The Albanese Government has proposed a significant expansion to its housing policy aimed at improving access to home ownership for first-time buyers.

If re-elected, the Labor Government has pledged to allow all Australian first home buyers to purchase a property with as little as a 5% deposit, while eliminating the need for Lenders Mortgage Insurance (LMI)—a cost that often exceeds $20,000 for many borrowers.

What the New First Home Buyer Policy Includes

5% Deposit with No LMI: All first home buyers will be eligible to purchase a home with only a 5% deposit. The government will guarantee the remaining 15%, removing the need for costly Lenders Mortgage Insurance (LMI), which can add over $20,000 to a loan.

No Income Caps: Unlike the current First Home Guarantee, this expanded scheme will not be restricted by income thresholds.

Higher Property Price Limits: The policy will reflect actual market conditions, with price caps raised significantly in capital cities and regional areas.

100,000 New Homes for First Home Buyers: A $10 billion federal investment will support the construction of 100,000 homes exclusively for eligible first home buyers between 2026 and 2034.

$1,000 Instant Tax Deduction: From the 2026–27 financial year, first home buyers and workers can opt into a $1,000 automatic tax deduction without needing to submit receipts or detailed records.

Property Price Thresholds by City

Capital City	Property Price Limit
Sydney	$1,500,000
Melbourne	$950,000
Brisbane	$1,000,000
Perth	$850,000
Adelaide	$900,000
Hobart	$700,000
Canberra	$1,000,000
Darwin	$600,000

Regional centres will share the same caps as their respective capital cities.

Who Is Eligible?

To qualify for the scheme, buyers must:

• Be Australian citizens;
  
• Have never owned a property before;
  
• Intend to live in the property as their primary residence.
  

Although the policy is designed to be universally accessible, the government has indicated that some form of income testing may still apply.

Addressing Housing Affordability

Housing Minister Clare O’Neil emphasised that the initiative is designed to reduce competition between first-time buyers and investors, while increasing the supply of affordable homes. Construction will begin in 2026–27, with homeowners expected to move in from 2027–28.

“This plan will help young Australians break into the housing market without needing to save for a 20% deposit or pay for costly mortgage insurance,” Prime Minister Anthony Albanese stated during his campaign launch in Perth.

Impact and Industry Outlook

Currently, approximately 50,000 Australians access the existing income-limited scheme each year. With this expansion, the number is projected to grow to nearly 80,000 buyers annually.

Despite concerns about increased demand, the Treasury has indicated that the policy will not significantly impact housing prices due to its targeted focus on a narrow segment of the market.

The Albanese Government’s total investment in housing will rise to $43 billion under this new proposal, which it claims is the largest federal housing initiative in modern Australian history.

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At Loan Nerds, we understand how transformative a policy like this could be for thousands of aspiring homeowners. Whether you’re ready to buy now or planning ahead, our team of expert brokers is here to help you navigate your options and take advantage of any available government incentives.

Have questions about how this could impact your home loan journey? Get in touch with us today.