The 5% Deposit Scheme has quietly become one of the most powerful tools available to first home buyers — and its latest expansion is a genuine game-changer.
From 1 October, the scheme now offers unlimited places and no income caps. Eligible buyers can purchase with just a 5% deposit and avoid the significant cost of lenders’ mortgage insurance (LMI), as long as the property sits under the price cap for their area (ranging from $500,000 in regional SA to $1.5 million in Sydney).
This isn’t just broader access — it’s a shift that could reshape competition in key markets.
Why this expansion matters
Removing income caps means higher-earning singles and couples who were previously locked out can now participate. That’s likely to:
- Increase demand in suburbs where prices sit just below the caps
- Bring more buyers into townhouse and unit markets
- Accelerate activity as buyers with small deposits can enter sooner
And with no LMI required, borrowing capacity goes further — meaning some buyers may stretch into higher price brackets.
What this looks like in practice
- More competition for townhouses and units in suburbs close to the cap thresholds
- Faster-moving markets, as buyers with smaller deposits can act immediately
- Higher loan amounts, because the deposit requirement is lower and LMI doesn’t eat into the budget
A note of caution
A smaller deposit can be helpful, but it also means a larger loan. Your long-term repayment comfort — buffers, savings habits, and future plans — still needs to be front and centre.
Want to see if the scheme works for you?
If you’d like to check your eligibility, understand the price cap for your area, or see what repayments might look like under the scheme, I can run the numbers and lay out your options clearly.