Making Homeownership Possible Sooner with Just 5% Deposits
For many Australians, saving for a home deposit has been the biggest hurdle to buying their first house. But from 1 October 2025, the federal government has introduced major changes to the First Home Buyers Scheme, aiming to make it easier for thousands of people to become homeowners sooner. So, what are the changes, and why do they matter to you?
What’s New in the Scheme?
The income limits have been removed, so the scheme is open to all buyers regardless of how much they earn.
- There are no limits on the number of government guarantees available, meaning anyone eligible can apply at any time.
- The property price caps have been increased to reflect current market prices, letting you consider a wider range of homes.
How the Scheme Works
The government helps you get into your first home by guaranteeing up to 15% of the property’s value. This means you only need to save a minimum of 5% deposit to apply for a home loan. Unlike many loans with small deposits, you won’t have to pay lenders’ mortgage insurance, which can save you thousands.
To put this into context:
- The average home price in Australia is around $844,000, so a 5% deposit is about $42,000. That’s the same amount people had to save as a 20% deposit nearly 20 years ago.
- This cuts down the time it takes to save for a deposit from about 11 years to just 2-3 years.
Step-By-Step: What This Means for You
- Save a minimum 5% deposit of the home’s price.
- Apply for the Home Guarantee Scheme through your lender.
- Your lender assesses your application, and if eligible, the government guarantees part of your loan.
- You get a loan without having to pay for lenders’ mortgage insurance.
- Buy your first home sooner with less money saved upfront.
Why These Changes Matter
- With no income caps and unlimited places, more people across Australia can buy their first home without long waiting times.
- Higher property price caps mean you can afford properties closer to current market values.
- Eliminating mortgage insurance reduces your upfront costs, so you keep more of your savings.
- Overall, the scheme helps people become homeowners much faster than before.
Updated Property Price Caps by Location
| Where You Want to Buy | New Maximum Price |
|---|---|
| Sydney, Newcastle, Lake Macquarie | $1,500,000 |
| Other areas in New South Wales | $800,000 |
| Melbourne, Geelong | $950,000 |
| Other areas in Victoria | $650,000 |
| Brisbane, Gold Coast, Sunshine Coast | $1,000,000 |
| Other areas in Queensland | $700,000 |
| Perth | $850,000 |
| Other areas in Western Australia | $600,000 |
| Adelaide | $900,000 |
| Other areas in South Australia | $500,000 |
| Hobart | $700,000 |
| Other areas in Tasmania | $550,000 |
| Canberra (ACT) | $1,000,000 |
| Northern Territory | $600,000 |
These limits ensure the scheme reflects real house prices in your area.
Who Can’t Use the Scheme?
- Those who are temporary residents without Australian citizenship or permanent residency.
- Anyone who already owns, or has owned, a property in Australia in the last 10 years.
- Buyers looking to buy investment properties (it’s only for people who will live in the home).
- People under 18 years old.
- Those who don’t have at least 5% saved (or 2% for some single parents).
- Loans with three or more borrowers.
- Properties priced above the caps listed above.
Example: Buying a Home in Sydney
James is 32 and has saved $90,000 to buy a home. Previously, with lower price caps and income limits, he would have struggled to find a property or faced higher costs like mortgage insurance.
With the new scheme:
- James can buy a home for $1,000,000 under the scheme with a $50,000 deposit. James will also need to pay $40,000 in stamp duty and his savings will cover this.
- His income no longer limits his eligibility.
- He doesn’t have to wait for a place in the scheme.
- Most importantly, he avoids paying expensive lenders’ mortgage insurance.
This means James can own a property in a good Sydney suburb much sooner and with lower upfront costs.
If you’re thinking about buying your first home, these changes could be the opportunity you’ve been waiting for. Book a call with one of our Mortgage Brokers today to find out how you can take advantage of the new First Home Buyers Scheme.
* The information provided in this blog is general in nature and intended to offer a broad overview of the changes to the First Home Buyers Scheme as of October 2025. It does not take into account your individual circumstances or financial situation. Before making any decisions or applications related to the scheme, it is important to discuss your specific needs with a qualified mortgage broker or financial adviser who can provide personalised advice tailored to you.
