First homebuyers will be able to purchase a property with a deposit of just 5 per cent from Wednesday, when Australia’s expanded Home Guarantee Scheme takes effect.

The federal government will support eligible buyers by guaranteeing a portion of their home loan, meaning the need for less cash up front without having to fork out for costly Lenders Mortgage Insurance (LMI).

WATCH THE VIDEO ABOVE: What expanded Home Guarantee Scheme means for first-time buyers.

From October 1, price caps will also be pushed up to $1m in some cities, and the scheme will do away with income limits.

The government says the changes will get Australians into a home sooner by cutting years off the time it takes to save for a deposit and unshackling the burden of LMI.

“It’s just not right that an entire gener

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