First Home Buyer Scheme 2026: Is It Raising Prices in VIC
Is the First Home Buyer Scheme Actually Making Homes More Expensive?
New data is raising a tough question is the government's 5% Deposit Scheme helping first home buyers, or quietly pricing them out? It's a scheme that was supposed to make buying your first home easier. But fresh data from Cotality and the Australian Bureau of Statistics (ABS) is now pointing to something uncomfortable: the 5% Deposit Scheme may be pushing up the very prices it was designed to help people afford.
What's Changed Since October 2025?
When the federal government expanded the 5% Deposit Scheme on October 1, 2025, demand surged almost immediately. Over 22,921 guarantees were issued in the four months following the expansion — a 75% jump compared to the previous four-month period.
That's a massive wave of new buyers entering the market at the same time, all chasing the same entry-level properties.
The Data That Should Worry First Home Buyers
The homes the scheme was designed to help people buy are now the most expensive relative to where they were before the scheme expanded. The 5% deposit scheme simply drove up the price of entry-level homes, ultimately making them more expensive for first-home buyers. Future first home buyers now face the prospect of paying more for housing and holding larger mortgages than they otherwise would have. MacroBusiness
This isn't a theory. The average size of first-home buyer mortgages jumped 8.3% in the December quarter of 2025 alone, reaching a new high of $607,500. That's a bigger loan. A bigger repayment. And a longer time paying it off.
So Should You Still Use the Scheme?
This is where we need to be honest with you, because it's not a simple yes or no.
The scheme still has real benefits, no Lenders Mortgage Insurance (LMI), a lower deposit threshold, and faster market entry. For buyers in the right position, it can be a genuine advantage. We've written about how the scheme works and what to watch out for in a previous article that's worth reading alongside this one.
What This Means If You're Buying in Melbourne or Victoria Right Now
If you're based in Victoria, the scheme is still available, and the eligibility criteria haven't changed. But property prices across Melbourne have been shifting, and knowing how to structure your loan in this market matters more than ever.
At ASK Financials, we work with first home buyers, investors, and upgraders across Bentleigh East and greater Melbourne to cut through the noise and figure out what actually makes sense for your situation. Not just whether you qualify for a scheme, but whether using it is the smartest move for where you want to be in five years.
Ready to Make Your Move?
If you're thinking about buying and want to understand how the 5% Deposit Scheme fits into your broader loan strategy, let's talk.
Call us on 0433 944 055, or book a free consultation today, and let's work out what's actually right for you. Follow us on Instagram and LinkedIn for regular updates on the Australian property and lending market.
