Gen Z and the First Home Buyer Guarantee Scheme

A surge in younger Australians entering the property market is turning heads, and the numbers behind it tell a compelling story. Changes to the 5% Deposit Scheme have removed two of the biggest barriers that locked Gen Z out for years: the deposit size and the income limit. Combined with federal budget reforms reshaping the investor landscape, the conditions for first home buyers right now are the most favourable they have been in a long time.

Osinski Finance is a family-owned mortgage brokerage based in Rockingham, WA. The team has been helping first home buyers navigate schemes like this since 2017. If you have been watching from the sidelines and wondering whether now is your moment, this article walks you through exactly what changed, who qualifies, and what it means for your path to ownership.

What Is the First Home Buyer Guarantee Scheme?

This federal government initiative allows eligible buyers to purchase a home with as little as a 5% deposit, reducing upfront costs and making home ownership more accessible. The government acts as a guarantor on your loan, covering the gap between your deposit and the 20% threshold that lenders typically require before waiving LMI.

As of October 2025, the scheme was expanded significantly. Annual place limits were removed, income caps were scrapped, and property price caps were raised to reflect current market values. That means eligible first home buyers can now access the scheme without competing for a limited number of spots or worrying about earning too much.

Gen Z Demand Has Jumped 22.8%: Here Is Why That Matters

The October 2025 changes to the 5% Deposit Scheme had an immediate effect. According to credit reporting agency Equifax, overall first home buyer demand increased by 16.4% in the months following the expansion.

Gen Z buyers aged 18 to 25 led every other age group, with home loan demand rising 22.8% since October. That is not a coincidence. As Equifax notes, Gen Z has historically found it harder than any other generation to save a 20% deposit, particularly with rental costs eating into savings and property prices outpacing income growth.

The data across other age groups tells a similar story. Home loan demand among buyers aged 26 to 35 rose 17.4%, while demand from first-time buyers aged 35 to 44 climbed 16% over the same period. The scheme has clearly reached buyers across the board, but the youngest cohort is driving the most significant shift.

How the First Home Buyer Guarantee Scheme Works

The core mechanics

The 5% Deposit Scheme, now formally called the Australian Government 5% Deposit Scheme, allows eligible buyers to purchase with a deposit as low as 5% of the property value. Single parents and legal guardians can go lower still, with a 2% deposit available under the scheme.

The federal government guarantees the portion of the loan sitting between your deposit and the standard 20% threshold. This removes the need for lenders mortgage insurance for first home buyer applicants, who would otherwise be required to pay, which on a median-priced Perth property can add thousands of dollars to upfront costs.

Buying with a smaller deposit does more than just reduce how long you spend saving. Getting into the market sooner means you start building equity earlier, and in a rising market, that early entry can represent a significant financial advantage over buyers who wait another two or three years.

What changed in October 2025

The expanded scheme introduced three major changes:

No annual place limits

Previously, the scheme ran on a fixed number of spots per financial year. Once they were gone, buyers had to wait until the next round. That restriction has now been removed entirely.

No income caps

Earlier versions of the scheme excluded higher earners from applying. The income ceiling has been lifted, meaning a broader range of buyers can now access the guarantee regardless of how much they earn.

Higher property price caps

The maximum purchase price eligible under the scheme has been raised to reflect current property values across different states and territories. In Western Australia, the cap increase brings more of the Perth and greater Rockingham market into scope.

Who is eligible

The scheme is open to Australian citizens and permanent residents who are genuine first home buyers. You need to intend to live in the property as your principal place of residence. Beyond that, the removal of income caps and place limits means the primary qualifying question is simply whether you have not previously owned property in Australia.

Checking your eligibility takes a short conversation, and it is something the team at Osinski Finance can walk you through before you make any commitments.

The Lenders Mortgage Insurance Question

One of the most underappreciated benefits of the scheme is what it does to your upfront costs.

Lenders mortgage insurance for first home buyer applicants would typically run to tens of thousands of dollars on a standard home purchase. It is a premium lenders charge to protect themselves when a borrower's deposit is below 20%, and it does not protect the buyer at all. It protects the bank.

The government guarantee removes the need for LMI, allowing you to put those savings toward your deposit, conveyancing costs, or stamp duty.

For a first home buyer in Western Australia purchasing a property around the median price, avoiding LMI can represent a saving of $15,000 or more, depending on your deposit size and loan amount. That is not a marginal benefit.

Not All Lenders Participate in the Scheme

This is an important practical detail that the scheme's marketing does not always make clear.

The first home buyer deposit scheme is delivered through a panel of approved lenders. Not every bank or non-bank lender in Australia has signed up. This means the home loan you qualify for through the scheme may come from a narrower pool of lenders than if you were applying through standard channels.

Working with a mortgage broker matters here precisely because navigating participating lenders is what brokers are built for. At Osinski Finance, the team has access to nearly 100 lenders across Australia and has strong familiarity with which lenders are on the scheme panel, what their current rates look like, and which products will suit your situation. The goal is to find a loan that matches your needs within that approved pool, not just to confirm that a scheme exists.

Federal Budget Reforms Are Also Working in First Home Buyers' Favour

The expanded scheme is not the only tailwind first home buyers have at the moment.

This year's federal budget introduced reforms specifically designed to shift the scales in favour of first home buyers, according to the government. The changes target negative gearing rules and capital gains tax treatment for property investors, with the explicit goal of reducing competition at the more affordable end of the market.

What the negative gearing and CGT changes mean in practice

Investors have historically competed with first home buyers most directly in the price range that entry-level buyers can afford. Negative gearing and CGT concessions have made that price bracket particularly attractive for investment purchases, pushing prices up and reducing the number of properties available to owner-occupiers.

The budget changes aim to reduce that competitive pressure. By adjusting the financial incentives for investors in lower price brackets, the government expects to free up more supply for buyers who intend to live in the property.

What this means for prices

Less investor competition in the entry-level market is expected to moderate price growth, not reverse it. The Commonwealth Bank is currently predicting that the federal budget reforms will see home prices rise 3% this year, revised down from earlier forecasts of 5%, followed by further growth of 3% in 2027.

That is still a market that is moving upward. For first home buyers weighing whether to act now or wait, a softer growth outlook means the price gap between now and next year is narrower, but the market is not predicted to fall. Getting in sooner remains the more conservative financial decision.

How to Get Started With the Scheme Through a Broker

Understanding a government scheme is one thing. Getting it to work for your specific financial situation is another.

Here is how the process typically works when you approach it through Osinski Finance:

Step 1: Initial conversation. You talk through your financial situation, your deposit savings, your income, and the kind of property you are looking at. This takes around 30 to 45 minutes and gives the broker a clear picture of where you stand.

Step 2: Eligibility and serviceability check. The broker confirms you meet the scheme's eligibility criteria and assesses your borrowing capacity. This includes reviewing your income documents and any existing debts.

Step 3: Lender matching. From the pool of participating lenders in the scheme, the broker identifies which products suit your needs, at what rates, and with what features. You are presented with options rather than a single lender's range.

Step 4: Application preparation and submission. The broker handles the paperwork, communicates with the lender on your behalf, and manages the process through to approval.

Step 5: Settlement and beyond. Once approved, you receive ongoing support, including rate reviews and advice as your circumstances change.

There are no fees charged to you for home loan assistance. Osinski Finance is paid a commission by the lender if a loan settles. If no suitable finance can be secured, the team works for free.

Is Now a Good Time to Use the Scheme?

The expanded guarantee scheme removes previous limits on places and income, making it accessible to more buyers. 

Combined with the federal budget reforms reducing investor competition at the entry level, and a market forecast showing moderate rather than runaway price growth, the conditions for first home buyers in 2026 are as clear as they have been for some time. Rates have been moving, the deposit hurdle is lower than it has ever been under the scheme, and LMI is off the table.

Whether or not now is the right time for you personally depends on your savings, your income, and your goals. That is a 30-minute conversation, and it costs nothing.

Speak to Osinski Finance About Your First Home 

Osinski Finance is a fully accredited, family-owned mortgage brokerage based in Rockingham, WA. The team helps clients across Perth and Western Australia with home loans, investing in a property, and becoming a first home buyer, among other services.

If you want to know whether the first home buyer guarantee scheme applies to your situation, contact us today.

Key Takeaways

• The first home buyer guarantee scheme now has unlimited places, no income caps, and higher property price caps, meaning far more Australians can access it than under the previous version.
• Gen Z home loan demand rose 22.8% after the October 2025 changes, the highest increase of any age group, driven by the removal of the 20% deposit barrier.
• The scheme can save eligible applicants $15,000 or more, depending on their loan amount and deposit size.
• Not all lenders participate in the deposit scheme, so working with a broker who knows the approved panel is an important practical advantage.
• Federal budget reforms targeting negative gearing and CGT are expected to reduce investor competition in the entry-level market, moderating price growth from 5% to 3% for 2026, according to CommBank forecasts.
• Getting independent, no-cost advice from a broker is the fastest way to understand whether the scheme applies to your situation and which participating lender offers the best fit.

Frequently Asked Questions About the First Home Buyer Deposit Scheme

What is the first home buyer guarantee scheme, and how does it work? 

The guarantee scheme is an Australian Government initiative that allows eligible buyers to purchase a home with a deposit as low as 5% without paying lenders' mortgage insurance. The government acts as a guarantor on the portion of the loan between your deposit and the standard 20% threshold lenders require. This means you do not need to save a larger deposit or pay an insurance premium to protect the lender. As of October 2025, the scheme has unlimited places and no income cap, making it accessible to a much broader range of buyers than previous versions.

Who is eligible for the scheme in 2026? 

To be eligible, you must be an Australian citizen or permanent resident who has not previously owned property in Australia. You must intend to occupy the property as your principal place of residence. The income cap that existed under older versions of the scheme has been removed, so there is no longer an earnings ceiling. Your deposit needs to be at least 5% of the property's purchase price, and the property must fall within the price cap set for your state or territory. A mortgage broker can confirm your eligibility quickly based on your individual situation.

What are the property price caps for the scheme in Western Australia? 

The property price caps for the first home buyer were raised as part of the October 2025 expansion to better reflect current market values. In Western Australia, the updated caps cover a broader segment of the Perth and greater metro market than the previous limits allowed. Specific cap figures are published on the Housing Australia website and are updated when the scheme rules change. Speaking with a participating broker like Osinski Finance is the quickest way to confirm whether a specific property you are considering falls within the current cap.

Does the scheme mean I do not need to pay lender's mortgage insurance? 

Yes. One of the primary benefits of the scheme is that it removes the need for lenders' mortgage insurance for eligible buyers. LMI is a premium charged by lenders when a borrower's deposit is below 20%, and it can run to tens of thousands of dollars depending on the loan size. Under the scheme, the federal government guarantees the lender's risk instead. This can make a significant difference to your upfront costs and how much you need to have saved before you can buy.

Not all lenders participate in the scheme. How do I find one that does? 

The first home buyer deposit scheme operates through an approved panel of participating lenders. Not every lender in Australia is on that panel. The Housing Australia website publishes a current list, but comparing options across participating lenders is where a mortgage broker adds real value. Osinski Finance has relationships with nearly 100 lenders and can identify which participating lenders offer the most competitive rates and product features for your specific circumstances. This is a faster and more thorough process than approaching lenders individually.

What is the difference between the 5% Deposit Scheme and the 2% deposit for single parents? 

The standard scheme allows eligible first home buyers to purchase with a minimum 5% deposit. Single parents and eligible legal guardians can access a lower deposit threshold of 2% under a separate component of the same scheme. Both components remove the need for lender's mortgage insurance through the government guarantee. The 2% deposit option recognises that single-income households face a harder savings challenge. Eligibility criteria for both components are broadly similar, with the deposit requirement being the primary difference.

How do the federal budget reforms affect first home buyers? 

The 2026 federal budget introduced changes to negative gearing rules and capital gains tax treatment for property investors. The goal is to reduce investor competition in the more affordable price brackets typically targeted by first home buyers. With less investor demand at the entry level, price growth is expected to moderate. CommBank has revised its national home price forecast down from 5% to 3% for 2026 as a result. For first home buyers, this means a somewhat less competitive purchasing environment without any indication that prices will fall.

Do I need to pay a mortgage broker to help me access the scheme? 

No. Mortgage brokers in Australia are paid by lenders, not borrowers, when a home loan settles. If you work with Osinski Finance to access the first home buyer guarantee scheme and a loan is successfully arranged, Osinski Finance receives a commission from the lender. If no suitable finance can be secured, there is no charge to you. This means you get professional guidance navigating the scheme, the participating lender panel, and the application process at no direct cost.

How long does the application process take for scheme participants? 

The timeline depends on the lender selected and the complexity of your financial situation, but the overall process follows the same path as a standard home loan application. Once a broker has assessed your eligibility and matched you with a participating lender, the application is prepared and submitted. Approval timeframes vary but are typically in line with what you would expect from any home loan application, often between one and three weeks for conditional approval. Having your income documents and deposit history ready before the initial meeting speeds the process considerably.

Is the scheme available for new builds as well as existing properties? 

Yes, the first home buyer guarantee scheme applies to both newly built homes and established properties, as well as house-and-land packages and off-the-plan purchases, subject to the property price caps applying in your state. There are no restrictions based on property type beyond the price cap and the requirement that you intend to live in the property. If you are considering a new build in Western Australia, Osinski Finance can help you understand how construction loan structures interact with the scheme guarantee.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to your circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.