Discover how the expanded 5% Deposit Scheme, effective 1 October 2025, empowers more first-home buyers to enter the NSW property market. Learn the benefits, eligibility rules, potential risks, and why expert property conveyancing is essential for navigating legal and financial requirements with confidence in today’s dynamic housing landscape.
From 1 October 2025, the NSW Government has expanded the First Home Buyer 5% Deposit Scheme, allowing eligible buyers to purchase properties worth up to $1.5 million with just a 5% deposit. Under this updated policy, applicants no longer face income limits or waiting lists, and the government guarantees part of the home loan to remove the need for costly Lenders Mortgage Insurance (LMI). This change helps many first-home buyers who were previously priced out of the $1M+ range enter the market sooner and with less upfront savings.
While this expansion reduces financial barriers, it also introduces new legal and lending responsibilities that first-home buyers must navigate carefully. Understanding eligibility criteria, property value caps, and the conveyancing process is crucial before signing a contract. Buyers should pay close attention to contract conditions, lender requirements, and government regulations to avoid pitfalls. This guide explains how the new scheme works, its key benefits and potential risks, and how CMI Legal provides professional conveyancing support to secure a smooth property purchase in NSW.
Property Conveyancing: Expansion of 5% Deposit Scheme
Let our property lawyers guide you through the new 5% Deposit Scheme. Get expert advice to secure your home purchase and understand the latest rules, caps, and eligibility.
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Key Changes Commencing 1 October 2025
The 5% deposit scheme has been updated with important changes from 1 October 2025:
No Income Limit: Now, all first-home buyers can apply, no matter how much they earn.
Unlimited Applications: There is no limit on the number of people who can join the scheme.
Higher Property Price Limits: You can now buy more expensive homes under the scheme:
Sydney: up to $1.5 million
Melbourne: up to $950,000
Brisbane: up to $1 million
Adelaide: up to $900,000
Perth: up to $850,000
ACT: up to $1 million
These adjustments make it easier for first-home buyers across both metropolitan and regional NSW to access the property market under more flexible financial conditions.
Eligibility Criteria
To qualify for the 5% Deposit Scheme, you must meet these key eligibility requirements:
First-Home Buyer: Applicants must be purchasing their first home. Ownership of any Australian residential property within the past 10 years disqualifies eligibility.
Australian Citizenship or PR: The scheme is open only to Australian citizens and permanent residents. Temporary residents and foreign nationals are not eligible.
Owner-Occupier Requirement: The property must be your primary residence. You must move in within six months of settlement and live there continuously.
Minimum Age: You must be at least 18 years of age at the time of purchase.
5% Minimum Deposit: Buyers must contribute at least 5% of the property price, excluding other costs such as stamp duty, fees, and charges.
Bank Lending Approval: Even with scheme approval, buyers must pass a standard lending assessment, including credit, income, and serviceability checks.
Understanding Low-Deposit Home Loans
A low-deposit loan lets buyers purchase a home with as little as 5% savings. Normally, lenders require Lenders Mortgage Insurance (LMI) to safeguard against loan defaults. LMI can add thousands to upfront or ongoing costs.
Under the government scheme, eligible first-home buyers can avoid paying LMI, saving up to $40,000 depending on the property price. It’s wise to compare government assistance with private lending options; your conveyancer or mortgage broker can help determine which is suited to your situation.
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How CMI Legal Helps First-Home Buyers
- Comprehensive Contract Review: CMI Legal carefully reviews the contract of sale to uncover unfavourable conditions or hidden clauses. We ensure buyers understand critical terms such as settlement timelines, special conditions, and cooling-off rights before signing.
- Detailed Title and Property Searches: We conduct title, zoning, easement, and council approval checks before your deposit is paid, preventing future ownership disputes or legal restrictions.
- Scheme Eligibility and Grant Advice: Our lawyers guide you through eligibility under the 5% scheme and evaluate your potential for NSW stamp duty concessions, first-home buyer duty relief, or grants available through Revenue NSW.
- Coordination with Lenders and Agents: CMI Legal liaises with banks, real estate agents, and vendors to keep your settlement process smooth and compliant. We manage all required documentation and ensure on-time lodgement and settlement.
- Transparent Fixed-Fee Conveyancing
:Our fixed-fee structure means no hidden costs. Whether you’re purchasing a $1M apartment or a $1.5M home in Sydney, our services are tailored to protect your financial and legal interests.
Benefits of the 5% Deposit Scheme
- Reduced Upfront Costs: Avoiding LMI can save between $20,000–$40,000, depending on loan size.
- Faster Market Entry: Buyers can purchase sooner without needing a full 20% deposit.
- Wider Choice of Properties: Higher property price caps mean more options in cities like Sydney and other high-demand areas.
Conclusion
The expansion of the 5% Deposit Scheme is a valuable opportunity for NSW first-home buyers aiming for properties between $1 million and $1.5 million. While it makes homeownership more reachable, it also introduces complex financial and legal considerations that require professional guidance. With CMI Legal’s expertise in property conveyancing across Sydney, first-home buyers can navigate contracts, eligibility, and settlement confidently—ensuring their first property purchase is legally secure and financially sound. Ready to buy your first home under the new 5% Deposit Scheme? Contact CMI Legal today for expert property conveyancing advice in Sydney and NSW.
Frequently Asked Questions
What is the First Home Buyer 5% Deposit Scheme?
It’s a government initiative allowing eligible first-home buyers to purchase property with just a 5% deposit, avoiding Lenders Mortgage Insurance, and expanding from 1 October 2025.
Who can apply for the 5% Deposit Scheme?
Applicants must be Australian citizens or permanent residents, over 18, and purchasing their first home to live in, not as an investment property.
What is the maximum property value under the scheme?
From October 2025, buyers can purchase up to $1.5 million in Sydney and varying lower caps across other capital cities.
Do I still need bank approval under the scheme?
Yes. Even with government eligibility, you must pass standard lender checks, including credit score, income, and financial serviceability.
How does CMI Legal assist buyers under this scheme?
CMI Legal reviews contracts, ensures legal compliance, checks title and zoning, and manages communication with lenders and agents for a smooth settlement.
Can I avoid Lenders Mortgage Insurance (LMI) through the scheme?
Yes. Eligible buyers can borrow up to 95% of the property’s value without paying costly LMI, saving thousands upfront.
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They explained every step of the process clearly, responded promptly to any questions I had, and made complicated situations feel a lot more manageable. I felt like I was in good hands the entire time, and their calm, confident approach really helped me stay grounded.
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As an old customer of CMI, this year is already the 8th year. Special thanks to attorney John and attorney Tina for carefully answering our various questions, providing a lot of professional advice and help, allowing us to easily complete each transaction.
Tina was a great lawyer - she was always incredibly knowledgeable, answered all questions promptly, and very friendly. Would recommend Tina!
Tina was a great help in guiding us through our first home buying experience. She gave us a lot of great explanations and advice from initial discussion of the process through every step until successful settlement. Communication and resolution of issues was prompt and professional.
Tina is a fantastic lawyer. her responses to my queries were thorough and timely, and impeccable organizational skills! Truly appreciated her clear and consistent communcation througout the entire property-purchasing process. she handled everything with profressionalism and expertise, making what could have been a stressful experience much smoother. Highly recommend!
We had the pleasure of working with Tina as our solicitor for our first home purchase, and we couldn’t have been in better hands. She carefully explained every step of the process, guiding us through what initially felt overwhelming and unfamiliar. Buying off the plan made us particularly cautious, especially when it came to reviewing legal documents. Tina’s meticulous approach put us at ease—she ensured we both clearly understood each aspect, taking the time to highlight and reorganise information to make it more accessible. Her dedication and professionalism made the entire experience far less daunting, and we’re truly grateful for her support.
John and Tina have provided great professional legal service since 2017 for me.
I realised that I hadn’t left a review for my dealings with CMI legal. I had dealt with them a few months ago, but an epiphany made me come and leave a review.
5 stars is insufficient to express their work. We were working Dee and she is an amazing and thorough professional. She goes above and beyond and explains matters that makes you understand things really well. Thank you Dee for your amazing work.
5 stars is insufficient to express their work. We were working Dee and she is an amazing and thorough professional. She goes above and beyond and explains matters that makes you understand things really well. Thank you Dee for your amazing work.
