There’s a clear shift happening in how first home buyers are getting into property — and the numbers behind it are hard to ignore.
Since the expansion of the Australian Government 5% Deposit Scheme in October 2025, demand at participating lenders has jumped sharply while buyers using traditional pathways have pulled back. If you’ve been wondering whether the scheme is worth exploring, here’s what the latest data shows.
What the Data Is Telling Us
According to Equifax analysis published in May 2026, lenders participating in the scheme recorded a 16.4% increase in first home buyer loan volumes between October 2025 and March 2026. Over the same period, demand at non-participating lenders fell 6.5%.
That’s a meaningful shift — and it’s not just activity from buyers who were already ready to go. Enquiry volumes rose 22.8% among 18–25-year-olds and 17.4% among 26–35-year-olds. Younger buyers who may have thought homeownership was years away are clearly reassessing what’s possible.
One other finding from the Equifax data is worth noting: 81.9% of first home buyers who used the scheme purchased outside their existing suburb. That suggests many buyers are making a deliberate trade-off — prioritising getting into the market over staying close to where they currently live. Whether that’s the right call depends entirely on your situation, but it does signal that affordability and opportunity are winning out over familiarity for a lot of people right now.
How the Scheme Works
The core idea is straightforward. Normally, if you’re buying with less than a 20% deposit, you’d need to pay Lenders Mortgage Insurance — a cost that protects the lender, not you, and can run to tens of thousands of dollars depending on the purchase price and deposit size.
Under the Australian Government 5% Deposit Scheme, eligible first home buyers can purchase with as little as a 5% deposit without paying LMI. The federal government guarantees part of the loan instead, removing the need for the insurance altogether.
The expanded scheme now has no income caps and unlimited places — so there’s no waiting list and no annual cutoff to race against.
Property Price Caps Apply
The scheme does have property price caps that vary by state and territory — and they matter, because a property priced above the cap for your area won’t be eligible regardless of your deposit size.
We have a full breakdown of the current caps available — just ask us and we’ll walk you through what applies in your area.
The Trade-offs Are Real
The scheme can genuinely help buyers get into the market sooner. But a smaller deposit does come with trade-offs that are worth understanding before you commit.
Borrowing more means higher monthly repayments and paying more interest over the life of the loan. You’ll also start with less equity, which can affect your options if you want to refinance or access funds down the track.
That’s not a reason to rule the scheme out — for many buyers, the trade-off is absolutely worth making. But it’s worth going in with eyes open rather than just focusing on the deposit savings.
Is It the Right Fit for You?
The honest answer is: it depends. The scheme works well for buyers who are ready to purchase, have a stable income, and can comfortably service the loan — but who haven’t yet built up a full 20% deposit.
It may be less suited to buyers who are still building their financial foundation, or who are looking at properties above the price caps for their state.
The best way to work out whether it makes sense for your situation is to look at the full picture — your borrowing capacity, the property you’re targeting, your long-term plans, and what the repayments would actually look like day to day.
Key Takeaways
- Loan volumes at scheme-participating lenders rose 16.4% between October 2025 and March 2026 (Equifax, May 2026)
- Enquiries from younger buyers jumped — up 22.8% for 18–25-year-olds and 17.4% for 26–35-year-olds
- The expanded scheme has no income caps and unlimited places
- Property price caps apply and vary by state and territory
- A 5% deposit means borrowing more and paying more interest over time — understand the trade-offs before you proceed
Ready to find out if the scheme could work for you? We’re based in Richmond, Melbourne, but we help first home buyers right across Australia. Get in touch here and we’ll run through your options.
