Big Changes Ahead for First Home Buyers: What the New 5% Deposit Scheme Means
- Haynes Wileman
- Aug 26
- 2 min read
From 1 October 2025, the Federal Government will roll out major changes to the Home Guarantee Scheme, designed to make it easier for first home buyers (FHBs) to enter the property market sooner.
What’s Changing?
No caps on places – previously only 10,000 spots were available each year, but from October, every eligible first home buyer can access the scheme.
No income limits – the previous thresholds of $125,000 for singles and $200,000 for couples have been removed, opening the scheme up to higher-income buyers.
Higher property price caps – in Sydney, the cap will lift from $900,000 to $1.5m, while other capitals also see significant increases (e.g. Brisbane $700k → $1m, Adelaide $600k → $900k, Canberra $750k → $1m).
Regional access simplified – the separate Regional First Home Buyer Guarantee will be folded into the one streamlined First Home Guarantee.
The scheme allows first home buyers to purchase with just a 5% deposit, with the government guaranteeing another 15%. This means buyers can avoid costly Lenders Mortgage Insurance (LMI) — a saving that, in Sydney, can run into the tens of thousands.
What It Means for Sydney Buyers
For first home buyers in the Eastern Suburbs and across Sydney, this is a game-changer. With the new $1.5m cap, the scheme now applies to a far greater share of properties in our area — not just entry-level apartments but also houses and townhomes.
For example, a buyer purchasing at $1.5m could get into the market with a $75,000 deposit (5%), instead of needing $300,000 for a traditional 20% deposit. On top of that, avoiding LMI could save another $50,000+.
Market Impacts
The expansion is expected to:
Increase competition in the sub-$1.5m bracket, with more first home buyers now able to actively participate.
Drive faster decisions at open homes and auctions, as buyers take advantage of the new scheme.
Lift overall market sentiment heading into the end of 2025, particularly if paired with another interest rate cut.
Final Thoughts
For first home buyers, these changes remove some of the biggest barriers to entering the market. For sellers, especially in the $1–1.5m price range, it’s likely to mean stronger buyer demand.
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