How to Buy Your First Home in 2025 with a Low Deposit

Breaking into the property market doesn’t have to mean waiting years to save a 20% deposit. With low-deposit loan schemes and expanding government support available now—and even more coming in October 2025—you might be closer to owning your first home than you think.

1. Current Low-Deposit Options for First-Time Buyers

• First Home Guarantee (FHBG) — Allows eligible first-home buyers to purchase with just a 5% deposit, and the government guarantees up to 15% so there's no LMI.

• Family Home Guarantee — Specifically supports eligible single parents with a 2% deposit requirement. The government covers up to 18% of the property value.

• Regional First Home Buyer Guarantee — Offers similar terms for eligible buyers outside major capital cities.

These schemes are most effective when combined with state-based incentives, like NSW stamp duty exemptions or First Home Owner Grants (FHOG), which vary by state.

2. What’s Changing from 1 October 2025?

From 1 October 2025, the Home Guarantee Scheme (which covers the FHBG and Family/Regional variants) will be significantly expanded:

• No place restrictions — Every eligible applicant can access the scheme.

• No income caps — Higher-earning buyers will now qualify.

• Higher property price caps — The new limits reflect current market prices; for example: Sydney’s cap raised from $900K → $1.5M.

These changes make the scheme more inclusive and realistic for buyers in today’s housing market.

3. How It Works — A Snapshot

Step	What It Means
1. Save a 5% deposit	Your upfront cost—plus stamp duty and legal fees.
2. Apply through a participating lender	The government promise removes the need for LMI.
3. Move in sooner	The scheme covers the rest through a guarantee—not a cash payment.

4. Why It Matters (and What to Watch For)

Benefits:

• A much lower entry cost with no LMI and expanded eligibility.

• Higher price caps reflecting real housing markets, especially in major cities.

Risks:Experts warn the scheme may fuel stronger demand at a time of limited housing supply, potentially driving up prices. One former RBA economist called the timing “like pouring gasoline on a fire.”

5. Tips to Maximise These Changes

• Work with a broker to compare eligible lenders and loan structures.

• Plan financially—even with a 5% deposit, ensure you can manage regular repayments, council rates, maintenance, and interest rate increases.

• Stay informed—schemes evolve; ensure you’re aware of all federal and state incentives available in your area.