Blog post by Empower Wealth

Big News for First-Home Buyers: The 5% First Home Buyer Deposit Scheme Starts Sooner

Buying your first home has always been one of life’s biggest milestones… and one of its biggest challenges. For most Australians, the hardest part isn’t paying the mortgage — it’s saving that elusive deposit.

The good news? From 1 October 2025, the Federal Government’s new initiative means first-home buyers can step into the market with just a 5% first home buyer deposit.

This scheme was originally planned for early 2026, but it’s been brought forward — giving Australians a chance to buy sooner, without having to wait years to save a 20% deposit.

So, what’s changing, what do you need to know, and how do you make the most of it? Let’s unpack it together.

What’s Changing from 1 October?

Buy with just 5% deposit — The scheme is part of the Government’s First Home Guarantee, and allows you to purchase a property with only a 5% deposit.
No Lenders Mortgage Insurance (LMI) — Normally, a deposit under 20% attracts expensive LMI. Under the scheme, the Government acts as guarantor, helping you avoid this cost.
Property price caps lifted — For example, the cap in Melbourne has jumped from $800,000 to $950,000, and Sydney from $900,000 to $1.5 million.
Unlimited access — There are no income caps or place limits. All first-home buyers can take part.

See the full details on Housing Australia’s website here.

Why This Matters?

On a median-priced home of around $844,000, a traditional 20% deposit means saving almost $170,000. Under the new scheme, you’d only need about $42,000. That difference could save you years of waiting.

You also avoid paying tens of thousands of dollars in LMI — with some estimates suggesting Australians will save around $1.5 billion in the first year alone. And for first-home buyers, that can be life-changing.

“Being a first home buyer with little/no understanding of what is involved was a little daunting, but with the support from Empower Wealth, the journey was made smooth. Thomas and his team were very helpful.”
– James D, Tasmania

What This Means for First-Home Buyers

Fresh analysis from Cotality shows just how far-reaching these changes are.

Under the old price caps, only about one-third of suburbs nationally were within reach for first-home buyers.
From 1 October, that jumps to 63.1% of suburbs — including more than half of all house markets and nearly all unit markets (93.7%).
In cities like Adelaide, the number of suburbs where first-home buyers could purchase a house has skyrocketed from just 8 suburbs to 130.
In Brisbane, 97.5% of unit markets will now fall within the new caps, up from just 36.9% previously.

In other words, the scheme isn’t just about smaller deposits — it’s also about bigger choice. From October, first-home buyers will be able to look at suburbs and properties that were previously out of reach.

Beyond the Deposit: Mindsets and Realities

The latest “No Place Like Home” report from Great Southern Bank shows just how much younger Australians are rethinking what property means.

For Gen Z, a home isn’t just somewhere to live — it’s increasingly seen as a wealth-building vehicle.

58% see their home as a source of income.
24% plan to eventually turn it into an investment property.
19% would rent out a room to help with repayments.
16% are open to running a business from home.

Parents are supportive too, with many happy for their kids to stay at home longer to save. But government help like the 5% first home buyer deposit scheme could ease that burden and give younger buyers a head start.

Of course, it’s important for you to note that getting the keys is only the beginning.

The same report revealed that:

35% of new homeowners faced unexpected costs like insurance and utilities.
20% needed to renovate sooner than expected.
15% had higher upkeep than planned.
10% had to learn DIY skills to keep costs down.

This is why a clear financial plan matters. A 5% first home buyer deposit can open the door, but the bigger question is: what happens after?

“Going into the home buying process as a first home buyer was definitely daunting… without Empower’s help, we would not have been able to purchase our home. Highly recommend.”
– Bannahaka B, NSW

Remember this… Your First Property Might Not Be Your Last

We’ve seen time and time again that buying your first property isn’t just about scraping together the deposit — it’s about making sure that first step sets you up for the long term.

Your first home doesn’t have to be your forever dream home. In fact, for many Australians, it won’t be. Property is a powerful asset that grows in value over time, and the choices you make now can open up opportunities for the next property down the track.

That’s why strategy matters.

Sometimes, it’s about compromising now to avoid missing out. A smaller unit or townhouse in the right location may build the equity you need for your next move. But if you’re thinking about starting a family sooner rather than later, a one- or two-bedroom apartment may not suit your needs beyond a few years.

We always encourage first-home buyers to think in five- to seven-year windows. Ask yourself:

Will this property still work for me in five years? And if not, does it still help me take the next step on my journey?

The 5% first home buyer deposit scheme can certainly help you get started, but the real power comes from making that first purchase part of a bigger plan.

At Empower Wealth, we’ve already completed more than 5,000 Property Portfolio Plans — helping households map out a clear pathway to financial peace of mind. That means when you buy your first home, you’re not doing it in isolation — you’re building it into a long-term strategy.

And timing matters. If you want to take full advantage of the property market when the scheme begins on 1 October, it’s important to start the process now. Getting your plan in place and your loan application ready takes time (often a few weeks!) — and with competition from thousands of other first-home buyers, being prepared could make all the difference in securing the right property.

Real Stories from First-Home Buyers

We know it can feel daunting, but you’re not alone. Many of our clients started out feeling exactly the same way! Watch Regie’s story here and find out how she went from uncertainty to confidence, with our team by her side.

These real stories show that with the right guidance, buying your first home doesn’t have to be overwhelming.

Ready to Explore Your Options?

Of course, the first challenge is saving for a deposit first — and if you’re still on the saving journey, this free resource might help: Are You Saving for a Deposit? from The Property Couch Podcast.

But if you’re ready to take the next step, now’s the time to act. With the 5% first home buyer deposit scheme kicking off on 1 October, there will be plenty of competition from other first-home buyers. Getting your finance strategy in place and your loan application prepared takes time — and the sooner you start, the better positioned you’ll be to take full advantage of the opportunity.

At Empower Wealth, our focus has always been on helping our clients achieve their own unique lifestyle goals and feel confident about their financial journey. Every plan is carefully tailored, and every conversation we have is about putting you first. We were humbled to see this dedication recognised at the Australian Broking Awards 2025, where we received the Best Customer Service award — but for us, the real reward is seeing our clients reach the outcomes they’ve been working towards.

“Seamless, friendly service for first home buyers! Took the stress out of the lending process and provided sound advice throughout. Thanks team!”
– Victoria L, VIC

So if you’re keen to get started today, book a free initial consultation with our team! You’ll get heaps of clarity on how to take full advantage of this scheme and there’s absolutely no obligation to proceed too. Fill in the form below to get started.

Categories: Buyers Agents, Investment Education, Mortgage Broking