Today Marks Day Albo’s 5 % Deposit Scheme — What It Means for Buyers & Investors

Today, 1 October 2025, is the formal launch of the Australian Government’s expanded 5 % deposit scheme under Prime Minister Albanese’s housing agenda.

This is a big shift in housing policy, one designed to open the the property door wider especially for first home buyers. Below, I break down what the scheme is, how it works, and the implications for buyers and investors alike.

What’s the scheme about?

• First home buyers can now purchase with just a 5% deposit, with the government acting as guarantor for up to 15% of the loan.

• That means no Lenders Mortgage Insurance (LMI) — a saving of $20,000–$50,000 depending on the property price.

• Unlike the old system, there are now no income caps and no quotas, so far more people are eligible.

• Property price caps have been lifted significantly (Sydney up to $1.5m, Melbourne $950k, Brisbane $1m), opening the door to better homes in more desirable areas.

What this means for buyers

This is a huge opportunity for first home buyers who’ve struggled to save a 20% deposit. It means:

• Getting into the market years sooner.

• More choice of suburbs and property types within reach.

• Immediate savings by avoiding LMI.

But buyers need to be mindful: borrowing 95% of a property’s value is still a big commitment. Monthly repayments will be larger, and with only a slim equity buffer, you’re more exposed if interest rates rise or values soften.

What this means for investors
For investors, the scheme shifts the dynamics of the market:

• Expect extra demand in entry-level suburbs, where first home buyers will be competing directly with investors.

• This may create upward price pressure in affordable areas, with ripple effects through the mid-market.

• Rental demand is unlikely to fall — the scheme helps with demand but doesn’t add new housing supply.

The bigger picture
This policy makes it easier for people to step onto the property ladder, but it also risks adding fuel to already heated markets. Supply remains the real issue, and unless more homes are built, competition for existing stock will stay fierce.

Bottom line: For first home buyers, this scheme is a genuine chance to break into the market sooner if you have a deposit ready. For investors, it’s a signal to prepare for more competition in affordable suburbs and to think carefully about timing and location.

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_{Disclaimer: The information provided in this article is for educational and informational purposes only. It is not intended as financial, legal, or professional advice. Always do your own research and consult with a qualified professional before making any decisions. The opinions expressed here are solely those of the speaker and do not reflect the opinions or views of any other organisation. By using this information, you agree that the creator of this content is not responsible for any financial or other losses you might incur.}