Government Expands First Home Guarantee to 5% Deposit

The federal government has expanded the First Home Guarantee so all eligible first-home buyers can purchase with a 5% deposit and avoid lenders mortgage insurance, removing previous income, property-value and applicant limits. The scheme sets property price thresholds that vary by city — from $600,000 in Darwin to $1.5 million in Sydney — enabling purchases at up to 95% loan-to-value ratios. Analysts warn buyers with cash could bid up suburbs just under those caps, potentially putting 5% deposit buyers out of reach and tightening local prices. Economists say first-home buyers remain a small share of the market but increased demand may enable existing owners to trade up and could stimulate investor activity. New lending products aimed at low-deposit buyers, such as part interest-only mortgages, lower near-term payments but increase long-term interest costs and repayment risk over a typical 30-year loan.