Introduction
For years, first home buyers across Australia have been told they need to save a 20% deposit before entering the market. But in 2025, this is no longer the reality. With lenders dropping fixed rates under 5%, government schemes designed to ease entry, and brokers helping clients navigate complex policies, aspiring homeowners in Sydney, Melbourne, Brisbane, Perth, Adelaide, Hobart, Canberra, and Darwin are finding that they can achieve their dream sooner — often with just a 5% deposit.
Rate Cuts Creating Opportunities
Recent mortgage news shows a strong shift:
- BOQ slashed its two-year fixed rate to 4.89% for eligible borrowers.
- Westpac, NAB, and ANZ have followed with fixed rates at or just above 5%.
- According to Canstar, 18 lenders now have fixed rates under 5%, signalling fierce competition.
This means lower repayments for first home buyers, and a higher likelihood of loan approval thanks to reduced serviceability pressures.
Why the 20% Deposit Myth Persists
The 20% benchmark exists because:
- It avoids Lenders Mortgage Insurance (LMI).
- It provides a “safety buffer” for banks.
But in 2025, brokers regularly help first home buyers secure loans with 5–10% deposits using a combination of lender products and government schemes.
Government Schemes Helping Buyers
Across Australia, options include:
- First Home Guarantee – Buy with just 5% deposit, no LMI.
- Family Home Guarantee – For single parents, as little as 2% deposit.
- First Home Owner Grant (FHOG) – Lump sum support for eligible buyers of new builds.
- Stamp Duty Concessions – Available in most states for first-time buyers.
Capital City Realities
- Sydney: Prices remain high, but grants + 5% loans make entry possible in outer suburbs.
- Melbourne: Competitive lending environment improves borrower options.
- Brisbane: Strong affordability attracts first home buyers and investors alike.
- Perth: Rising property values boost long-term equity for new buyers.
- Adelaide: Lower median prices allow borrowers to enter with smaller loans.
- Hobart: Growth has stabilised, making entry more achievable.
- Canberra: Strong employment and stable incomes support approvals.
- Darwin: Regional lenders offer competitive deals for first-time buyers.
Savings Example: 5% vs 20% Deposit
Scenario: $600,000 home purchase
- 20% deposit ($120,000) → loan $480,000
- 5% deposit ($30,000) → loan $570,000
At BOQ’s 4.89% fixed rate:
- $480,000 loan = $2,782/month
- $570,000 loan = $3,304/month
Yes, repayments are higher with a smaller deposit — but they’re achievable for many households, especially when compared to rising rent costs in capital cities.
Real Client Story: James & Anna in Brisbane
“We thought it would take years to save 20%. Our broker explained the First Home Guarantee, helped us qualify with 5% down, and found a fixed rate under 5%. We moved into our new home in six months instead of five years.”
The Role of a Mortgage Broker
A broker helps first home buyers by:
- Comparing 50+ lenders for the best deals
- Identifying lenders with flexible credit policies
- Managing grant and concession applications
- Explaining LMI and strategies to avoid or reduce it
- Structuring loans to suit long-term goals
Why Waiting Could Cost You
If you delay:
- Property prices could rise as rates fall.
- Grant eligibility may change.
- Today’s sub-5% rates might not last.
With competition heating up, early movers stand to benefit the most.
📅 Book Your Free, No-Obligation Chat
At Money Tree Mortgage Brokers, we help first home buyers enter the market sooner by comparing lenders, unlocking grants, and guiding you through every step. Don’t let myths hold you back — let’s explore your options today.
