme represents a generational shift in affordability. For many, this is the first real chance to get into the market without a 15% savings hurdle or paying expensive LMI.
If you’re considering buying:
Start preparing your finances now – reach out to speak with our in-house finance team for an obligation free consultation to work out how much you can borrow
Explore both your “dream” suburbs and alternative areas to maximise your opportunities – check out our Newcastle Property Investment guide for local suburbs recommendations
Find off-market properties – sign up and join our off-market mailing list to be emailed a list of off-market properties each week, avoid the competition of properties already online
Be ready to move quickly when the right property comes up – this may mean getting the expert help onboard, so you don’t miss out on the right opportunity. We tailor our services to suit your needs and budget.
Ready to Take the Next Step?
At Chamberlain Brown, we specialise in making complex property decisions simple. From helping you identify the right suburbs to securing off-market opportunities and negotiating the best deal quickly, we’ll guide you every step of the way.
If you’re a first home buyer who wants to take advantage of the 5% deposit scheme – now is the time to act. Get in touch with our team today to discuss your options and start planning your path to home ownership.
Looking for a Mortgage Broker to help you get your first home loan?
Buying a home or investment property doesn’t need to feel overwhelming. Castle Finance are experts at simplifying the mortgage process, ensuring you have the right loan structure in place so you can focus on the property itself.