There are many factors that influence property prices, and while most people are aware of things like interest rates or supply and demand, there’s one factor that’s often overlooked: the election cycle. Political decisions — especially in the lead-up to an election — can have a big impact on who can buy, what they can afford, and how much help they can get from the government.
A recent announcement by Anthony Albanese and the Labor Government is a perfect example. They’ve just revealed a major change that could help more Australians get into their first home with only a 5% deposit — and with fewer hoops to jump through.
What’s Changing with the First Home Guarantee Scheme?
Currently, the First Home Guarantee Scheme has several restrictions that limit who can access it. Here’s what buyers are dealing with under the current rules:
- A cap on spots: Only 50,000 places are available per year. If you miss out, you miss out.
- Income limits: Singles must earn under $125,000, and couples must be under $200,000 combined.
- Property price limits: Because income is restricted, so is borrowing power — which then limits the price of the home you can buy.
The New Scheme: Open Access for More First Home Buyers
Under the new proposal, all Australian first home buyers will be able to purchase a property with a 5% deposit. That’s across all income levels and all property prices. The government expects around 80,000 first home buyers each year to benefit.
Let’s break down the three major advantages of the updated scheme:
1. Only a 5% Deposit Required
This is a game-changer. It means buyers no longer need to save a full 20% deposit or rely on family guarantees. And history tells us this: when the deposit needed to buy a home is lower, more people buy.
2. No Lender’s Mortgage Insurance (LMI)
This part is often misunderstood. When a buyer has less than a 20% deposit, banks usually require LMI — a cost that protects the bank, not the buyer.
But under this scheme, the government guarantees the other 15% of the deposit. Because of that guarantee, banks don’t need to charge LMI. Here’s how much that could save:
| Property Price | 5% Deposit | LMI Savings |
|---|---|---|
| $600,000 | $30,000 | $24,000 |
| $750,000 | $37,500 | $30,000 |
| $1,000,000 | $50,000 | $40,000 |
These are real savings — tens of thousands of dollars that can stay in the buyer’s pocket.
3. Access to Better Interest Rates
Another hidden benefit: banks treat you as if you had a 20% deposit because of the government’s guarantee. That means:
- Lower interest rates
- Lower monthly repayments
- Improved borrowing capacity
This often surprises people, but it’s one of the most powerful features of the scheme. Lower repayments mean you can qualify for more — and get into a home sooner.
What This Means During an Election
From a Teach Me About Property perspective, the election cycle can become a powerful driver of property activity. Political parties often use housing policy to win votes, and for buyers, that can bring new opportunities.
As housing becomes a bigger issue on the political agenda, expect more policy changes and incentives that help first home buyers and investors. And with the Coalition expected to respond to Labor’s proposal soon, there could be even more options on the table.
The Bottom Line
If you’re thinking about buying your first home, this policy change could be the window you’ve been waiting for. A smaller deposit, no LMI, and lower interest rates can mean the difference between sitting on the sidelines and becoming a homeowner.
Stay tuned for updates on how the opposition plans to respond — and what that might mean for you.
