First home buyers in Australia are set to receive a much-needed boost with the Federal Government introducing 5% deposits on October 1st, instead of waiting until next year 

This expansion of the 5% deposit scheme guarantees a portion of first home buyer’s home loan, allowing them to purchase a property with a smaller deposit and avoid Lenders Mortgage Insurance. Most excitingly, this scheme differs from the existing First Home Buyer Guarantee by having no restrictions on property location or income, while the cap on price will be set higher to align with the rising average in house prices. This combined gives

first home buyers access to a greater variety of homes all across Australia, not just up and coming suburbs or regional areas.

The intention behind the scheme is to cut years off the time it takes saving for a deposit and increase the percentage of Australians owning their homes. Prime Minister Anthony Albanese said in his announcement that his government ‘want[s] to help young people and first home buyers achieve the dream of home ownership sooner’ and that ‘bringing [forward] the start date of [the] 5% deposit scheme will do just that.’

This scheme will mean that a home valued at $1 million could be purchased with a deposit of only $50,000. This could shave off almost a decade in the time it takes to save for a larger deposit and save borrowers tens of thousands of dollars in mortgage insurance, and hundreds of thousands in savings from not renting during the period used to save. The federal Minister for Housing, Claire O’Neil, said ‘it’s just not right that an entire generation of young Australians have been locked out of the housing market – saving for decades while paying off someone else’s mortgage.’ She said this scheme will help the housing shortage by ‘unlock[ing] tens of thousands of new homes’ and creating a possibility for ‘tens of thousands of first home buyers [to] get into home ownership.’

To make the most of this scheme, prospective buyers can check their eligibility with the Home Guarantee Scheme Eligibility Tool on the Housing Australia Website (available here from October 1st) and check property price caps for their area. Buyers will then need to contact a participating lender and apply for their home loan, and if approved the lender will then submit applications to Housing Australia. Once a buyer has received pre-approval, they can go house hunting and find a place to call home!

For more information on the scheme, property caps and terms and conditions,click here to visit the Housing Australia website.