Through the expanded 5 per cent deposit scheme, the Albanese Government will guarantee a portion of a first home buyer’s home loan, so they can purchase with a lower deposit and not pay Lenders Mortgage Insurance.
Under the changes, all first home buyers will have access, with no caps on places or income limits. Property price caps will also be set higher in line with average house prices, providing access to a greater variety of homes.
For the average first home buyer, access to the scheme cuts years off the time it takes to save for a deposit and saves tens of thousands of dollars on Lenders Mortgage Insurance. In just the first year alone, first home buyers using the scheme are expected to avoid around $1.5 billion in potential mortgage insurance costs.
The median home price in Australia today is $844,000 and 5 per cent of that is $42,200. The last time $42,200 covered the 20 per cent deposit for a median home was 2002, which shows the generational scale of this change.
The expanded scheme means a first home buyer in in the Southern Highlands can purchase a $1 million home with a $50,000 deposit. They could save up to 10 years off the time it takes to save for a deposit, save about $42,000 in mortgage insurance, and could pay up to $350,000 towards their own loan instead of paying rent.
After consulting with industry, the Government will also direct Housing Australia to promote the diversity of lenders who offer the scheme, giving first home buyers greater choice to buy a home through smaller, customer-owned and regional banks.
Prime Minister Albanese said “We want to help young people and first home buyers achieve the dream of home ownership sooner.
“Bringing the start date of our 5 per cent deposit scheme forward will do just that.
“Getting more Australians into their own home quicker, while saving them money along the way.” he explained.
Since 2022, the federal government has helped over 180,000 first home buyers get a home of their own with a lower deposit. For more information on the 5 per cent deposits scheme, go to the Housing Australia website.
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