Australia’s New 5% Deposit Home Loan Scheme
- Jasmeet Deogun
- Oct 5
- 2 min read
Updated: Oct 5
From 1 October 2025, the Australian Government will introduce major changes to help first-home buyers enter the property market faster through the 5% Deposit Home Loan Scheme. This scheme allows eligible buyers to purchase a home with just a 5% deposit, while avoiding Lenders Mortgage Insurance (LMI) — saving thousands in upfront costs.
The update expands eligibility, removes income limits and quotas, and increases property price caps across Australia.
What's Changing:
Feature | Before 1 Oct 2025 | From 1 Oct 2025 |
Minimum Deposit | 10–20% (to avoid LMI) | 5% deposit |
Government Guarantee | Up to 15% | Remains 15% |
Income Caps | $125,000 (single) / $200,000 (couple) | Removed |
Places Available | Limited yearly spots | Unlimited |
Property Price Caps | Lower regional limits | Increased nationwide |
Example property caps (from 1 Oct 2025):
NSW – Up to $1.5 million
VIC – Up to $950,000
QLD – Up to $1 million
WA – Up to $850,000
SA – Up to $900,000
Who can Apply?
To qualify for the 5% Deposit Home Loan Scheme, you must:
Be a first-home buyer (or haven’t owned a property in 10 years)
Be an Australian citizen or permanent resident
Be 18 years or older
Live in the property (owner-occupied)
Have at least 5% genuine savings
Meet your lender’s serviceability criteria
Key Benefits
Buy Sooner: No need to wait years to save a 20% deposit.
Save on LMI: Avoid paying up to $30,000 in insurance costs.
No Income Limits: More Australians now qualify.
Higher Property Caps: Access homes that better reflect real market values.
Unlimited Places: No quotas — apply anytime after 1 October 2025.
Things to Keep in Mind
While the new scheme makes home ownership more achievable, borrowers should remain mindful of:
Higher loan balances, as smaller deposits mean larger repayments.
Interest rate changes that can affect affordability.
Ongoing costs like stamp duty, legal fees, and maintenance.
Long-term financial planning, ensuring you borrow within your means.
Final Thoughts
The 5% Deposit Home Loan Scheme, starting 1 October 2025, is one of the biggest steps toward improving home ownership access in Australia. With lower entry barriers and updated property caps, it gives first-home buyers a stronger chance to enter the market sooner.
However, it’s still essential to assess your financial position carefully and seek professional advice before applying.
Written by:
Jasmeet Deogun
Owner - Finance Broker | Meet Financial
Let's get started on our journeys together.