Australia’s New 5% Deposit Scheme: First Home Buyers to Benefit from October 2025

Let’s be real—buying your first home in Australia has felt a bit like chasing a unicorn. You save, and prices rise. You save more, and they rise again. It’s a cycle that leaves most first-time home buyers wondering if they’ll ever step through a front door that’s actually theirs.

But here’s the plot twist: starting October 2025, the government is introducing a new 5% deposit scheme under the First Home Guarantee. In simple terms, you’ll be able to buy a property with just a 5% deposit—without the sting of Lenders Mortgage Insurance (LMI) chewing through your budget.

For anyone tired of renting, couch-surfing, or living with family longer than planned, this scheme could be your golden ticket to turning “someday” into “settlement day.”

What is the 5% Deposit Scheme for First Home Buyers?

The new 5% deposit scheme (formally part of the First Home Guarantee) lets eligible buyers purchase a property with just a 5% deposit.

Here’s the real kicker: usually, putting down less than 20% means you’re slapped with Lenders Mortgage Insurance (LMI)—which can cost tens of thousands. Under this scheme, the government acts as a guarantor for the remaining 15%, saving you from that financial sting.

You get to buy sooner, with a smaller deposit, and without paying LMI.

When Does the New 5% Deposit Scheme Start?

Mark your calendars: the scheme kicks off in October 2025.

That means if you’re currently renting, saving, or eyeing the market, you have a few months to get your finances in order before applications open.

Who is Eligible for the 5% Deposit Scheme?

The Government hasn’t made it a free-for-all (sadly). There are eligibility rules first home buyers in Australia need to meet:

• Must be a first home buyer (no prior property ownership in Australia).

• Minimum 5% deposit saved.

• Income caps apply (exact thresholds to be confirmed, but similar schemes capped at $125,000 for singles and $200,000 for couples).

• Property price caps vary by city/region (e.g., Sydney vs. regional NSW).

Property Price Caps by State/Region (example template below)

Are There Any Income or Property Price Caps for the Scheme?

Yes, absolutely. These caps are in place to make sure the scheme actually helps those struggling to enter the market—rather than people snapping up million-dollar mansions.

So if you’re dreaming of a beachfront penthouse in Bondi, this scheme won’t be your ticket. But if your heart’s set on a two-bedroom townhouse in the suburbs, you might be in luck.

How Do I Apply for the Scheme as a First Home Buyer?

The process will be straightforward but competitive (spots in similar schemes ran out in weeks). Here’s how to prep:

1. Check eligibility: Make sure you meet the deposit, income, and price cap rules.

2. Talk to a participating lender: The scheme works through specific banks and lenders, not directly with the government.

3. Get pre-approval early: Demand will be huge when October rolls around, so having your paperwork ready gives you a head start.

4. Apply through your lender: They’ll submit your application under the Home Guarantee Scheme.

👉 Tip: Keep an eye on the official NHFIC (National Housing Finance and Investment Corporation) website for updates.

Why This Scheme is a Game-Changer (And Why It Matters to You)

• Less saving stress: A 5% deposit could mean the difference between saving for 3 years versus 10.

• No LMI:That’s thousands (sometimes tens of thousands) saved upfront.

• Regional benefits: The Regional First Home Buyer Guarantee gives extra support to those looking outside metro cities.

And let’s be honest—buying your first home feels less like “mission impossible” and more like “mission finally possible.”

Quick FAQ Recap

Q: What is a 5% deposit home loan in Australia?
A: It’s a government-backed scheme that lets first-time home buyers purchase with just a 5% deposit and no LMI.

Q: When does it start?
A: October 2025.

Q: Who’s eligible?
A: First-home buyers who meet deposit, income, and property price cap requirements.

Q: How do I apply?
A: Through participating lenders once applications open.

Your Key to Unlocking the Front Door

This scheme won’t magically make housing cheap in Australia (if only). But it’s a genuine step towards helping first-time home buyers bridge the gap between dreaming and owning.

If you’re serious about buying, start prepping now—save that 5%, get your paperwork sorted, and stalk the property market like it’s your weekend Netflix binge.

And when October 2025 rolls around, you might just find yourself holding keys instead of rental receipts.

👉 Would you use this scheme to buy your first home? Drop your thoughts in the comments—I’d love to hear your take.

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