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The 5% Deposit Scheme: How the Australian Government Is Helping First Home Buyer Australia Get Into Their Homes Sooner

  • Writer: George Giannakakis
    George Giannakakis
  • Oct 15
  • 4 min read
Happy young Australian couple celebrating after getting keys to their new home under the 5 percent deposit scheme.

Buying your first home in Australia just became a lot easier.

From 1 October 2025, the Australian Government’s 5% Deposit Scheme will officially expand, making it possible for First Home Buyer Australia to purchase a property with as little as a 5% deposit and no Lenders’ Mortgage Insurance (LMI).


This update could save eligible buyers tens of thousands of dollars and help them enter the market years sooner.




What Is the 5% Deposit Scheme for First Home Buyer Australia?


The Australian Government 5% Deposit Scheme allows first home buyers to secure a mortgage with a deposit as low as 5%, while the government guarantees up to the remaining 15%.

This means you will not need to pay Lenders’ Mortgage Insurance (LMI), a fee usually required when your deposit is under 20%.


It is part of the government’s broader housing affordability plan to help more Australians get into home ownership sooner.

Learn more on the official government website:




What’s Changing from October 2025?


The 5% Deposit Scheme isn’t new, but the 2025 update makes it far more accessible.

Here’s what’s changing:


  • No income caps – higher earners can now qualify.

  • No limits on places – there are no annual quotas or waiting lists.

  • Higher property price caps – to reflect the real cost of housing in each region.

  • Support for single parents – eligible parents can still buy with a 2% deposit.

  • Expanded home types – includes houses, apartments, townhouses, and house and land packages.



In short, more Australians will finally have the chance to buy their first home without the years of saving that used to be required.

Read more on the Prime Minister’s official release:




Who’s Eligible?


To qualify for the 5% Deposit Scheme, you need to meet these basic criteria:


  1. Be an Australian citizen or permanent resident.

  2. Be 18 years or older.

  3. Have saved at least 5% of the home’s purchase price (2% for single parents).

  4. Be a first home buyer (or haven’t owned property in Australia in the last 10 years).

  5. Plan to live in the home (it cannot be an investment).

  6. Apply through a participating lender, including:







How Does It Work?


Here’s a simple breakdown of how the scheme works:


  1. Check your eligibility using the government’s online tools:

    https://firsthomebuyers.gov.au/australian-government-5-percent-deposit-scheme

  2. Talk to a participating lender to discuss pre-approval.

  3. Find an eligible property under the price cap for your region.

  4. Apply for your loan – the lender manages the guarantee with the government.

  5. Settle and move in!



You’ll still need to meet standard lending requirements (like proof of income and credit checks), but the key difference is that the government guarantee removes the need for LMI, which can save you anywhere between $10,000 and $30,000 depending on your loan size.




Property Price Caps by Region


The property price caps vary by location, but they’ve increased significantly from previous years.


  • Adelaide metro: up from $600,000 to $900,000

  • Regional SA: up to $500,000

  • Sydney: up to $1.5 million

  • Melbourne: up to $1.2 million

  • Brisbane: up to $900,000



These higher limits reflect today’s real property prices, helping buyers in major cities and growing regions alike.

Source: 9News Australia




Benefits of the 5% Deposit Scheme


Here’s why the update is such a game changer:


  • You can buy sooner – no more waiting years to save a 20% deposit.

  • No LMI – saving you potentially tens of thousands of dollars.

  • No income limits – available to a much wider group of buyers.

  • Higher property caps – more choice of homes and suburbs.

  • Available nationwide – no regional restrictions.



For many Australians, this scheme will make the difference between renting indefinitely and owning a home this year.




Things to Keep in Mind


While the scheme is an incredible opportunity, there are a few things to be aware of:


  • A smaller deposit means a larger loan, so make sure repayments fit your budget.

  • Interest rates still apply on the full amount you borrow.

  • You’ll still pay stamp duty, legal fees, and ongoing home ownership costs.

  • You must live in the home to remain eligible under the guarantee.



Before applying, speak to your lender or a financial advisor to understand your total costs and obligations.




What This Means for South Australians


For South Australians, especially first home buyers in Adelaide, this expansion is huge.

The $900,000 price cap now covers a wide range of homes across Adelaide’s metro area, not just outer suburbs.

That opens the door for more buyers who previously would have been priced out of the scheme.


At BuildPilot, we’ve already seen a spike in first home buyers wanting to explore house and land packages that fall under the new caps.

If you’re ready to find out what you can afford, we’ll help you compare builders, designs, and land options that work within your 5% deposit.




Next Steps: How to Take Advantage of the Scheme


  1. Visit the official scheme page to confirm your eligibility:

    https://firsthomebuyers.gov.au/australian-government-5-percent-deposit-scheme

  2. Talk to one or more participating lenders:



  3. Connect with BuildPilot to help you:


    • Find the right builder for your budget and design.

    • Compare house and land options that meet the scheme’s limits.

    • Understand total costs and timelines before you commit.






Final Thoughts


The expansion of the 5% Deposit Scheme is one of the most significant housing policy shifts in recent years and a real win for first home buyers across Australia.

It removes the biggest barrier for most people: saving the deposit.


At BuildPilot, we’re here to help you take that next step with confidence.

From choosing land and builder options to comparing designs that fit your budget, our goal is to make your home buying journey clear, affordable, and stress free.




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Disclaimer


This article is intended to provide general information only and should not be taken as financial, legal, or lending advice. BuildPilot is not a financial advisor or mortgage broker and does not provide credit assistance. Eligibility for the 5% Deposit Scheme depends on government criteria and the policies of individual participating lenders. Always seek independent advice from a qualified financial advisor, mortgage broker, or lender before making any property purchase or financial decision.

 
 
 

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