Potentially thousands of first home buyers are missing out in the confusion of the 5% deposit scheme.

Dozens of would-be first home buyers risk missing out on thousands of dollars in savings due to confusion about eligibility for government assistance.

Dozens of would-be first home buyers risk missing out on thousands of dollars in savings due to confusion about eligibility for government assistance.

More than 21,000 first-time home buyers have taken advantage of the government’s Extended First Home Guarantee in the past four months, and government estimates show one in 10 properties nationwide were purchased using the program in October alone.

The program allows first-time home buyers to purchase a home with as little as a 5% deposit, with the government guaranteeing up to 15% of the property’s value, bridging the gap to a 20% deposit and removing the expensive Lenders’ Mortgage Insurance requirement.

I October extension a modest reduction in the number of properties in the scheme, removal of income thresholds and a revised property price level to more closely align with average property prices across the country.

The latest Mortgage Choice Home Loan Report, which uses home loan origination data and a national survey of 1,000 consumers, found 28% of first-time buyers said the expansion of the program made them buy faster.

Despite this, confusion over the validity of the scheme since the October changes means it is likely to do more to hinder first home buyers than to help.

“A quarter of prospective buyers say they don’t know if they qualify,” said Mortgage Choice CEO Anthony Waldron.

“This highlights how important it is to get professional advice from a real estate agent, especially when you’re first navigating the property market.”

To take advantage of the program, prospective buyers must meet a variety of eligibility criteria that include everything from age and nationality to property values ​​and the purpose of how they will use the property.

Unlike other similar measures from the government in the past, people in any tax bracket are able to use the program because of the removal of income limits, which is one of the most common misconceptions about eligibility.

Although many are missing out, Mr Waldron said the impact of the program on the market since October was “undeniable”.

“For many first-time home buyers, these flexible goal posts mean the scheme could be the help they need to speed up their entry into the market.

“Seeing the average loan size rise above $80,000 in historically affordable markets, such as South Australia and the Northern Territory shows how challenging the market has become for first home buyers.”

Data from the Australian Bureau of Statistics this week shows that strong first home buyer activity led to an increase in lending activity for all types of borrowers between October and December.

A total of 31,780 loans were issued to home buyers in the quarter, with the total number of loans increased by 15.5% compared to 2023.

This article originally appeared on Mortgage Choice and has been republished with permission.