Government support for first home buyers has changed substantially since late 2025, with income caps removed from the Australian Government 5% Deposit Scheme and new concessions introduced in several states.
Sole traders assessing whether now is the right time to enter the market need to understand how these changes affect borrowing capacity, deposit requirements, and the combined value of state and federal support. The difference between what was available 12 months ago and what applies today can add up to tens of thousands of dollars in saved stamp duty and eliminated lenders mortgage insurance.
How the Removal of Income Caps Changed Access for Sole Traders
The Australian Government 5% Deposit Scheme no longer imposes income limits and has no annual place caps. Applications are processed through 31 participating lenders, including three major banks and 28 non-major lenders. Property price caps remain, set at $1,500,000 in Sydney, $950,000 in Melbourne, and $1,000,000 in Brisbane.
Sole traders with variable income previously found themselves ineligible under earlier versions of the scheme due to strict income thresholds. A buyer operating a consulting business with gross receipts of $180,000 but deductible business expenses reducing taxable income to $95,000 would have exceeded the prior cap in some years and fallen short in others. Under the current structure, eligibility depends on meeting the lender's serviceability assessment and the property price cap, not a fixed income threshold.
First Home Owner Grants by State
Queensland reduced its first home buyer grants from $30,000 to $15,000 for contracts signed from 1 July 2026. South Australia offers $15,000 with no property price cap for eligible new home purchases. Tasmania increased its grant to $20,000 for new homes, subject to assent, while the Northern Territory provides $50,000 under the HomeGrown Territory Grant for contracts signed by 30 September 2027.
Victoria, New South Wales, and Western Australia each provide $10,000 for new builds, with price caps of $750,000, $750,000, and $750,000 respectively. The Australian Capital Territory closed its grant scheme in 2019, replacing it with the Home Buyer Concession Scheme. Grants apply only to new or substantially renovated homes in all jurisdictions that still offer them.
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Stamp Duty Concessions and How They Apply to Established Homes
Full stamp duty exemptions for established homes apply in New South Wales up to $800,000, Victoria up to $600,000, Queensland up to $700,000, and South Australia up to $700,000. Concessions phase out at higher thresholds in most states.
The ACT removed both the property value limit and income threshold from 1 July 2026, providing full conveyance duty exemption regardless of purchase price. This change applies to all eligible buyers who meet the occupancy requirement. Tasmania ended its stamp duty exemption for established homes on 30 June 2026, leaving no equivalent concession in place for purchases settling after that date under current law.
A sole trader purchasing an established home in Canberra at $950,000 would pay no conveyance duty, while the same purchase in Hobart settling after 30 June 2026 would attract standard duty. The difference in upfront costs between these two transactions is substantial and affects how much cash needs to be held in reserve for settlement.
How Lenders Mortgage Insurance Is Avoided
The Australian Government 5% Deposit Scheme guarantees the difference between a 5% deposit and 20% of the property value. No lenders mortgage insurance is payable under this structure. For a property purchased at $800,000, the buyer contributes $40,000 and Housing Australia guarantees $120,000. The buyer borrows $760,000 from the participating lender.
Lenders mortgage insurance would typically cost between $15,000 and $25,000 on a loan of this size with a 5% deposit. The scheme removes that cost entirely. Sole traders with fluctuating income often carry higher deposits to offset perceived serviceability risk, but the government guarantee allows a lower deposit without adding insurance premiums to the loan.
Combining State and Federal Support
State grants and stamp duty concessions can generally be used alongside the Australian Government 5% Deposit Scheme. Help to Buy cannot be combined with the 5% Deposit Scheme but can in most jurisdictions be used with applicable state concessions.
A buyer in South Australia purchasing a new home at $650,000 with a 5% deposit would access the $15,000 state grant, full stamp duty exemption, and the federal deposit guarantee. The combined value of avoided stamp duty, the grant, and eliminated lenders mortgage insurance totals more than $50,000 in upfront cost reduction. That capital can remain in the business or be allocated to settlement costs and working capital post-purchase.
What Sole Traders Need to Verify Before Applying
Lenders assess sole trader income using tax returns, business activity statements, and accountant-prepared financials. Most require two full financial years of trading history. Applications lodged with incomplete business documentation are routinely declined or delayed.
Pre-approval provides certainty before making an offer. The assessment confirms borrowing capacity based on documented income, existing debts, and the lender's serviceability criteria. Sole traders with significant business reinvestment or recent expansion may show lower taxable income than their cash flow supports. Lenders vary in how they treat add-backs for depreciation, vehicle expenses, and other non-cash deductions. Some lenders accept alternative income verification methods for businesses with shorter trading histories or seasonal revenue.
Financial Alliance Network works with lenders across the panel to match your business structure and income profile to the most suitable lender policies. Call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
Can sole traders access the Australian Government 5% Deposit Scheme?
Sole traders can access the scheme provided they meet the lender's serviceability assessment and the property price cap. No income limits or annual place caps apply under the current structure operative from 1 October 2025.
Which states offer stamp duty exemptions on established homes?
New South Wales offers full exemption up to $800,000, Victoria up to $600,000, Queensland up to $700,000, and South Australia up to $700,000. The ACT provides full exemption regardless of price, while Tasmania ended its exemption on 30 June 2026.
How much lenders mortgage insurance is payable under the 5% Deposit Scheme?
No lenders mortgage insurance is payable. Housing Australia guarantees the difference between the buyer's 5% deposit and 20% of the property value, eliminating the need for the buyer to pay insurance premiums.
Can state grants be combined with the federal 5% Deposit Scheme?
State grants and stamp duty concessions can generally be used alongside the 5% Deposit Scheme. Help to Buy cannot be combined with the 5% Deposit Scheme but can in most jurisdictions be used with state concessions.
What income documentation do lenders require from sole traders?
Lenders typically require two full financial years of tax returns, business activity statements, and accountant-prepared financials. Some lenders accept alternative verification methods for businesses with shorter trading histories or seasonal revenue patterns.
