The Federal Government has confirmed that its new First Home Buyer 5% Deposit Scheme will begin in October 2025, ahead of the originally planned 2026 start date.
For many first home buyers who’ve been sitting on the sidelines waiting for a break, this brings new opportunities, and a few things to keep in mind.
In this article, we break down what the scheme is, how it works, and what you need to know if you’re thinking about buying your first home in Perth or anywhere across Australia.
What Is the 5% Deposit Scheme?
The new scheme allows first home buyers to purchase a property with just a 5% deposit without having to pay Lenders Mortgage Insurance (LMI).
Under normal circumstances, lenders typically require a 20% deposit to avoid LMI. With this scheme, the government will act as a guarantor for the remaining 15%, opening the door to home ownership much sooner.
There are no income caps, no limited allocations, and no lottery-style waiting lists. The only cap is on the property price, which is determined based on where the property is. If you’re an eligible first home buyer, you can access the scheme from October 2025.
Key Features at a Glance
- Deposit Required: 5% of the property price
- LMI: Waived (normally adds thousands to upfront costs)
- Available From: October 2025
- Income Caps: None
- Property Price Caps: Based on city averages
Why It’s a Big Deal for First Home Buyers
Saving a full 20% deposit is one of the biggest barriers for young Australians trying to enter the property market. With this scheme, the time it takes to buy a home can shrink from years to months.
In Perth, where prices are still more affordable than the eastern states, this could be a game-changer, especially for buyers wanting to get in before any further price rises.
It’s also worth noting that the scheme doesn’t just stop at the deposit. The government is pairing it with a $10 billion plan to build 100,000 new homes specifically for first home buyers over the next decade.
What to Watch Out For
While the policy opens the door for many, it’s not without its potential drawbacks.
Several economists have pointed out that increasing buyer demand without matching supply could put upward pressure on prices. In other words, more buyers with higher borrowing power might end up bidding against each other, pushing prices higher.
Others have raised concerns about long-term risk. If you buy with only 5% down, there’s less of a buffer if the market dips or interest rates rise.
As always, smart advice and a tailored lending strategy are key.
Getting the Right Loan Structure Matters
Buying with a 5% deposit can work well with the right mortgage setup. For many first home buyers, we’re seeing combinations like:
Variable loans with offset accounts to help manage repayments
Split loans that balance flexibility with certainty
Parental guarantees as an alternative for those not eligible under the scheme
At Strategic Mortgages, we help you map out the right approach whether you’re buying now or preparing to do so when the scheme opens.
Final Thoughts
The early rollout of the First Home Buyer Deposit Scheme will help first home buyers with the deposit. It removes a major barrier to entry, gives buyers more choice, and levels the playing field for those without family support or large savings. That said, it could be seen as more fuel on the fire of rising property prices.
But it’s not one-size-fits-all. The right finance strategy still depends on your income, goals, and the type of property you’re targeting.
If you’re thinking of buying your first home, the smartest move is to plan ahead now so you’re ready when the doors open.
