From 1 October 2025, first-home buyers can purchase with just a 5% deposit and no LMI, thanks to an expanded federal guarantee. The start date has been brought forward (was January 2026), with no caps on places or income and higher property price caps to be set in line with average prices.

What changed — at a glance

• Earlier start: Scheme now begins 1 Oct 2025 (not Jan 2026).
• Access expanded: All first-home buyers can apply — no caps on places or income.
• Price caps rising: Higher property price caps will apply (set in line with average prices); full table to be confirmed by Housing Australia ahead of launch.
• How it works: Government guarantees up to 15% of the loan so you can buy with a 5% deposit and avoid LMI.

Quick refresher: the guarantee vs LMI

Normally, buying with <20% deposit triggers Lenders Mortgage Insurance (LMI). Under the Home Guarantee Scheme, the Government guarantees part of your loan so you don’t pay LMI — potentially saving tens of thousands up-front.

Will this push prices up?

Independent modelling and commentary are mixed. Treasury expects a minor long-run price effect (~0.5% over six years), while several analysts suggest larger near-term increases as more buyers compete sooner. Either way, your focus should be borrowing safely and choosing the right product, not just the maximum budget.

WA buyers: where this helps most

• Deposit hurdle: A 5% deposit means getting in years sooner than saving 20%.
• No income caps: Opens the door for higher-earning singles/couples who were previously excluded.
• Higher price caps: Expect Perth and regional WA caps to lift with market averages (final figures to be published by Housing Australia).

WA purchase price limits — what can you buy? 

• Keystart (WA State): The maximum purchase price is now $800,000 statewide for the Low Deposit Home Loan. This follows two recent lifts — from $650,000 → $730,000 (Dec 2024), then $730,000 → $800,000 (Aug 2025) — with limits now reviewed against REIWA data.
• Federal 5% deposit scheme (Home Guarantee Scheme): From 1 Oct 2025, price caps are being set higher in line with average prices (final tables are released by Housing Australia and vary by postcode). We’ll update the WA figures here as soon as the official cap table is live; in the meantime, buyers can check postcode caps via Housing Australia’s tool.

Why it matters: the Keystart $800k cap expands options immediately for WA buyers needing a 2% deposit / no LMI pathway, while the federal 5% guarantee broadens access (no income caps, no place caps) and avoids LMI once Housing Australia’s new cap table kicks in.

Keystart or the 5% deposit scheme — or both?

In WA, Keystart remains a powerful option: deposits from 2% and no LMI on select products (with separate income and price limits). Many clients compare Keystart vs the federal 5% guarantee to see which delivers the best outcome on total cost, repayments and eligibility.

High-level comparison (summary only):

• Keystart (State): From 2% deposit, no LMI; WA-specific eligibility/settings.
• Home Guarantee (Federal): 5% deposit, no LMI via government guarantee; unlimited places, no income caps, and higher price caps from 1 Oct 2025.

FAQs

1. When does the 5% deposit scheme start?
   1 October 2025, brought forward from January 2026.
2. Are there still limits on places or income?
   No — unlimited places and no income caps will apply under the expansion.
3. What about property price caps in WA?
   Caps are being raised and will be aligned to average prices; Housing Australia will publish the updated caps and postcode tool before launch.
4. Do I still pay LMI?
   No — the government guarantee replaces LMI when you buy with 5% under the scheme.
5. How does this compare to Keystart?
   Keystart can allow deposits from 2% (no LMI) under WA-specific rules. We’ll compare both paths for total cost, repayments, and eligibility.

What to do now (and how we help)

1. Check your path: In a short call we’ll gauge your fit for the 5% scheme and Keystart.
2. Run the numbers: We’ll model borrowing power and repayments with realistic buffers — try our Resources & calculators first, then we’ll refine.
3. Compare lenders: We’ll show participating lenders under the guarantee vs mainstream alternatives, and any Keystart pathway.
4. Plan the next step: If a low-deposit option gets you in, we’ll map a refinance pathway once equity and rates improve.

Ready to get started?

👉 First-home buyer home loans → clear steps, documents and timelines
👉 Resources & calculators → estimate borrowing power & costs
👉 Contact our Perth team → personalised advice and lender comparison