A Boost for First Home Buyers: New 5% Deposit Scheme

For many Australians, saving for a house deposit has long been one of the biggest barriers to home ownership. In an effort to make that first step onto the property ladder more achievable, the Government has announced a major expansion to its existing support scheme for first home buyers.

Under the new initiative, eligible first-time buyers will be able to purchase a home with as little as a 5 per cent deposit, without the need to pay Lenders Mortgage Insurance (LMI) – a cost that typically applies when borrowers have a deposit of less than 20 per cent. Instead, the Government will act as a guarantor for the remaining portion of the deposit, reducing the financial burden on new buyers and helping them enter the market sooner.

What’s Changing?

This updated scheme represents a significant shift from previous versions of the First Home Guarantee. 

Key changes include:

• Higher property price caps, making the scheme more accessible to buyers in metropolitan and regional areas where home prices have risen significantly.
• No limit on the number of participants, removing the cap on available places that previously restricted access.
• No income thresholds, meaning the scheme is open to a broader group of Australians, including middle-income earners who were previously excluded due to salary limits.

These updates are designed to address the affordability challenges many buyers face, especially in markets where prices have outpaced wage growth.

Who Is Eligible?

To qualify, you must be an Australian citizen or permanent resident purchasing your first home. The scheme is available to individuals who have never owned property or land in Australia, or who have not held property ownership in the past 10 years. It is important to note that the scheme is for owner-occupiers only, so investment properties are not eligible.

By removing some of the more restrictive eligibility criteria and increasing the accessibility of the program, the Government aims to accelerate home ownership across the country, particularly among younger Australians and those returning to the market after a long absence.

Why It Matters

This expansion could make a real difference to first home buyers struggling to save a 20 per cent deposit, particularly in areas where rising rents are making it difficult to put money aside. Eliminating the need for Lenders Mortgage Insurance alone can save buyers thousands of dollars and make loan approvals faster and more affordable.

At the same time, the new measures may increase demand in certain parts of the property market, particularly in the entry-level price bracket. If you’re considering buying your first home, it’s worth getting financial advice early to understand how this scheme fits into your broader plan.

Our team can help you determine your eligibility, explain how the guarantee works with your home loan, and guide you through the buying process with confidence. Contact us today on 1800 618 800 or email admin@simmonslivingstone.com.au to get started on your home ownership journey.