Breaking Barriers: How Australia’s 5% Deposit Scheme is Opening Doors for First Home Buyers

The Aussie Lending Lounge by Loans AU

Written by David – CFO, Loans AU

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Introduction

For many Australians, the biggest hurdle to buying a first home isn’t the dream itself—it’s the deposit. The Australian Government has now supercharged its First Home Buyer Guarantee Scheme, allowing eligible buyers to enter the property market with as little as 5% deposit, while avoiding costly Lenders Mortgage Insurance (LMI).

This is a game-changer. From 1 October 2025, the scheme has not only expanded but also introduced higher property price caps and removed income caps altogether. With unlimited places available, more Australians than ever before can take advantage of this opportunity.

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What the 5% Deposit Scheme Means

Traditionally, lenders require a 20% deposit to avoid LMI—a cost that can easily run into tens of thousands of dollars. Under this government-backed initiative:

• Buyers can purchase with just 5% deposit.
• The government acts as a guarantor for up to 15% of the property’s value.
• Eligible buyers can avoid LMI entirely, saving significant upfront costs.
• There are now unlimited places under the scheme.

This means Australians can finally stop waiting to save a full 20% deposit and step into the market sooner.

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Updated Property Price Caps

The scheme now comes with new, higher price limits for properties, allowing first home buyers to target homes in more realistic brackets, especially in high-demand cities.

State	Old Price Limit	New Price Limit
NSW: Capital City & Regional Centre	$900,000	$1,500,000
NSW: Other	$750,000	$800,000
VIC: Capital City & Regional Centre	$800,000	$950,000
VIC: Other	$650,000	$650,000
QLD: Capital City & Other	$700,000	$1,000,000
QLD: Other	$550,000	$700,000
WA: Capital City & Regional Centre	$600,000	$850,000
WA: Other	$450,000	$600,000
SA: Capital City	$600,000	$900,000
SA: Other	$450,000	$500,000
TAS: Capital City	$600,000	$700,000
TAS: Other	$450,000	$550,000
ACT	$750,000	$1,000,000

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Who Can Apply?

The updated scheme is designed for genuine first home buyers with far fewer barriers than before.

Eligibility conditions:

• Must be at least 18 years old.
• Must be an Australian citizen or permanent resident.
• Must be a first-time buyer, or not have owned property in Australia for the past 10 years.
• Must have saved at least 5% deposit.
• The property must be purchased as your principal place of residence (not an investment).
• Property value must be within the new state-based price caps.

No income caps. No limits on places.

This opens the door for thousands more Australians across different income levels to finally buy their first home.

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Why This Matters

This initiative will open doors for countless young Australians, couples, and families who may have been locked out of the market. With the expanded price caps and unlimited participation, even properties in high-demand areas such as Sydney, Melbourne, Brisbane, and Canberra are now accessible under the scheme.

For buyers, this means:

• Entering the market sooner.
• Saving tens of thousands in LMI.
• Having access to a wider range of properties.
• Greater certainty that you can secure a place in the scheme.

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How Loans AU Can Help

At Loans AU, we specialise in guiding first home buyers through this process. From confirming eligibility to helping you secure pre-approval with the right lender, our team ensures you take full advantage of the scheme.

📞 Call us today at 0413-360-888
🌐 Visit us at http://www.loansau.com
💬 Chat with us on WhatsApp here

Let us help you turn your dream of home ownership into reality.

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✅ The Aussie Lending Lounge by Loans AU – keeping you informed, empowered, and ready to own your first home.