First home buyers in Melbourne and Perth will soon have a faster pathway into the market, with the federal government confirming its expanded 5% deposit home loan guarantee will commence on 1 October 2025, months earlier than originally planned.
The program allows eligible buyers to purchase a home with as little as a five per cent deposit, while avoiding the significant cost of lenders mortgage insurance (LMI). The government effectively guarantees the remaining 15% usually required by banks, easing one of the biggest hurdles to home ownership.
Key Features
- Earlier rollout: Launching in October 2025 instead of 2026.
- Open access: No income caps and no limit on the number of buyers able to participate.
- Higher property price thresholds:
- Melbourne: up to $950,000
- Perth: up to $800,000
What It Means for Melbourne and Perth Buyers
For first home buyers in Melbourne, the scheme means a $950,000 property can be purchased with just a $47,500 deposit — a fraction of the $190,000 typically needed. Buyers also save tens of thousands of dollars by avoiding mortgage insurance premiums. In Perth, where the cap is $800,000, a home can now be secured with a $40,000 deposit.
It can also be used in conjunction with other state-based FHB schemes (for those who meet eligibility requirements).
Housing Minister Clare O’Neil said the policy was designed to “give first home buyers a genuine shot at ownership in markets where saving a 20 per cent deposit has become out of reach for most households.”
The policy comes hot on the heels of the RBA’s recent rate cut and is expected to inject further demand into the property market.
