The 5% Deposit Scheme has quietly become one of the most powerful tools first home buyers have – and the latest expansion is a genuine game-changer.
From 1 October, the scheme now offers unlimited places and no longer has income caps. Eligible buyers can purchase with just a 5% deposit and avoid the large cost of lenders’ mortgage insurance (LMI), provided the property sits under your location’s price cap (from $500,000 in regional South Australia up to $1.5 million in Sydney).
The interesting shift isn’t just the expanded access – it’s how it’s expected to reshape competition. Without income caps, higher-earning couples who were previously excluded can now enter popular markets, which may push more demand into price ranges just under the caps.
What this means in practice
More buyers competing for townhouses and units in suburbs close to cap thresholds.
Fast-moving markets, as buyers with small deposits can now act sooner.
Larger borrowing amounts, because deposits are smaller and LMI isn’t required.
Even though the deposit hurdle is lower, your long-term repayment comfort still matters. A higher loan balance means repayments need to fit safely within your budget and buffers.
If you want to check whether you're eligible - or see what your repayments might look like under the scheme - I can run the numbers for you.