October 2025 First Home Buyer Deposit Scheme - Explained

15th September 2025

Finance & Budgeting Pre-Construction Design & Trends Legal & Contracts First Home Buyer Investor News & Industry Insights

Learn how Australia’s updated First Home Buyer Deposit Scheme (starting October 2025) helps buyers enter the market with just a 5% deposit. Discover eligibility, caps, savings, and expert insights from the Home Building Hub Podcast.

October 2025 First Home Buyer Deposit Scheme: What Australian Buyers Need to Know

The Australian Government’s latest update to the First Home Buyer Deposit Scheme, coming into effect on 1 October 2025, is set to make home ownership more accessible for thousands of first-time buyers.

In this episode of the Home Building Hub Podcast, hosts Colin Bischof and Darren Brennan unpack what’s changing, how it works, and what it means for the new home construction market across Australia.

Let’s break it all down in simple terms.

What Is the First Home Buyer Deposit Scheme?

From 1 October 2025, first home buyers across Australia will be able to purchase a home with just a 5% deposit — without paying Lenders Mortgage Insurance (LMI).

The Federal Government will guarantee part of your loan, protecting the bank if you default, which means buyers can enter the market sooner without needing a 20% deposit.

Key updates include:

• No income caps

• Unlimited places available

• Higher property price caps

• Expanded lender participation, including regional and customer-owned banks

How the Scheme Works

Here’s a quick snapshot using an example shared in the episode:

• Loan amount: $750,000

• Deposit required: $37,500 (5%)

• Savings: Around $30,000 on LMI fees

That’s a saving of more than $110,000 compared to saving a full 20% deposit to avoid LMI. For many Australians, that difference could shave years off their savings journey.

Updated Property Price Caps by State (October 2025)

To make the scheme more realistic for today’s housing market, property price caps have been significantly increased.

State/Territory

Capital City & Major Regional Centres

Regional Areas

NSW

$1.5 million (was $900k)

$800k (was $750k)

VIC

$950k (was $800k)

$650k (was $600k)

QLD

$1 million (was $700k)

$700k (was $550k)

WA

$850k (was $600k)

$600k (was $450k)

SA

$900k (was $600k)

$500k (was $450k)

TAS

$700k (was $600k)

$550k (was $450k)

ACT

$1 million (was $750k)

—

NT

$600k (no change)

—

Visit housingaustralia.gov.au for the official list of caps and lender details.

Who Can Apply?

To qualify for the 2025 First Home Buyer Deposit Scheme, applicants must:

• Be 18 years or older

• Be an Australian citizen or permanent resident

• Purchase as an owner-occupier (not an investor)

• Move in within six months of settlement or completion

• Take out a principal and interest loan for a maximum of 30 years

• Use a participating lender

Eligible property types include:

• Existing homes

• House and land packages

• Vacant land with a separate build contract

• Off-the-plan purchases

What It Means for New Home Builders

According to Colin and Darren, this policy could open the door for thousands of first home buyers who were previously priced out of the market.

While the market has been slow over the past 12 months, the removal of income caps and expansion of property limits could provide a significant boost to new home construction.

However, both hosts caution that buyers should act early. Once demand spikes, land prices and rebates could change quickly — something that’s happened in every previous grant or incentive cycle.

Their advice:

• Talk to a broker (not just your bank)

• Understand your true borrowing capacity

• Get your finance pre-approval sorted before 1 October

• Research available titled land and reputable builders early

Stamp Duty Still Matters

While the government’s announcement is a win, stamp duty exemptions haven’t increased in line with the new price caps.

For example, in NSW, full stamp duty exemption only applies up to $800,000, with concessions up to $1 million. Properties above that attract full stamp duty.

At $1.5 million, stamp duty alone could reach $68,000, plus your deposit — so budgeting accurately is essential.

Key Takeaways

• Buyers can purchase with just a 5% deposit and no LMI.

• No income or place caps, making it more inclusive than ever.

• Significantly higher property caps reflect real market conditions.

• Ideal time for first home buyers to prepare finance and research titled land.

• Act fast – incentives often lead to increased land and property prices.

• Stamp duty still applies in many cases, so do your homework.

Glossary of Terms

• LMI (Lenders Mortgage Insurance): Insurance that protects the lender (not the borrower) if you default on your loan.

• LVR (Loan-to-Value Ratio): The percentage of your property value that’s financed through a loan.

• Owner-Occupier: A person who buys a property to live in, not to rent out.

• Titled Land: Land that has been officially registered and is ready for construction.

• Stamp Duty: A government tax on property purchases.

FAQs

Q: When does the updated First Home Buyer Deposit Scheme start? A: It begins 1 October 2025.

Q: Can I buy an investment property under this scheme? A: No. It applies only to owner-occupiers.

Q: Do I need to be an Australian citizen? A: You must be either a citizen or permanent resident to qualify.

Q: What if my property costs more than the cap? A: You won’t be eligible for the scheme if the total purchase price exceeds the cap for your region.

Q: Can I choose any lender? A: You’ll need to go through a participating lender, which may include major banks and regional or customer-owned lenders.

Listen to the Full Episode

🎧 Watch or listen to the full discussion on YouTube: October 2025 First Home Buyer Deposit Scheme - Explained

About the Home Building Hub Podcast

The Home Building Hub podcast, hosted by industry experts Colin Bischof and Darren Brennan, is Australia’s premier resource for new home buyers. With weekly episodes featuring special guests, the podcast provides objective, high-quality insights into the home building process - completely free and without sales pitches. From understanding financing options to navigating the complexities of building a new home, each episode is packed with actionable advice and tips. Explore more episodes at http://www.homebuildinghub.com.au and join our growing community of informed home buyers.

Disclaimer

This article was generated by AI based on a transcript of our podcast episode and may contain inaccuracies or omissions. Whilst we’re all about providing value to you, this article should not be considered as legal or financial advice. It contains general information only and is based on the content discussed during the podcast episode. This information is relevant to the episode’s release date and may not be applicable at the time of reading. Always seek independent professional advice tailored to your personal situation before making any legal or financial decisions.