5% First Home Buyer Deposit Scheme

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Government Brings Forward the 5% First Home Buyer Deposit Scheme

The Federal Government has made a major change that impacts anyone looking to buy property in the next 12 months. The First Home Buyer 5% Deposit Scheme was originally set to begin on 1 January 2026. It will now start in October 2025.

This means eligible buyers will only need a 5% deposit to purchase a home, and they will not need to pay Lenders Mortgage Insurance (LMI). For many Australians, this is the difference between waiting years to save and entering the market now.

How the 5% Deposit Scheme Works

The scheme allows first home buyers to:

• Purchase a property with a deposit as low as 5%
• Avoid paying LMI, saving between $40,000 and $60,000 depending on the property value
• Access higher property price caps than in earlier versions of the scheme

For example:

• Sydney: Property cap up to $1.5 million
• Melbourne: Property cap up to $950,000
• Brisbane: Property cap up to $1 million

This opens opportunities in markets where prices were previously too high for first home buyer schemes.

Example of the Savings

If a buyer wanted to purchase a $1.5 million property in Sydney:

• Standard 20% deposit: $300,000
• With 5% scheme deposit: $75,000
• LMI savings: $40,000 to $60,000

This difference allows buyers to access the market years earlier than if they waited to save a full deposit.

Why the Timing Matters

The timing of this announcement has created both opportunities and challenges:

• Buyers ready in October 2025 benefit immediately
• Those waiting until January 2026 could face higher property prices due to increased demand
• Investors and current buyers may try to purchase before October, anticipating price rises

This change has shifted market expectations. Property demand will likely increase earlier than predicted.

Impact of Interest Rate Cuts

Recent interest rate cuts have already lifted borrowing capacity. With further cuts expected by the end of 2025, borrowing limits will rise again. Combined with the 5% scheme, this will put more buyers into the market with greater purchasing power.

For first home buyers, this is good news if they are ready now. For others, the competition for properties could drive prices higher in the coming months.

Who Benefits Most

The scheme is designed to support first home buyers, but the real winners are:

• Buyers who are ready to purchase in October 2025
• Those with savings already in place for a 5% deposit
• Buyers who want to avoid LMI and use those savings towards their loan or property costs

Those still saving for their deposit might miss out, as price rises between October and January could make properties less affordable.

Risks to Consider

While the scheme provides opportunities, there are risks:

• Rising property prices could cancel out deposit savings
• Limited places in the scheme mean not all buyers will qualify
• Buyers entering with a 5% deposit will have higher loan-to-value ratios, increasing debt risk if interest rates rise again in the future

It is important for first home buyers to weigh both the benefits and risks before committing.

Strategic Opportunities for Buyers

For those considering buying, here are strategies to prepare:

• Have your deposit ready before October 2025
• Speak to your accountant or mortgage broker about borrowing capacity
• Secure pre-approval to move quickly once the scheme begins
• Consider the impact of future price rises when setting your budget

Acting early could help buyers take advantage of the scheme while keeping control of costs.

The Market Outlook

With the scheme brought forward, expect:

• Higher demand from October 2025 onwards
• Price growth in major cities like Sydney, Melbourne, and Brisbane
• Increased competition for properties under the scheme caps
• Stronger investor activity anticipating buyer demand

The government’s decision to bring the scheme forward has shifted property market dynamics for the rest of 2025.

How Nexus Wealth Partners Supports First Home Buyers

Buying your first property is more than finding a home. It involves loan structuring, financial planning, and long-term budgeting. Nexus Wealth Partners helps you by:

• Reviewing borrowing and savings strategies
• Explaining how much deposit you need and how to manage repayments
• Advising on cash flow and budgeting for mortgage costs
• Structuring loans with lenders to achieve long-term savings
• Providing financial guidance so you enter the property market with confidence

We help you prepare not just to buy your home, but to manage it sustainably in the years ahead.

Key Takeaways

• The First Home Buyer 5% Deposit Scheme begins in October 2025, not January 2026
• Buyers only need a 5% deposit and pay no LMI
• Property caps are higher, making more homes eligible across Australia
• Buyers who are ready by October benefit most, while those still saving risk facing higher prices
• Nexus Wealth Partners provides financial advice and lending support to help first home buyers succeed

👉 Nexus Wealth Partners
✅ Mortgage Broker in Beverly Hills
☎️ 0478 666 333
📍 159 Stoney Creek Road Beverly Hills NSW 2209
🌐https://nexuswealth.au/
📅 Weekend & after-hours appointments available!
📅 Booking Link https://calendly.com/ramy-hanna

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