Everything You Need to Know About the First Home Buyers Scheme

Buying your first home can feel like standing at the edge of a marathon – you’re eager, hopeful, but that finish line (and deposit) can look miles away. However, the dream isn’t that far-fetched anymore! From 1 October 2025, the Government made it much easier to cross that line with the Home Guarantee Scheme.

Under the new First Home Buyers 5% Deposit Scheme, you can now purchase a home with just a 5% deposit, and still skip the hefty Lenders Mortgage Insurance (LMI).

In this post, we’ll walk you through what’s changed, how the scheme actually works, who’s eligible, and what to keep in mind if you’re planning to buy around Green Valley or nearby suburbs.

What Exactly is the Australian Government 5% Deposit Scheme?

Let’s start with the basics.

The Australian Government 5% Deposit Scheme (officially part of the Home Guarantee Scheme) helps first-time buyers enter the property market without waiting years to save a traditional 20% deposit.

Here’s how it used to work: If you wanted to buy a home worth $800,000, you’d need $160,000 for your deposit. If you had less than 20%, lenders would hit you with Lenders Mortgage Insurance (LMI) – costing anywhere from $25,000 to $42,000 extra. That’s a brutal double penalty for not having enough savings.

This year’s expansion fundamentally reshaped the program:

• Unlimited places – No more waiting lists or missing out
• No income caps – Whether you earn $60,000 or $140,000, you can access it
• Higher price caps – Sydney properties up to $1.5M (up from $900K)
• 5% minimum deposit – Plus government guarantee for up to 15% of property value
• No LMI required – Save $25,000 to $42,000 in upfront insurance costs

Here’s how it works: you contribute 5% from genuine savings. The government provides a guarantee to your lender for up to 15% of the property’s value. Your lender treats it like you’ve put down 20%, so you avoid Lenders Mortgage Insurance entirely.

Here’s an example: Say you’re looking for a house for sale in Green Valley, priced at $750,000? Your $50,000 deposit (6.7%) is enough. Under old rules, you’d need $150,000 or face $25,000+ in LMI costs.

In short, with this scheme, you buy real estate in Green Valley now instead of waiting another three to five years.

Why These Updates are Exciting for Australian Families

The October 2025 version scrapped income limits completely. Previously, strict income caps locked many out; now, whether you earn $50k or $150k, you can apply if you meet the other criteria.

You can apply as an individual or jointly with one other person, say a partner, friend, or sibling. (Parents can’t co-borrow unless they also meet every eligibility rule.)

Moreover, the 5% Deposit Scheme can work alongside most state-level first-home buyer grants and stamp-duty concessions. Each state’s rules differ, but in NSW you can often combine the programs to maximise your help.

The scheme officially kicked off on October 1st, 2025, with expanded eligibility and higher price caps than ever before. This isn’t a minor tweak; it’s a fundamental shift in how Australians can buy their first homes. Learn more about the scheme and its key features on the official website.

So, Who Can Actually Use This Scheme?

One of the best parts about the update is that it’s become much more accessible. To qualify, you’ll generally need to:

• Be a first-home buyer purchasing a property to live in (not an investment).
• Have at least 5% genuine savings.
• Borrow from a participating lender.
• Buy within the relevant price cap for your area.

There’s also a minimum age requirement of 18 years old, but beyond that, the eligibility criteria have opened up considerably compared to previous versions of the program.

You’ll also need to meet standard lending checks, such as income verification, expenses, and credit history. The process still feels just like a regular home loan, except you’re backed by the Government guarantee.

The Application Process – How to Get Started

You can’t apply directly through Housing Australia. You’ll go through participating lenders – which include all major banks and several smaller ones.

Here’s the step-by-step flow:

• Check your eligibility using the online tool on the official site.
• Contact a lender or broker who participates in the scheme.
• Submit your application with citizenship documents and a Statutory Declaration confirming you meet the criteria.
• Receive pre-approval (valid for 90 days) to shop for your first home confidently.
• Time to shortlist and inspect! Focus on owner-occupier streets with good transport, schools, and shops. Always get building and pest inspections for houses; review strata reports for apartments.
• Find your property and let your lender finalise everything with Housing Australia.

You can compare a few lenders while searching, but once you sign a purchase contract, you must stick with one.

What Happens After You Buy?

Your guarantee stays active until:

• Your loan balance drops to 80% or less through regular repayments
• You fully repay or refinance with a non-participating lender
• You sell the home
• You stop living there as your primary residence

IMPORTANT: This scheme is strictly for owner-occupiers. Renting out the property voids your guarantee, potentially requiring you to pay LMI retroactively.

Ready to Take the Next Step?

The October 2025 expansion represents a genuine window of opportunity. Properties within the scheme’s price caps are attracting serious attention from first home buyers who suddenly find themselves able to compete.

At Ray White Green Valley, we’ve been helping first home buyers navigate government schemes for 30 years across Green Valley, Hinchinbrook, and the surrounding Liverpool and Fairfield areas. We understand which properties qualify, can connect you with participating lenders, and know the local market well enough to help you find a property that fits your budget and lifestyle.

No matter if you’re looking for new houses for sale in Ashcroft or somewhere in Bonnyrigg, contact our team today and let’s help you turn your first-home dream into a beautiful reality.