From 1 October 2025, the Albanese Government will introduce major changes to first home buyer support through an expanded 5% deposit scheme and the new Help to Buy shared equity program.

The 5% deposit scheme will remove income and location caps, raise property price limits, and help buyers avoid LMI, making it easier to purchase with a smaller deposit. The Help to Buy program will see the government contribute up to 40% of a home’s value, reducing both deposit and loan size for eligible buyers.

These initiatives aim to improve affordability and access to home ownership, though they may increase competition in key markets.

1. The Expanded 5% Deposit Scheme

This program is often recognised as the First Home Guarantee, allowing eligible buyers to purchase a home with just a 5% deposit. The government acts as guarantor for the remaining 15%, helping buyers avoid costly Lenders’ Mortgage Insurance (LMI).

Key Changes from October 2025:

• Earlier Start: Launches 1 October 2025, three months ahead of schedule.
• No Income Caps: Previously limited to certain income brackets, the scheme will now be available to all buyers regardless of earnings.
• No Location Restrictions: Buyers across Australia can apply.
• Higher Property Price Caps: Adjusted to reflect market values:
  • Sydney: up to $1.5 million
  • Melbourne: up to $950,000
  • Brisbane: up to $1.0 million
  • Other cities and regions have also seen increases.
• Expected Reach: Around 20,000 additional guarantees will be available in the first year, with government estimates of $1.5 billion in LMI savings for buyers.

What it may mean for you:
This scheme will enable many to enter the market sooner, particularly those struggling to reach the traditional 20% deposit. However, advisers caution that it may also add demand-side pressure to property prices in high-demand areas.

2. Help to Buy (Shared Equity Program)

This program is  shared equity model where the government contributes to the purchase price:

• Up to 30% for an existing home
• Up to 40% for a new build

This reduces both the deposit and the mortgage required, while eliminating the need for LMI.

Eligibility and Caps:

• Minimum deposit: 2%
• Income threshold: $100,000 (individuals), $160,000 (couples/single parents)
• Property price caps raised to reflect the market, e.g. $1.3 million in Sydney
• Applications expected to open in late 2025

What it may mean for you:
This scheme targets households who have the income to service a loan but cannot save a sufficient deposit. By co-owning a share of the property, the government lowers the upfront barrier to entry.

Practical Considerations for Buyers

• Affordability vs. Ownership:
  The 5% scheme provides full ownership but with a higher mortgage, while Help to Buy reduces debt but involves co-ownership with the government.
• Exit Strategy:
  Under Help to Buy, buyers will need to plan for future equity repayments if they want to “buy out” the government’s share.
• Market Impact:
  Experts warn the expanded schemes could drive demand in an already tight housing market, particularly in Sydney and Melbourne.

What Buyers Should Do Now

1. Assess Suitability: Consider whether you’d prefer full ownership with a higher loan (5% scheme) or shared equity with lower debt (Help to Buy).
2. Prepare Documentation: Proof of savings, ID, and income details should be ready ahead of October.
3. Engage an Adviser: Financial and mortgage advisers can guide clients through eligibility, lender participation, and long-term financial impact.
4. Stay Updated: The Help to Buy scheme is not open yet; details on application dates will be announced later in 2025.

Get in contact with our team to discover how we can incorporate these schemes into effective advice.

Call us : 02 9836 4140

Email : office@providafinance.com.au