On Monday 25 August 2025, the Federal Government announced they would be bringing forward the proposed First Home Buyer 5% Deposit Scheme to 01 October 2025, instead of its planned commencement next year.
What does this mean for First Home Buyers?
Under this new scheme, all First Home Buyers will be eligible to purchase properties with a 5% Deposit. This is achieved by the Government acting as a guarantor for a certain portion of every purchase thereby removing the need for Lenders Mortgage Insurance or other forms of security (including parental guarantees) which would generally be required with deposits of less than 20%.
How does this differ from previous schemes?
Whilst the 5% Deposit Scheme is not brand new, previous schemes had a strict limit on the number of places allocated per year, income limits for applicants and property purchase price caps.
Under this new scheme, there will be no limit on the number of places allocated per year and no income limits for applicants.
Whilst purchase price caps do still remain, the caps have been significantly increased under the new scheme. For Tasmania the new caps will be $700,000 for capital cities (previously $600,000) and $550,000 for all other areas (previously $450,000).
This effectively means that all First Home Buyers in Tasmania will be eligible to purchase a property with a 5% Deposit so long as the relevant property is under the applicable price cap.
Who is a First Home Buyer?
To be an eligible First Home Buyer under this scheme, applicants must have not previously owned any real property in Australia and must be Australian Citizens or Permanent Residents.
What type of properties can be purchased?
This scheme supports both new and existing residential properties (including house and land packages and vacant land purchases with appropriately linked building contracts). Importantly, all properties purchased under the scheme must be used as the principal place of residence for all applicants once settled/constructed and the scheme cannot be used to purchase an investment property or a property for any use other than residential.
Who to contact?
All reputable Brokers and Financial Institutions will have the expertise to assist First Home Buyers to access the scheme as a part of their pre-approval or finance application.
Simmons Wolfhagen are also here to assist and we encourage all First Home Buyers to contact our expert Property Law Team to discuss their eligibility for the scheme or any other queries or concerns they may have relating to the purchase of property in Tasmania.