Australian Finance Podcast No caps, no LMI, no waitlist — the new 5% deposit rules explained
Oct 22, 2025
Discover how the government's new 5% Deposit Scheme is transforming the property landscape for first home buyers. Learn about the removal of income caps and Lenders Mortgage Insurance, allowing buyers to enter the market sooner. Get insights on the eligibility requirements and what to consider before applying. Unpack the potential market impacts and why it matters for newcomers. Plus, find out how to maximize savings by combining this scheme with other incentives. Don't miss this essential guide to navigating home loans!
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How The 5% Guarantee Works
- The federal 5% deposit scheme lets buyers with only 5% deposit avoid lenders mortgage insurance because the government guarantees the gap up to 20%.
- This reduces the upfront cash needed but increases loan size and ongoing cashflow pressure for buyers.
Model Cashflow Before Lowering Deposit
- Do model the cashflow impact before using a 5% deposit because a 95% loan raises repayments and other ownership costs.
- Do consider middle options like a 15% deposit or keeping cash as emergency funds to reduce risk.
Policy Changes Amplify Demand
- Removing income caps, waitlists and many previous restrictions made the scheme instantly much larger and more attractive to buyers.
- That scale increases the risk of upward pressure on house prices in eligible markets.
