For many Australians, buying a first home can feel out of reach — especially when trying to save a large deposit while managing rising living costs and rent.

But more buyers are now entering the market sooner thanks to the Federal Government’s 5% Deposit Scheme.

According to Housing Australia, more than 300,000 Australians have used the scheme since it launched in 2020, helping thousands of first home buyers secure a property earlier than they expected.

Why More Buyers Are Using the Scheme

The biggest challenge for many first home buyers isn’t necessarily meeting loan repayments — it’s saving the upfront deposit.

Traditionally, buyers aiming to avoid Lenders Mortgage Insurance (LMI) would need a 20% deposit. On a $700,000 property, that’s $140,000 saved before purchase costs.

Under the 5% Deposit Scheme, eligible buyers may be able to purchase with just a 5% deposit without paying LMI.

This significantly reduces the upfront savings required and allows many buyers to enter the market years earlier.

Who Has Been Using the Scheme?

The scheme has been especially popular among younger Australians and essential workers.

Housing Australia reports:

• Around half of participants have been under 30 years old
• About one in five buyers have been key workers such as:
  • Teachers
  • Nurses
  • Emergency services staff

The scheme has become an important pathway into home ownership for Australians who have stable income but struggle to build a large deposit while renting.

What Changed in October 2025?

The Government expanded the scheme in October 2025, making it accessible to a broader group of buyers.

The key updates included:

• Removal of income caps
• Increased property price caps
• Removal of participation limits

These changes mean more Australians may now qualify, including buyers who may not have previously been eligible under earlier rules.

How the 5% Deposit Scheme Works

Eligible first home buyers can purchase a property with a minimum 5% deposit.

Instead of requiring a 20% deposit or charging Lenders Mortgage Insurance, the Federal Government guarantees part of the loan on behalf of the borrower.

This helps reduce upfront costs while still allowing lenders to approve loans with lower deposits.

For buyers, the benefits may include:

• Entering the property market sooner
• Avoiding costly LMI premiums
• Keeping more savings available for emergencies or moving costs
• Building equity earlier instead of continuing to rent

Is the Scheme Right for Everyone?

While the scheme can be extremely helpful, it’s still important to make sure the loan is affordable and properly structured.

Buying with a smaller deposit can mean:

• Higher loan amounts
• Higher repayments
• Greater sensitivity to interest rate changes

That’s why understanding your borrowing capacity, budget, and long-term plans is important before purchasing.

How I Can Help

Navigating government schemes, lender policies, and loan options can feel overwhelming — especially for first home buyers.

I can help you:

• Check your eligibility for the scheme
• Understand your borrowing power
• Compare lender options
• Structure your loan correctly
• Understand upfront costs and repayments
• Create a strategy to buy sooner

If you’re considering buying your first home and want to know whether the 5% Deposit Scheme could work for you, feel free to reach out for a chat.