
The Federal Government has announced it will fast-track the 5% First Home Deposit Scheme, with changes now starting 1st October 2025 – three months earlier than originally planned.
This update is designed to give more Australians a faster, easier path to home ownership, with expanded eligibility and greater flexibility in how the scheme can be used.
What’s Changing?
From 1 October 2025, the scheme will be significantly broadened:
• Unlimited places: Every eligible first home buyer can access the scheme, without worrying about allocations running out.
• No income caps: Higher-income earners are now included, opening the scheme to a much larger pool of buyers.
• Higher property price limits: Purchase caps have been lifted in every state and territory (from $800,000 to $950,000 in Melbourne), meaning more homes in more suburbs are within reach.
How the Scheme Helps Buyers
The guarantee is designed to reduce one of the biggest hurdles for first home buyers – saving for a deposit. Under the scheme:
• You only need a 5% deposit instead of the traditional 20%.
• You can avoid paying Lenders Mortgage Insurance (LMI), which often adds tens of thousands to upfront costs.
• You gain access to a wider choice of properties, thanks to the increased price caps.
What Will This Do to House Prices?
While the scheme offers clear benefits to first home buyers, the flow-on effects for the housing market are still debated.
• Treasury modelling estimates the scheme will add around 0.5% to house prices over six years.
• However, economists warn that by bringing demand forward, the scheme could push house prices even higher, particularly in already competitive markets like Melbourne.
As independent economist Saul Eslake explains:
“Anything that allows Australians to spend more on housing than they’d otherwise be able to, results in more expensive housing, which in turn results in lower homeownership rates.”
What This Means for You
For first home buyers, the October launch is a chance to get into the market sooner with a smaller deposit and lower upfront costs. For sellers, the scheme may bring an extra wave of motivated buyers – potentially adding to competition in key suburbs.
Thinking about buying your first home or selling in this market?
Our experienced team at Shape can help you make the most of these changes. Get in touch today to discuss your options and start planning your next move.