Big News for First Home Buyers: 5% Deposits Coming Sooner

If you’ve been struggling to save for a home deposit, you’ll want to pay attention to this. The Albanese Government has just announced that from 1 October 2025, all first home buyers will be able to buy with a 5% deposit. There will be no caps on places, no income limits and higher property price caps.

This is an expansion of the existing First Home Buyer Guarantee and it’s kicking off three months earlier than planned. It was originally set to start in January 2026.

What’s changing?

Until now, the scheme had strict limits. There were capped numbers, income thresholds and lower property price caps. From October 2025:

• All first home buyers can apply, with no more yearly limits
• No income caps, which means higher earners aren’t locked out
• Property price caps will rise in most areas
• The government will guarantee part of your loan, which means you can avoid costly Lenders Mortgage Insurance (LMI)

What’s the catch?

Nothing’s ever that simple. With lower deposit hurdles, more people will want to buy. That extra demand could push property prices up. You’ll also be borrowing a bigger percentage of your home’s value, which means a higher level of debt to manage.

But here’s the flip side. Waiting until you’ve saved a full 20% deposit could see prices move further out of reach, especially if rates keep easing. As Rod puts it:

“The reality is, if you sit back and wait until you’ve saved a 20% deposit, the market could move ahead of you. With rates starting to ease, we could see property prices climb again, which means the goalposts keep shifting while you’re saving. Sometimes getting in sooner with a smaller deposit is the smarter move.”

The expansion is great news if you’re trying to break into the market. The key will be getting loan-ready now. Banks and lenders will be competing hard for first home buyers come October 2025. If you’ve got your finances sorted early, you’ll be in the best position to move quickly when the doors open.

If you’re a first home buyer wondering what this could mean for you, our Coffs Coast mortgage broker team at North Coast Lending is here to help you cut through the noise. Let’s look at your options, run the numbers and see if 2025 is your year to finally get into the market.

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