Big News For Australian First-Home Buyers: 5% Deposits + No LMI Starting 1 October
Positive news for first-home buyers in Australia with the Prime Minister Albanese’s annoucement
On Monday (25 August 2025), the Australian Government confirmed it is bringing forward its expanded first-home buyer policy so all first-home buyers can purchase with just a 5% deposit and no Lenders Mortgage Insurance (LMI), thanks to a government guarantee on part of the loan. The start date is now 1 October 2025, three months earlier than originally planned.
Summary
What changed? From 1 October 2025, first-home buyers can buy with a 5% deposit and avoid LMI because the government will guarantee a portion of the loan.
Who’s included? The government says the expansion is for all first-home buyers. Industry coverage indicates no income caps, no limit on places and higher property price caps aligned with market prices (final details will be in program rules).
Why it matters: Avoiding LMI can save buyers tens of thousands of dollars and bring timelines forward by years. The government has flagged aggregate LMI savings of around $1.5 billion in the first year.
Note: This is not a cash grant in your bank account. It’s a loan guarantee that removes the need for LMI when you have a 5% deposit.
How the “5% + No LMI” Works
Minimum 5% deposit: You contribute at least 5% of the purchase price.
Government guarantee: The Commonwealth guarantees part of your loan so the bank treats you like a lower-risk borrower, hence no LMI.
You still need to qualify: Normal bank serviceability checks apply (income, expenses, credit, buffers).
Property price caps & rules: The expanded scheme is slated to lift caps to reflect market prices and broaden access; keep an eye on the official program page for final thresholds and lender lists as 1 October approaches.
What This Means For QLD Buyers (Brisbane & Gold Coast)
Faster entry: A 5% deposit on an $800k townhouse is $40,000 instead of $160,000 for a traditional 20% deposit.
LMI savings: LMI on 90–95% LVR loans often runs into five figures, that’s money you keep.
More choice (with caveats): With higher caps and broader eligibility, more homes should be in reach but competition may lift in entry-level segments. Treasury reckons the effect on prices is “very minor”, while some analysts warn of a more noticeable near-term bump.
The government guarantee will enable buyers to get into their first property sooner
Who’s Eligible? (At a Glance)
First-home buyers purchasing a qualifying property.
Must meet standard bank lending criteria.
Program rules (caps/thresholds, property types, citizenship/residency) are set by the Commonwealth and delivered via participating lenders under the Home Guarantee Scheme. Check the official page and lender list as we get closer to 1 October.
Example: What A Buyer Might Save
Purchase price: $750,000
Traditional 20% deposit: $150,000
Under new settings (5%): $37,500 deposit
Indicative LMI saving: Often $15k-$30k+ depending on lender/LVR (varies). Avoided under the guarantee.
(Figures are illustrative only; your lender provides exact numbers.)
Smart Next Steps (So You’re Ready By 1 October)
Get a borrowing assessment now with a broker or your bank, so you know your max budget and repayments.
Tidy your file: Reduce unsecured debts, verify stable income, and prepare ID, payslips, and bank statements.
Target suburbs with real stock coming: Ask us for suburb-level intel in Brisbane/Gold Coast where listings are set to rise.
Have your conveyancer on standby: Fast competition means swift contract reviews.
Be valuation-savvy: In hot pockets, ensure your contract has finance/valuation conditions to protect you if the bank’s valuation comes in short.
Plan the total cost: Deposit + stamp duty + legals + inspections + moving. We’ll map this with you.
Price Caps by City & Region (Effective 1 October 2025)
Brisbane, Gold Coast & Sunshine Coast (QLD): up to $1,000,000
Rest of Queensland: up to $700,000
Sydney & Regional Centre (NSW): up to $1,500,000
Rest of NSW: up to $800,000
Melbourne & Regional Centre (VIC): up to $950,000
Rest of Victoria: up to $650,000
Perth (WA Capital): up to $850,000
Rest of WA: up to $600,000
Adelaide (SA Capital): up to $900,000
Rest of SA: up to $500,000
Hobart (Tasmania Capital): up to $700,000
Rest of Tasmania: up to $550,000
ACT (Canberra): up to $1,000,000
Northern Territory (Darwin): up to $600,000
Jervis Bay & Norfolk Island: up to $550,000
Let’s Turn Your Next Move Into a Powerful Step Forward
This policy shift could bring your first home within reach sooner than you think. If you’d like to understand how it applies to your situation or get ready before the rush in October contact us today. We’ll walk you through your options, suburb opportunities and how to take advantage of this major change.
FAQs
Q: Is this an actual cash grant?
A: No. It’s a government guarantee that removes the need for LMI when you buy with a 5% deposit.
Q: When does it start?
A: 1 October 2025.
Q: Are there income caps or limited places?
A: The government has signalled broader access with higher price caps; industry reporting indicates no income caps and no limit on places under the expansion. Await final program rules from the government/participating lenders.
Q: Could this push up prices?
A: Possibly in the short term especially entry-level stock, so preparation matters.
Q: I’d like to purchase a property on the Gold Coast. Is there a price limit on my first home?
A: Yes, to be eligible the price of the property should not exceed $1,000,000