If you’ve been dreaming of buying your first home but feel stuck saving for a big deposit, here’s some exciting news. From 1 October 2025, Housing Australia is introducing changes that will allow eligible first home buyers to purchase a property with just a 5% deposit — and in many cases, without paying Lenders Mortgage Insurance (LMI).
This is part of the First Home Guarantee (previously known as the Home Guarantee Scheme) and it’s designed to make home ownership more achievable for everyday Australians.
Why is this change so important?
Saving a 20% deposit has been one of the biggest hurdles for first home buyers in Australia. With property prices continuing to rise, this update is a game-changer because it:
- Reduces the deposit required – making it easier to buy sooner
- Helps you avoid LMI – saving thousands of dollars in upfront costs
- Removes income caps – more people can now qualify
- Lifts property price caps – giving buyers access to more homes across the market
Who can benefit from the 5% deposit scheme?
This scheme is perfect for:
- First-time buyers who have a small deposit but strong income to service the loan
- Families who want to help their children enter the property market sooner
- Buyers in high-demand markets like Sydney, Melbourne, or Brisbane where saving 20% has been a major roadblock
- Regional buyers who may now find more properties within the new price caps
Pros and cons of buying with a 5% deposit
Benefits:
- Get into the market sooner, before prices rise further
- Save money by avoiding costly LMI premiums
- Access to a wider range of properties due to higher price caps
Things to consider:
- With a 95% loan, your loan-to-value ratio (LVR) is higher, meaning repayments may be larger
- You’ll need to budget carefully for extra costs like stamp duty, legal fees, and moving expenses
- Competition may increase as more buyers become eligible
How to get started
If you’re thinking about taking advantage of the 5% deposit scheme, here’s what you should do now:
- Check your eligibility – the scheme has specific rules around being a first home buyer.
- Get your finances in order – review your savings, income, and expenses.
- Speak to a mortgage broker – we can guide you on the right loan options and lenders participating in the scheme.
- Get pre-approval – so you’re ready to act when you find the right property.
Let’s make your first home a reality
At Myloan Buddy, I help first home buyers navigate their options and secure the right home loan. With these new changes starting 1 October 2025, now is the perfect time to start planning.
📞 Call me today on 0433 533 759
🌐 Visit: www.myloanbuddy.com.au
And don’t keep this news to yourself — share this with your family and friends who may also be looking to buy their first home. This could be the opportunity they’ve been waiting for.
