What the 5% Deposit Scheme News Means for First Home Buyers
New figures are in the headlines, but here's what actually matters if you're trying to buy your first home
There's been a bit of chatter this week after new data reported by the Guardian showed that a small number of properties bought under the Australian Government's 5% Deposit Scheme have ended up being rented out rather than lived in. Out of hundreds of thousands of purchases made through the scheme, the figure being reported is under 1,500 properties, less than 1% of the total. So while it's made for an eye-catching headline, it's not the full picture, and it shouldn't take away from what the scheme is actually doing for everyday buyers.
A job relocation, a family emergency, or a change in circumstances can mean someone who genuinely intended to live in a property ends up renting it out down the track. That's very different from someone gaming the system, and it's worth keeping that distinction in mind before writing off a scheme that's helped so many Australians get their foot in the door.
The scheme is doing what it was designed to do
Since the Australian Government removed income caps and place limits from the 5% Deposit Scheme on 1 October 2025, more buyers than ever are eligible to purchase with just a 5% deposit and no Lenders Mortgage Insurance. For many first-home buyers, that's the difference between years of saving and getting into the market now. Deposit barriers have always been one of the biggest hurdles to home ownership in Australia, and this scheme genuinely addresses that.
What buyers should focus on
Whether you're using the 5% Deposit Scheme or another pathway, a few things matter more than the headlines:
- Understand your eligibility first. Price caps, residency rules, and income assessments still apply, and they vary by state and lender.
- Get your borrowing capacity assessed properly. Just because you can enter the market with a smaller deposit doesn't mean you should borrow to your absolute limit.
- Get pre-approved before you start looking. It gives you a realistic budget and makes you a stronger buyer at the negotiating table.
- Think long term. Lower deposit requirements improve access, but affordability over the life of the loan is what really matters.
None of this needs to be complicated, but it does need the right advice early on, before you fall in love with a property that isn't the right fit for your finances.
Ready to make your move?
For tailored advice or to discuss your buying strategy, contact KM Financial Service. If you're ready to take the next step, call us on 0402 879 531 or book a free consultation today. We'll help you understand your options and work towards securing the right property in this market.
Follow us on Instagram and LinkedIn for more updates on home loans and the property market.
