A smaller deposit gets you in the door sooner. It also means a bigger loan.
That trade-off is now showing up in the national data. First home buyer lending grew 3.3% in the year to June 2026, ahead of 1.9% for the rest of the market. It’s the first time first home buyers have outpaced everyone else in two years.
What changed
On 1 October 2025 the First Home Guarantee opened to all eligible first home buyers with a 5% deposit. Income caps went and so did lenders mortgage insurance (LMI) for eligible buyers using the scheme.
The result? Loan sizes jumped. The average first home buyer loan reached $610,063 in June 2026, up 8.9% since the scheme launched. Almost all of that rise happened in the first three months.
Fewer buyers, bigger loans
Here’s the part that surprised us. The number of first home buyer loans actually fell 2.3% compared with the quarter before the scheme started. So more money is going to slightly fewer people.
Modelling on the average loan puts the extra borrowing at about $587 a month over 30 years. The scheme saves around $96,000 upfront (mostly the LMI and the extra deposit you didn’t have to save) but it takes about 13.7 years to break even. And rate rises since October have already eaten into that upfront benefit.
“An extra $587 a month changes how a new homeowner budgets,” said Peter Drennan, Head of Research and Data at Primara Research. Rising rates only make that harder to plan around.
So is the scheme a bad deal?
No. For a lot of buyers it’s the difference between buying in 2026 and still renting in 2029. But it works best when you go in with your eyes open.
Two buyers can use the same scheme in very different positions:
- Buyer A didn’t have the extra deposit saved. The higher repayment comes out of an already tight budget.
- Buyer B had a bigger deposit but kept it in the bank. Same repayment, but with a cash buffer for furniture, repairs and the odd surprise.
Hot Tip: if you can use the scheme and still keep some savings aside (ideally in an offset account), you get the benefit of buying sooner without leaving yourself exposed.
What to do next
Before you commit, work out the repayment you’re comfortable with at today’s rates (not the maximum a lender will approve). Then check whether the scheme, a family guarantee or a bigger deposit suits your situation.
We’ll happily run all three with you. Book a complimentary chat.
Source: Primara Research analysis of ABS Lending Indicators data, 2026.
General information only. Not financial or credit advice. Time Home Loans, Authorised Credit Representative under Australian Credit Licence 384324.
