It is no secret that interest rates have climbed this year, with the Reserve Bank of Australia holding the cash rate at 4.35 per cent after three increases in 2026.
But for first home buyers, the honest story of 2026 isn’t about the cost of money, it’s about how much easier governments have made it to get into the market in the first place.
A wave of Federal and State changes rolled out over the past nine months has stripped away some of the biggest barriers first home buyers have faced for a generation: the size of the deposit, the cost of lenders’ mortgage insurance, and the upfront sting of stamp duty. Stacked together, they add up to one of the most supportive policy environments first home buyers have seen.
The 5% deposit scheme, without the caps
The Federal Government’s First Home Guarantee, commonly known as the 5% Deposit Scheme, has been expanded so that any eligible first home buyer can apply, regardless of income, with no limit on the number of places available each year. Previously the scheme was capped at 35,000 places annually and restricted to buyers earning under $125,000 (singles) or $200,000 (couples). Both are gone.
Under the scheme, eligible buyers can purchase with as little as a 5% deposit and avoid lenders’ mortgage insurance (LMI) altogether, a saving that typically runs to $15,000-$30,000 on an average loan. Property price caps have also been lifted in many regions to better reflect local market values, including in parts of western Sydney, bringing more family homes within reach of the scheme.
NSW stamp duty relief
In New South Wales, the First Home Buyers Assistance Scheme continues to offer a full exemption from transfer duty on homes valued up to $800,000, with a tapered concession available up to $1 million. For a buyer purchasing an $800,000 home, that’s a saving of more than $30,000 that would otherwise be paid in stamp duty alone, money that can instead go straight towards the deposit or reduce the amount that needs to be borrowed.
Buyers building or buying vacant land also benefit, with a full exemption available on land valued up to $350,000 and a concessional rate up to $450,000.
More ways to bridge the gap
Beyond the 5% Deposit Scheme and stamp duty relief, eligible buyers have other levers available. The First Home Super Saver Scheme lets buyers grow a deposit inside superannuation’s lower tax environment, with voluntary contributions of up to $15,000 a year (capped at $50,000 total) able to be released for a first home. The new Federal Help to Buy shared equity scheme, meanwhile, allows the government to co-own a portion of an eligible property, lowering both the deposit required and the size of the loan, though it can’t be used alongside the 5% Deposit Scheme, so the right choice depends on individual circumstances.
Single parents have additional support through the Family Home Guarantee, which allows entry with a deposit as low as 2%, also without LMI.
What it means in practice
None of this changes the fact that borrowing costs are higher than they were a couple of years ago, and serviceability still needs to stack up under each lender’s assessment rules. But the deposit hurdle, long the biggest obstacle standing between renters and owners, has been lowered more dramatically in the past year than at almost any point in the scheme’s history. For many first home buyers, the question is no longer “can I ever save 20 per cent?” but “which combination of schemes gets me into a home sooner, and what does that mean for my repayments?”
Eligibility rules, price caps and panel lenders vary by scheme and can change, so it pays to get tailored advice before acting – particularly where schemes can’t be combined, or where a higher purchase price might tip a buyer out of an exemption.
Steven Korner is the Principal Mortgage Broker at The Finance Korner in Penrith.