The 5% Deposit Scheme, formerly known as the New Home Guarantee Scheme, allows eligible first-home buyers to purchase a property with a deposit as low as 5%, without the need to pay Lenders Mortgage Insurance (LMI). The scheme's expansion from 1 October 2025 removed the cap on the number of places available, eliminated income limits, and adjusted property price thresholds to better align with current market values. These changes have made the scheme more accessible to a broader range of prospective homeowners.

Government data reveals that approximately one in ten properties sold in October were purchased by first-home buyers utilizing this scheme. This surge underscores the scheme's effectiveness in addressing some of the affordability challenges faced by new entrants into the housing market.

However, while the scheme has facilitated increased participation, it also raises questions about its long-term impact on housing affordability. By boosting demand without a corresponding increase in housing supply, there is potential for upward pressure on property prices. Prospective buyers should consider this dynamic when planning their entry into the market.

For those contemplating homeownership, it's crucial to assess personal financial readiness and understand the full implications of participating in such schemes. Consulting with financial advisors or mortgage brokers can provide tailored advice to navigate the complexities of the current housing landscape.