First Homebuyer Deposit Scheme Moved Forward to Early October

Delivering on their election promise, Labor is moving ahead on their  First Homebuyer Deposit Scheme. They are bringing it forward to the start of October – three months earlier than planned.

Previously, the 5% deposit scheme was locked to a certain number of qualifiers per financial year. This is a cap that Labor intends to scrap.  They also intend to increase their own proposed caps in each capital city. This change will enable more buyers to enter the property market faster.^[1]

This decision comes a day after Labor confirmed it would be pausing the Construction Code. This pause aims to allow more accessible properties to be developed over the coming years. It is an idea adopted from The Coalition’s Federal Election policy. ^[2] The intention is simple: More houses, for more first homebuyers at a faster rate.

What is the 5% First Homebuyer Deposit Scheme?

The First Homebuyer Deposit Scheme, which is already in play, sees a number of first homebuyers per year able to purchase their first home with just a 5% deposit. This is as opposed to the regularly required 20% deposit, without paying Lender’s Mortgage Insurance.

What Changes are On Their Way?

Two major changes to Labor’s initial proposition are on the way

• The implementation date was initially set for January 1^st 2026; this has been accelerated to October 1^st 2025, just in time for when the market is at its most active.
• Borrowers will be able to access higher valued properties. For instance, a property valued at $844,000, the national median home price, could be purchased with a deposit of $42,200, subject to serviceability and guidelines.

What Are the Price Cap Changes? 

The updated property price caps are [3]:

• NSW (capital city and regional centre): $900,000 > $1,500,000.
• NSW (other): $750,000 > $800,000.
• VIC (capital city and regional centre): $800,000 > $950,000.
• VIC (other): $650,000 > $650,000 (no change).
• QLD (capital city and regional centre): $700,000 > $1,000,000.
• QLD (other): $550,000 > $700,000.
• WA (capital city): $600,000 > $850,000.
• WA (other): $450,000 > $600,000.
• SA (capital city): $600,000 > $900,000.
• SA (other): $450,000 > $500,000.
• TAS (capital city): $600,000 > $700,000.
• TAS (other): $450,000 > $550,000.
• ACT: $750,000 > $1,000,000.
• NT: $600,000 > $600,000 (no change).
• Jervis Bay Territory and Norfolk Island: $550,000 > $550,000 (no change).
• Christmas Island and Cocos (Keeling) Islands: $400,000 > $400,000 (no change).

The Potential Benefits

Following three cash rate cuts in 2025 (With the potential for more on the way), the implementation of the First Home Deposit Scheme by October spells a busy property market.  It also intends to open the door to homeownership for more people. This counters a property market increasingly dominated by older generations ^[4]. It’s intended to save first homebuyers potential tens of thousands of dollars on Lender’s Mortgage Insurance. Ultimately, it aims to get them into the property market up to eight years earlier.^[5]

The Potential Risks

The First Homebuyer Deposit Scheme does a lot to get more people into the property market sooner. However, it does less to ensure they can sustainably meet repayments. A smaller deposit could mean more Australians will hold a mortgage for longer. If we encounter a global financial crisis or other extraordinary situations like the COVID-19 pandemic, another generation of homebuyers may be left struggling to meet repayments on their home loan, just as they did during and following the pandemic.

It’s not all doom and gloom, however. With a drop in interest rates over the last few months, in addition to a lower barrier of entry, first home buyers may be able to increase their monthly repayments. They could reduce the length of their home loan. Or they may even provide a useful buffer in their loan repayment in the event of extraordinary circumstances.

Additionally, first homebuyers being able to afford higher-valued properties means more buyer activity across the board. This, in turn, means more competition. It could quickly lead to already high property prices increasing. This will hopefully be offset by the Government’s intention to boost the construction industry with first-home-only properties ^[6]

The immediate outcome of this decision is bound to provide exciting benefits to first home buyers, and will hopefully provide first homebuyers with a more sustainable and accessible pathway to homeownership will be interesting to watch the long-term ramifications of this decision and how the Federal Government will continue to evolve their strategy to support first buyers.

If you’re looking to get into your first home, be sure to start planning with your local MoneyQuest broker before October 1^st, so you can beat other first homebuyers to the punch. Reach out to us today.

References

[1] Evan, J. Five per cent first homebuyer deposit scheme to begin in October. ABC. 25th August 2025, Viewed 25th August 2025

[2] Read, M. New homes to be fast tracked after pause to building code. AFR. 23rd August 2025. Viewed 25th August 2025.

[3] Paige, W. Government brings forward Home Guarantee expansion start date. The Adviser. 25th August 2025. Viewed 25th August 2025.

[4] Chamas, Z. From baby boomers to alphas, every generation struggles when buying a first home. ABC. 27th October 2024, Viewed 25th August 2025.

[5]Himbrrechts, D. Albanese government to bring forward start of its home deposit guarantee changes. 25th August 2025. Viewed 25th August 2025.

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