October 2025 First Home Buyer Changes – What You Need to Know
From 1 October 2025, major updates to the First Home Buyer 5% Deposit Scheme will take effect, giving more Australians the opportunity to enter the property market with a low deposit home loan.
This scheme is designed to help first-time buyers purchase sooner—particularly in high-demand cities like Sydney, Melbourne, Brisbane, and Perth, where saving a traditional 20% deposit can take more than a decade.
Key October 2025 First Home Buyer Changes
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5% deposit – The government will guarantee up to 15% of the loan, removing the need for Lender’s Mortgage Insurance (LMI).
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No income caps – All first home buyers can apply, regardless of earnings.
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Higher property price caps – Homes valued up to ~$1.5 million in Sydney may qualify.
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Earlier rollout – Originally planned for 2026, the scheme begins in October 2025.
Example: A first home buyer in Brisbane could save up to $42,000 in LMI costs and cut deposit saving time by up to 10 years.
Why These Changes Matter
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Faster entry into the market – Buy years earlier than waiting to save 20%.
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Substantial LMI savings – Tens of thousands of dollars stay in your pocket.
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More choice – Higher property caps open up more suburbs and opportunities.
Risks to Consider
While the scheme creates opportunity, there are potential drawbacks:
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Rising property prices – Increased demand may push prices up by 3–9% in the first year.
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Higher loan-to-value ratio (LVR) – A 95% loan means more debt and less equity buffer.
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Greater competition – With no income caps, higher-income buyers may also use the scheme.
Tips for First Home Buyers in 2025
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Get pre-approval early – Places in the scheme may be limited.
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Save beyond 5% if you can – A larger deposit provides more financial security.
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Work with a mortgage broker – Each lender has unique criteria; expert guidance helps you secure the right loan.
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Plan for long-term affordability – Look beyond getting into the market and ensure your repayments align with future goals.
Outlook
The October 2025 changes will allow thousands of Australians to purchase sooner. However, without an increase in housing supply, demand is expected to remain strong, especially in Sydney and Melbourne.
Final Thoughts
The October 2025 First Home Buyer 5% Deposit Scheme could be a turning point for many Australians. But with higher loan sizes and the potential for rising prices, it’s important to make informed, strategic decisions.
At Zahr Financial, I work with first home buyers every day to structure the right loan, avoid unnecessary costs, and confidently take the next step toward home ownership.
Contact me today to find out if the new scheme is the right fit for your situation.
