With the federal election looming, the property industry is welcoming the announcement that first home buyers will be able to use just five per cent deposit for a loan.

Both major parties have committed to the scheme, which will cost $500 million and be available to up to 10,000 first-home buyers each year. This equates to one-in-10 first-home buyers in Australia.

Loans will be granted on a first-come, first-served basis, with some eligibility criteria applying to properties. The National Housing Finance and Investment Corporation will guarantee the difference between the five per cent deposit and the 20 per cent that most lenders require.

It is expected to have a positive impact on the property market, as it will assist younger people and long-term renters to break into the property market.

Find out some other ways the election might affect the property market.

As always, we advise your do your own research and gain legal advice before making any major financial decisions.