- Blog
- A Game Changer for Australian First Home Buyers: Buy a Home with a 5% Deposit and No LMI
A Game Changer for Australian First Home Buyers: Buy a Home with a 5% Deposit and No LMI
A significant change for first-time home buyers in Australia is on the way.
Soon, you’ll be able to secure a home loan with just a 5% deposit and avoid costly Lenders Mortgage Insurance (LMI).
Soon, you’ll be able to secure a home loan with just a 5% deposit and avoid costly Lenders Mortgage Insurance (LMI).
This new government initiative is designed to make property ownership more accessible and affordable for young Australians.
What Is Lenders Mortgage Insurance (LMI)?
LMI is a one-time, non-refundable fee you’re usually required to pay if your home loan deposit is less than 20% of the property’s value.
It protects the lender, not you, in case you default on your loan.
This can add tens of thousands of dollars to your home loan. For example, on a $700,000 loan, LMI could be over $30,000.
Many first-time buyers add this fee to their loan, increasing their overall debt and mortgage repayments.
How the New First Home Guarantee Works
From October 1st, the government will guarantee 15% of a first home buyer’s loan, allowing you to get a loan with only a 5% deposit and no LMI fee.
The program, now managed by Housing Australia, has been significantly expanded to help more people.
- No applicant caps: The previous limit of 35,000 applicants has been removed.
- Income limits dropped: The $125,000 income limit has been eliminated, opening the scheme to a wider range of buyers.
- Increased loan value caps: The maximum property values for eligibility have been increased to reflect current market conditions.
This means you could buy a $1 million home with a $50,000 deposit, saving years of saving time and avoiding thousands in mortgage insurance.
Expanded Property Price Caps by City
The government guarantee is available for properties up to the following values:
- $1.5 million in Sydney
- $950,000 in Melbourne
- $1 million in Brisbane and Canberra
- $900,000 in Adelaide
- $850,000 in Perth
- $700,000 in Hobart
Watch for Stamp Duty concessions offered by your State Government. Some of the above values exceed the limits for stamp duty exemption.
A Major Step for Housing Affordability
This new policy from the Albanese Government is a generational change that makes homeownership a realistic goal for many more young Australians.
While some critics suggest it might stimulate the property market and push prices higher, the scheme is a welcome measure that helps first-time buyers overcome the significant hurdle of saving a large deposit amid a cost-of-living crisis.
It’s an important step toward creating a more equitable housing market in Australia.
Other Blogs
- First Home Buyer, Investing
Your Spring Real Estate Guide: 9 Questions to Ask a Sales Agent When Inspecting a Home
- First Home Buyer, Investing
Is Rentvesting Right for You?
- First Home Buyer, Investing
Australian Real Estate Market: Confidence at 3-Year High as Spring Season Begins
- First Home Buyer, Investing
Rising Australian Property Values & Falling Interest Rates: An Ideal Opportunity for Investors
- First Home Buyer, Investing
First Home Buyer Australia: Incentives & Falling Rates to Help You Own a Home
- First Home Buyer, Investing
