Australian Government’s Expanded First Home Guarantee: What You Need to Know

Buying your first home in Australia has always been a big milestone, but also one of the toughest financial hurdles many people face. With rising property prices and the struggle to save a 20% deposit, it can often feel out of reach. That’s why the Australian Government has recently expanded its First Home Guarantee scheme, removing income caps, lifting property price limits, and making places unlimited from 1 October 2025. Designed to help first-home buyers get into the market sooner with just a 5% deposit and no Lenders’ Mortgage Insurance, the scheme could be a game-changer—if you know how to navigate it wisely.

1. What Has Changed?

• The scheme: formerly with limited spots, income thresholds, and property price caps is now significantly expanded:

  • Unlimited places: any eligible first-home buyer can apply. 

  • No income caps: eligibility is no longer restricted by income. 

  • Higher regional price caps: limits raised to reflect current market values (e.g., Sydney: $1.5M; Brisbane: $1M; Melbourne: $950K). 

  • Earlier rollout: scheme starts 1 October 2025, ahead of its original 2026 schedule. 

2. How the Scheme Works

• 5% deposit: you contribute at least 5% of the property’s value.

• Government guarantee: Housing Australia guarantees the remaining 15% (making up a 20% deposit equivalent to the lender), so no Lenders’ Mortgage Insurance (LMI) is required, saving potentially tens of thousands.

• You must still meet lender criteria, cover all other purchase costs (e.g. stamp duty, fees), and repay your own loan like any normal mortgage holder.

3. Who Qualifies?

Basic eligibility:

• Australian citizen or permanent resident

• Must be a genuine first-home buyer (no property ownership in Australia in the past 10 years)

• Owner-occupier (not an investment property)

• At least 18 years old

Note: Income caps used to apply ($125K individual / $200K joint), but have been removed from 1 October 2025.

Property price caps now higher, based on location—check with lender or the postcode tool.

4. State-Based Grants & Concessions

Depending on your state or territory, you might also qualify for additional support:

• Queensland: first-home buyer grant up to $30,000. Property Buyer

• WA: $10,000 grant for new builds or off-the-plan homes; stamp duty concessions up to $700K in Perth & Peel, $750K regional. Property Buyer

• Tasmania: up to $30,000 grant; 50% stamp duty concession on established homes. Property Buyer

• Northern Territory: $50,000 grant for new homes; $10,000 for existing homes (limited duration through 2025). Property Buyer

• Other states (NSW, SA, etc.) may still offer assistance. Check their respective websites. 

5. Benefits at a Glance

• Faster entry into homeownership with only a 5% deposit.

• Significant savings on LMI, approximately $1.5 billion saved nationally in the first year expected. 

• Wider accessibility: income and place limitations gone; raises opportunity for many more Aussies.

6. Considerations

Experts have voiced caution about potential unintended consequences:

• Market pressure: expanded eligibility could spur demand without corresponding supply, pushing prices higher, some forecasts indicate increases of 3.5%–9.9%, particularly in hot markets. 

• Asymmetrical benefits: critics argue higher-income buyers, rather than those who are most housing-stressed, are likely to benefit.

• Higher borrowing risk: entering with only 5% equity increases exposure to negative equity and high repayments.

• Experts emphasise that the real solution lies in boosting supply, not just removing buying hurdles. 

Tips for Prospective First-Home Buyers

Use the official eligibility and postcode tools on Housing Australia's website to check your status and property caps.

1. Apply through a Participating Lender, they'll guide you through eligibility and the claim process. 

2. Factor in all the costs: stamp duty, conveyancing, inspections, moving, etc., even if LMI is waived. 

3. Be cautious about high LVR loans: ensure repayments are manageable even with more interest rate increases ahead.

4. Consider combined support: stack grants, concessions, and this scheme if eligible, but carefully budget overall costs.

5. Stay alert to local market conditions: rapid price growth could erode affordability gains.

Summary Table

This is potentially a game-changing opportunity, particularly if you're ready to buy and can manage repayments responsibly. But it’s also critical to balance optimism with caution, keeping both your personal budget and broader market factors front of mind.

Get in touch with one of our experienced lenders if you'd like help checking eligibility, exploring property caps in your suburb, or comparing lender products. 

We love getting our clients into their first homes!

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