Big news for first home buyers across Australia. The Albanese Government has announced that from 1 October 2025, all first home buyers will be able to purchase a property with just a 5% deposit, without the need to pay Lenders Mortgage Insurance (LMI). This change was originally set to take effect later, but the start date has now been brought forward so buyers can take advantage sooner.
So what does this actually mean? In simple terms, the government will step in to guarantee part of a buyer’s loan, which allows the bank to accept a smaller deposit without charging LMI. For buyers, this can mean saving tens of thousands of dollars and shaving years off the time it takes to save for a deposit. Instead of needing to reach 20% of a purchase price, the door to home ownership is open at just 5%.
The scheme has also been designed to reflect today’s property market. Price caps are being raised so buyers aren’t locked out of more realistic property options. For example, in Brisbane, a home worth $1 million could be purchased with just $50,000 upfront. With the current national median house price sitting around $844,000, this change puts home ownership within reach for thousands of Australians who may have felt priced out of the market.
This is not just about reducing barriers, it’s about giving people more choice. Rather than spending money on mortgage insurance, buyers can put their funds directly into building equity in their home. The government estimates that in the first year alone, Australians will avoid around $1.5 billion in LMI costs under this scheme.
Of course, while this makes buying more achievable, it doesn’t remove the importance of careful planning. Buyers still need to meet lending requirements and factor in other costs such as stamp duty, legal fees and moving expenses. A smaller deposit doesn’t mean smaller responsibilities and it’s essential that anyone considering this path gets the right advice.
For many Australians, this is a game changer. Getting into the property market is one of the biggest financial steps a person can take, and this change means that dream can become reality much sooner. At Madd, we’re here to help first home buyers navigate the process, understand what this change means for them and take confident steps toward financial freedom.
If you’re considering buying your first home, now is the perfect time to have a conversation. Reach out to the Madd team and let’s start planning your journey.
