Buying your first home in Australia has always felt like a mix of excitement, anxiety, and, let’s be honest, a little bit of math-induced nausea.
Saving a deposit has been the biggest hurdle for many, often taking years of careful budgeting, frugal living, and perhaps skipping a few avo on toasts along the way.
Thanks to recent government changes, that timeline just got shorter. From October 1, 2025, all first home buyers will be able to access the First Home Guarantee with a 5% deposit, without having to pay Lenders Mortgage Insurance (LMI). That means fewer years of saving and more opportunity to step into your first home sooner.
What the First Home Guarantee means
The First Home Guarantee is designed to help eligible Australians buy their first home with a low deposit. Under the updated Albanese Government scheme:
- First home buyers can secure a home with just a 5% deposit
- The guarantee applies across all states and territories
- Lenders’ Mortgage Insurance is waived, saving potentially tens of thousands of dollars
- Buyers can access the scheme earlier than originally planned, accelerating home ownership
For example, a first home buyer looking at a $600,000 property could enter the market with a $30,000 deposit. Without this scheme, they might have faced the daunting prospect of saving 20%, or $120,000, plus LMI costs.
How to maximise your 5% deposit
Even with government support, entering the property market requires smart planning. Here’s how to make the most of your 5% deposit:
1. Combine with grants and concessions
Many states offer additional support for first home buyers, including:
- First Home Owner Grant – a one-off payment for eligible buyers
- Stamp duty concessions – some states reduce or waive stamp duty for first home buyers
- Builder incentives – some developers offer cashbacks or reduced fees
Stacking these incentives can reduce the total upfront costs and help stretch your 5% deposit further.
Example:
Imagine a first home buyer in Brisbane looking at a $600,000 property. Using the 5% deposit scheme ($30,000), together with a potential First Home Owner Grant ($15,000) and a stamp duty concession ($10,000), the total upfront cost could be significantly reduced.
2. Budget for additional costs
A deposit is just part of the picture. You’ll also need to plan for:
- Legal and conveyancing fees
- Building and pest inspections
- Moving costs and initial furniture
- Utility connections and rates
By accounting for these costs early, you avoid being caught off guard and can better plan your cash flow.
3. Choose the right loan structure
Working with a finance broker can help you:
- Find a loan that suits your budget
- Consider features like offset accounts and redraw facilities
- Understand repayment options and avoid overstretching
Even with a 5% deposit, the right loan structure ensures you are comfortable and can keep up with repayments without stress.
4. Time your purchase wisely
The housing market fluctuates. Even with government support, it pays to:
- Monitor property trends in your preferred area
- Attend open homes and research suburbs carefully
- Prepare pre-approvals so you can act quickly when the right property becomes available
Being prepared helps you make the most of your 5% deposit and reduces the risk of losing out to other buyers.
Making it work for you
The Albanese Government’s updated First Home Guarantee is a game-changer for first home buyers. A 5% deposit can now get you into your first home sooner, without the added burden of Lenders Mortgage Insurance.
However, success still requires planning. Budgeting for additional costs, exploring grants, choosing the right loan, and timing your purchase carefully will all help you maximise your deposit and make the most of this opportunity.
If you are ready to take the first step, speak with a finance broker who can help navigate your options and guide you through the process.
This blog is intended for general informational purposes only. For personalised advice tailored to your unique financial situation, please contact NMC Finance.
