5% Deposit Scheme 2025: What Sunshine Coast First-Home Buyers Need to Know
By Leigh Martinuzzi | Martinuzzi Property Group – eXp Australia
Buying a home has never been easy and the real hurdle has always been saving a large enough deposit.
But from 1 October 2025, that’s changing. The Federal Government’s expanded 5% Deposit Scheme gives eligible Australians a faster, more achievable path to home ownership.
It’s big news for Sunshine Coast locals, where lifestyle demand and steady price growth have made it increasingly difficult for first-time buyers to break in. Here’s how the scheme works, who’s eligible, and how to make the most of it.
What is the 5% Deposit Scheme?
The 5% Deposit Scheme is part of the Home Guarantee Scheme, often referred to as the “First Home Guarantee.” Under this, eligible buyers can purchase a home with as little as 5% deposit and avoid paying Lenders Mortgage Insurance (LMI), because the Government acts as guarantor for part of the loan.
In usual practice, lenders require a 20% deposit to avoid LMI, which can add tens of thousands to upfront costs. Under this scheme, by providing a guarantee (up to 15% of property value for the first-home stream), the Government reduces the LMI burden.
The scheme applies to both existing and new homes, townhouses, apartments, and house-and-land packages, subject to eligibility and property value caps.
What’s Changing from 1 October 2025
The new updates coming into effect make the scheme more flexible and accessible than ever.
The expansion brings several important shifts:
- No place limits – The scheme will no longer have a fixed number of places; any qualifying applicant may apply.
- No income caps – Previous limits (e.g. $125,000 for singles, $200,000 for couples) are removed.
- Increased property price caps – These have been raised across the country to reflect housing market changes. In Queensland:
- Brisbane & Sunshine Coast (capital city / major regional centres): $1,000,000 cap
- Other Queensland areas (non-metropolitan): $700,000 cap
- Scheme simplified / regional consolidation – The Regional First Home Buyer Guarantee will be folded into the main First Home Guarantee stream.
Thus, for Sunshine Coast and Brisbane, properties up to $1,000,000 become eligible under the First Home Guarantee.
Why This Update Matters for Sunshine Coast Buyers
Previously, a Sunshine Coast buyer might have looked at a cap of $700,000 or lower (older figures). But now with the $1,000,000 ceiling:
- A 20% deposit on a $1,000,000 home = $200,000
- Under the expanded scheme, with 5% deposit, you’d need only $50,000
- That difference (i.e. saving $150,000 in deposit) is a significant gain for many buyers
Government commentary explicitly states that under the scheme, a first home buyer in Brisbane could purchase a $1,000,000 home with a $50,000 deposit.
This shift can shorten the deposit accumulation timeline considerably (depending on income, savings rate, market conditions), making homeownership appearance more achievable earlier.
For single parents eligible under the Family Home Guarantee, a 2% deposit option remains, but subject to eligibility and scheme caps.
For many Sunshine Coast locals, this could translate into buying closer to work, schools, or coastlines, instead of being pushed further out by deposit constraints.
How It Could Shape the Sunshine Coast Property Market
With easier access to home financing, we can reasonably expect:
- Increased competition for entry-level and mid-priced homes
- Potential upward pressure on prices in suburbs like Palmwoods, Baringa, Buderim, Aura, Woombye
- More first-home buyers acting earlier, capturing value before further price growth
That said, market forces, supply constraints, interest rates, and economic conditions will significantly influence how dramatic these shifts become.
Things to Watch Out For
While the scheme offers a huge helping hand, it’s not without risks. Here are a few things to keep in mind:
- Smaller deposit = bigger loan
A 5% deposit means borrowing 95% of the property’s value. You’ll pay more in interest over time, so make sure repayments fit comfortably within your budget.
- Don’t overextend your budget
With income limits gone, it’s tempting to stretch your budget. But your lender will assess your borrowing power carefully, and you should too. Leave room for rate rises or life changes.
- Eligibility rules
You generally must not have owned property in Australia in the past 10 years (except under certain single-parent rules). Always check the latest scheme guidelines or consult a broker.
- Valuation & property value vs contract price
The property’s value assessed by the lender may differ from the purchase price. If that valuation exceeds the cap, the application may fail.
- Ongoing costs and financial planning
Even without LMI, you’ll still pay mortgage repayments, property rates, insurance, maintenance, etc. Build a financial safety net.
Smart Strategies to Get the Most Out of It
✔ Get pre-approval early
Participating lenders will assess your eligibility and borrowing capacity. Having pre-approval means you can move quickly when you find the right home.
✔ Target strategic suburbs
Look for suburbs under the price cap but with long-term growth potential. Areas like Palmwoods, Baringa, or Woombye often offer better value than coastal centres.
✔ Build a financial safety net
Even a small offset or savings account can help protect against interest rate increases or unexpected costs.
✔ Seek professional guidance
Talk to your mortgage broker or trusted real estate professional that’s where we come in!). A local perspective can help you buy smart and avoid overpaying.
My Final Take
The 5% Deposit Scheme (First Home Guarantee) with the updated $1,000,000 cap for Brisbane and Sunshine Coast is a major boost for first-home buyers in South-East Queensland.
It shortens the barrier to entry, reduces the upfront deposit requirement, and opens opportunities for more locals to step into homeownership sooner.
But it’s not risk-free. Careful financial planning, realistic borrowing, and good advice remain essential.
If you’re considering buying your first home under this scheme or want to understand your options on the Sunshine Coast, drop me a message. We can talk through your eligibility, suburb choices, and mortgage strategies.
👉 Book a chat today and let’s see how far $50,000 can take you under the 5% Deposit Scheme.
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