Buying a property off the plan is already an appealing route for many first home buyers - you get to lock in today’s prices, often enjoy modern design, and in many markets, take advantage of government incentives. The Albanese Government’s recent announcement about expanding its 5% deposit scheme adds another layer of opportunity.

Here’s what this means for off-the-plan buyers, and how you might leverage this to get into your own home faster.

What’s the New Scheme?

As of 1 October 2025, all first home buyers will be able to purchase a home with just 5% deposit, rather than waiting to scrape together 20%,  and without having to pay for Lenders Mortgage Insurance (LMI). 

  • Some key features: No caps on the number of places, no income limits. 
  • Property price limits will be adjusted upward in many locations, to align with average home prices. More homes will qualify. 
  • The savings are not just in years off saving. For many this means tens of thousands of dollars saved on LMI. 

Why It Matters Off-The-Plan Purchases

Buying off the plan normally involves paying a deposit (often a smaller amount, sometimes around 5-10%) plus progress payments over time, then settlement later. Here are a few ways the new scheme amps up the benefits for those picking an off-the-plan property.

Deposit hurdle lowered even further

Many off-the-plan projects already allow smaller initial deposits, with the remainder paid over construction. The 5% scheme means you may be able to enter into a contract with lower up-front cost and avoid paying Lenders Mortgage Insurance. That makes budgeting easier, and also means you need less cash in hand initially.

More properties become accessible

Because property price caps are being increased (where necessary) in line with market values, more off-the-plan developments will fall within the eligible range. That means greater choice over location, size, and amenities.

Reduced financial pressure during construction

Even though off-the-plan involves staged payments, stretching the time between the first deposit and final settlement gives you more flexibility. And with less pressure to accumulate a large up-front sum, you can avoid compromising by choosing smaller or less ideal options just to meet old deposit thresholds.

Savings on Lenders Mortgage Insurance

One of the biggest cost benefits. If your deposit is low enough that lenders previously required LMI, you’ll now avoid (or reduce) that cost entirely — freeing up funds either to invest in upgrades, cover moving costs, or simply reduce your ongoing repayments.

Things To Keep In Mind

  • While the scheme is a significant boost, there are a few practical details to watch out for, especially with off-the-plan purchases.
  • Contract terms: Off-the-plan contracts often involve staged payments. Make sure you clearly understand when your obligation to pay increases. Do the timing of those payments align with your income and finances?
  • Construction timelines: Delays are not unusual. Having a lower deposit upfront helps with cash flow, but you still need to plan for the rest of payments down the track.
  • Just because the scheme is broader doesn’t guarantee every off-the-plan property will qualify. Always check the current caps in your suburb or for the development you’re interested in. Off The Plan can help you with that assessment.
  • Reselling before settlement: If you buy off-the-plan and need to sell before settlement, market conditions may change. Be aware of the risks.

How Off The Plan Can Help You

At Off The Plan, we’re uniquely positioned to help buyers make the most of this 5% deposit scheme. Here’s how we support you through curated listings that clearly show whether off-the-plan projects meet current eligibility for government incentives, including the new scheme. Financial planning guidance to map out deposit, progress payments, and final settlement so you can budget confidently. Moreover, our lender connections can clarify exactly what the LMI savings will be, and which lenders are participating under the expanded scheme. We stay up to date with the latest caps, so you don’t waste time on properties that are later deemed ineligible.

Bottom Line

This new 5% deposit scheme could be a game changer for first home buyers, especially those looking for off-the-plan properties. It significantly lowers one of the biggest early barriers: the upfront deposit and associated mortgage insurance costs. For many, that means home ownership becomes not just a distant dream, but a realistic goal far sooner.

If you’re considering buying off the plan, now may be the best time to start exploring your options. Reach out to us https://offtheplan.com.au/ and we’d be happy to show you off-the-plan projects that are a strong fit under the new scheme and help you plan the journey from deposit through to move in