Major Changes to the First Home Buyer Scheme — Since 1 October 2025
The Federal Government has brought forward key reforms to the First Home Buyer Scheme, making it easier for Australians to enter the property market.
From 1 October 2025, eligible buyers will be able to purchase a home with just a 5% deposit and no Lender’s Mortgage Insurance (LMI). The reforms aim to remove long-standing barriers and make home ownership more accessible. What does this mean to first home buyers, the money you save on not paying LMI can now go towards your home deposit making it quicker to get into the market.
Key Changes
No Cap on Places – allowing eligible buyers to apply anytime.
Income Limits Removed – Higher-income individuals and couples can now qualify, reflecting today’s rising wages and prices.
Higher Price Caps – Updated property limits align with current market conditions, opening access to more locations and property types.
Simplified Access – The Regional First Home Buyer Guarantee merges with the main scheme, streamlining the process nationwide.
What This Means for Buyers
Saving a 20% deposit has long been a major hurdle. With a home price for example of $850,000, buyers needed about $170,000 upfront just for the deposit. Under the new scheme, only $42,500 is required.
For example:
A buyer wishing to purchase a
$1 million home with a $50,000 deposit, will save about $42,000 in LMI.
$600,000 home with $30,000 down, save about $25,000 in LMI.
Experts welcome the reforms, noting they’ll help many Australians who were previously locked out of the market. However, lending rules remain unchanged, meaning borrowing capacity will still depend on income and expenses — so dual-income households are likely to benefit most.
Market Outlook
Short-term, the changes may boost buyer activity and raise prices in affordable areas. Over time, increased access to finance could encourage new housing supply, helping balance demand.
The Bottom Line
The expanded First Home Buyer Scheme provides a faster, more attainable path to owning your first home. By lowering deposit requirements and removing LMI, the scheme shortens the time to buy and saves thousands.
At Azzato Buyers Agent, we help first-home buyers navigate the whole process, our collaboration with professionals ensures your first purchase is a smart, confident move.
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Disclaimer This guide provides general information and is not a substitute for professional legal, tax, or investment advice. Consult professionals for advice tailored to your circumstances. If you’d like to know more, we are happy to put you in contact with our team of experts.