Major Changes to Australia's 5% Deposit Scheme: Unlimited Places from October 2025
Key Highlights
- From 1 October 2025, all first home buyers can access the scheme with just a 5% deposit
- No more annual place limits - previously capped at 50,000 places per year
- Income caps removed - previously $125,000 for singles and $200,000 for couples
- Property price caps increased - Sydney rises from $900,000 to $1.5 million
- Expected to save first home buyers $1.5 billion in mortgage insurance in the first year
Game-Changing Expansion for First Home Buyers
The Australian Government has announced a significant expansion of the Home Guarantee Scheme, set to revolutionise the path to homeownership for first home buyers across the nation. Starting from 1 October 2025, the scheme will offer unlimited places with no income restrictions, marking the most substantial improvement to first home buyer support in recent years.
Prime Minister Anthony Albanese announced that the changes would be brought forward by three months from the originally planned January 2026 start date, demonstrating the government's commitment to addressing housing affordability challenges facing Australian families.
What's Changing from October 2025?
1. Unlimited Places Available
The most significant change is the removal of the annual cap on places. Currently, only 50,000 places are available each financial year, creating a competitive environment where many eligible buyers miss out. From October 2025, every eligible first home buyer who has saved a 5% deposit can apply for the scheme.
2. No Income Restrictions
The government is removing income caps entirely. Previously, singles earning more than $125,000 and couples earning more than $200,000 were ineligible. This change recognises that even higher-income earners struggle with housing affordability in today's market, particularly in major cities.
3. Higher Property Price Caps
Property price caps will be significantly increased to reflect current market conditions. For example:
- Sydney: Increasing from $900,000 to $1.5 million
- Melbourne: Increasing to $950,000
- Brisbane: Caps rising to accommodate homes up to $1 million
- Regional areas: Simplified access with higher caps aligned to local markets
4. Simplified Regional Access
The Regional First Home Buyer Guarantee will be merged into the main First Home Guarantee scheme, simplifying the process for regional buyers and ensuring consistent support across all areas of Australia.
How the 5% Deposit Scheme Works
Under the Home Guarantee Scheme, the federal government acts as guarantor for up to 15% of your home loan. This means:
- ✓ You only need a 5% deposit instead of the traditional 20%
- ✓ No Lenders Mortgage Insurance (LMI) required
- ✓ Government guarantees 15% of your loan value
- ✓ Available through over 30 participating lenders
Real-World Savings Examples
The financial benefits of the scheme are substantial. Here are some real examples of how much first home buyers can save:
| Location | Property Price | 5% Deposit | LMI Saved | Time Saved |
|---|---|---|---|---|
| Sydney | $1,500,000 | $75,000 | ~$63,000 | ~12 years |
| Brisbane | $1,000,000 | $50,000 | ~$42,000 | ~10 years |
| Regional VIC | $600,000 | $30,000 | ~$25,000 | ~6 years |
Who Can Access the Scheme?
From October 2025, eligibility criteria will be simplified:
- Must be an Australian citizen or permanent resident
- Must be a first home buyer (haven't owned property in Australia before)
- Must have saved at least a 5% deposit
- Must live in the property as your principal place of residence
- No income limits apply
- Property must be within the price cap for your area
Impact on the Housing Market
The expansion is expected to have significant impacts on the Australian housing market:
- 70,000 first home buyers expected to use the scheme in its first year
- $1.5 billion in mortgage insurance costs avoided in year one
- Increased demand likely in the sub-$1.5 million market segment
- Greater lender competition with more participating banks and credit unions
What Should First Home Buyers Do Now?
While the expanded scheme doesn't start until October 2025, there are steps you can take now:
Action Steps for 2025:
- Continue saving: Work towards that 5% deposit target
- Check current eligibility: The existing scheme with 50,000 places is still available
- Improve your credit score: Ensure you'll qualify for the best interest rates
- Research participating lenders: Over 30 lenders offer the scheme
- Get pre-approval: Understand your borrowing capacity
- Stay informed: Monitor updates as October 2025 approaches
Frequently Asked Questions
Can I access the scheme before October 2025?
Yes, the current Home Guarantee Scheme is still available with 50,000 places per year, but with existing income caps and property price limits.
Do I need to be married or in a relationship to apply?
No, the scheme is available to both singles and couples who meet the eligibility criteria.
Can I buy an investment property with this scheme?
No, the property must be your principal place of residence. Investment properties are not eligible.
What happens if property prices exceed the caps?
You would need to look at properties within the price cap for your area or save a larger deposit for properties above the cap.
Get Expert Mortgage Advice
Navigating the Home Guarantee Scheme and finding the right mortgage can be complex. At RateReviewGuide, we connect you with experienced mortgage brokers who can:
- Assess your eligibility for the expanded scheme
- Compare rates from participating lenders
- Help you understand your borrowing capacity
- Guide you through the application process
- Find the best mortgage solution for your situation
Ready to Start Your Home Buying Journey?
Whether you're planning to use the expanded scheme in October 2025 or want to explore your options now, our AI-powered mortgage assistant and expert broker network are here to help.
Get Started with Our AI AssistantDisclaimer: This article is based on announcements made by the Australian Government regarding changes to the Home Guarantee Scheme effective from 1 October 2025. Details may be subject to change. Always consult with a qualified mortgage broker or financial advisor for personalised advice regarding your specific situation.