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Speaking on Broker Daily Uncut, Finni brokers Eva Loisance and Costa Arvanitopoulos said that while the deposit scheme, which has now helped over 300,000 Australians buy a home, had been positive, rising house prices had pushed new costs onto borrowers.
Loisance and Arvanitopoulos said that stamp duty, which affects buyers at different thresholds around the country, did not tend to be an issue for first home buyers in the past.
“In the past, this wasn’t something that first home buyers would worry about,” Arvanitopoulos said.
“But as prices have moved up, particularly at that lower end, it’s becoming a real hidden cost.”
For example, the price cap for a property eligible for the 5 per cent Deposit Scheme in Sydney (and other regional centres in NSW) is $1.5 million – above the threshold for a first home buyer concessional stamp duty rate of $1 million.
For a $1.5 million home, stamp duty is therefore almost $65,000, almost the same amount as the 5 per cent deposit itself.
In Melbourne and Victorian regional centres, a property up to the value of the $900,000 price cap would incur stamp duty of over $51,000.
“Where are you going to draw that kind of stamp duty from? Because you probably can’t draw it from equity, of course, as a first home buyer,” Arvanitopoulos said.
“I’ve seen people get loans off their parents. They’ll give them a ‘gift’ of stamp duty and then they’ll do their own thing in the background to pay them back.
“The scheme works well at the lower end because there’s no lender’s mortgage insurance (LMI), but LMI doesn’t always stop buyers because you could capitalise it in the loan. Stamp duty will be less money paid over the life of the loan, but at the entry point, it could stop people from buying or at least delay them from doing something.”
“It’s a bit of a slap in the face for first home buyers,” Loisance added.
“And it’s not just stamp duty. You’ve got to think about your solicitor – that’s a few grand – more to survey everything and make sure the house is okay, then maybe more on maintenance when you move in.”
Similarly, Rebecca Jarrett-Dalton, mortgage broker and founder of Two Red Shoes, also noted that an increasing number of her clients using the scheme were now coming up against stamp duty.
“We certainly saw prices rising, particularly in the first few months after the expansion of the scheme,” she said.
“The challenge for this now is that that ‘beginner price point’, shall we say, is now above the limits for the stamp duty exemption and so now first home buyers are having a harder time chasing the stamp duty savings – that they need to pay more than they were for the deposit.”
Prices growing
The popularity of the scheme has surged since the federal government expanded it in October 2025, removing limits on application numbers and increasing the price caps to their current levels.
Broker Daily has previously reported that lower-priced homes have outperformed higher-value properties following the scheme’s expansion, reflecting increased first home buyer activity.
Loisance and Arvanitopoulos noted, however, that price growth has also been driven by investor activity.
Loisance said: “The $500,000–$700,000 benchmark is often the benchmark for most investors we work with. Investors and first home buyers are often in the same markets, and that’s often where the price growth is.
“You look at Sydney and the top end of the market is pretty much flat – it’s the lower end where we’ve seen the growth.”
[Related: ‘Trust is borrowed’, brokers warned]
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