The Federal Government’s expanded First Home Guarantee took effect on the 1st October, allowing Australians to buy with just a 5% deposit and avoid Lenders’ Mortgage Insurance. The updated scheme has no income caps or quotas, and higher property price limits. In Melbourne, the cap has risen to $950,000, up from $800,000.

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State incentives remain in place, including Victoria’s $10,000 First Homeowner Grant on new builds and stamp duty exemptions up to $600,000, with concessions up to $750,000. Together, these measures have lowered barriers to entry for many first home buyers.

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The immediate impact is stronger demand in entry- and mid-tier suburbs, likely driving more competition and price growth. While positive for overall market activity, buyers entering with just 5% equity are more vulnerable if prices soften or interest rates rise.

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For investors, the scheme adds both pressure and opportunity. Increased first home buyer activity may intensify competition for entry-level houses and units, potentially pushing up prices. At the same time, as some renters transition into ownership, demand in certain pockets may ease slightly. However, Melbourne’s population growth and rental shortages are expected to keep investor demand strong.

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First home buyers looking to use the scheme should act strategically: secure finance pre-approval, confirm their lender supports the program, and remain realistic about property type and suburb. Engaging a Buyers Advocate offers a competitive edge — from accessing off-market opportunities to negotiating effectively and ensuring long-term growth potential.

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The new 5% scheme has opened the door for many buyers who previously felt locked out of the market, while reshaping dynamics for investors. Success will come down to preparation, smart strategy, and expert guidance in an increasingly competitive environment.