Jump Into the Market Up to 4 Years Sooner With the 5% First Home Loan Deposit Scheme

September 17, 2025

For most first home buyers, saving for a 20% deposit can feel like a never-ending uphill climb. But here’s the good news: you might only need a 5% deposit to buy your first home. Even better, you may already have enough saved to qualify.


Think of saving for a deposit like running a financial marathon. It’s long, it’s tiring, and the finish line can seem far away.


According to PropTrack, it takes an average Australian household about 5.6 years to save the traditional 20% deposit. That timeline stretches even further in higher-priced areas.


And while you’re putting money aside, property prices rarely stand still. Rising values can move the goal posts, making it harder to keep pace with your savings target.


That’s why the recent expansion of the Home Guarantee Scheme (HGS) is such a game-changer. Housing Industry Association (HIA) Senior Economist Tom Devitt says the first home loans deposit scheme could shave up to four years off the time it takes to save for a deposit.


A quick calculation shows this means first home buyers could secure a deposit in just over 18 months. Many who are already saving may find themselves closer to buying than they thought.


What is the first home loan deposit scheme?


The first home loan deposit schemes, also known as the HGS, are designed to help first home buyers purchase sooner.


Unlike the First Home Owner Grant, which provides a one-off payment, no money changes hands under the HGS. Instead, it lets you buy with just a 5% deposit.


Here’s how it works. The federal government guarantees the remaining 15%, giving lenders the same level of security as if you had saved a 20% deposit. That guarantee removes the need for lenders' mortgage insurance (LMI), which can be a hefty upfront cost.


“First home buyers pay between $25,000 and $30,000 in LMI to purchase an average home,” says the HIA’s Tom Devitt.


By using the first home loans deposit scheme, you don’t just buy with a smaller deposit. You also avoid this significant cost, making homeownership more affordable from the start.


How do the first home loans deposit scheme and first home loan schemes compare?


The federal government has announced major updates to the HGS, starting 1 October 2025. These updates are aimed at improving access to all Australian first home loan schemes.


From this date:


  • All Australian first home buyers will be eligible.
  • There will be no cap on the number of applicants each year.
  • Income limits will be removed, opening the scheme to buyers on higher wages.
  • Property price thresholds will rise to reflect current market conditions.


According to the HIA, these changes mean first home buyers could move into their first home around four years sooner on average. The first home loan deposit scheme is one of the most significant reforms for young Australians hoping to buy sooner.


How Osinski Finance can help you with first home loan schemes


If you’re a first home buyer, now could be the right time to act. The changes to the first home loan deposit scheme give you a rare chance to shorten the path to homeownership and reduce upfront costs.


Not every lender is signed up to the first home loan schemes, which makes expert guidance essential. At Osinski Finance, we specialise in helping clients with home loans, investing in a property, and becoming a first-home buyer. Our team will point you to the right lenders, outline your options, and guide you through the next step with confidence.


Get in touch with us today, and let’s get you closer to your first set of house keys.


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.


Updates

All aboard! The affordability of just one extra train stop

By Dave Barbeler • October 22, 2025
If you’ve just boarded the home buyer express, chances are ‘value’ is high on your list of neighbourhood must-haves. Well, it turns out that house hunters who are happy to stay on the train for just one more stop can be rewarded with savings totalling hundreds of thousands of dollars.

Bank of Mum and Dad: What $40,000 Really Does for First Home Buyers?

By Dave Barbeler • October 22, 2025
They say there’s nothing quite like a parent’s love. Well, perhaps except for a parent’s love plus an extra $40,000 to help buy your first home. Today we’ll look at the pros and cons of family support – plus other ways to buy a first home that give mum and dad a break.

What Are the Chances of Another RBA Interest Rate Cut This Year?

By Dave Barbeler • October 15, 2025
The Reserve Bank has the cash rate in a holding pattern, and several of the big banks have scaled back their predictions of another cash rate cut in 2025. Here’s what it could mean for your home loan.