The Expanded First Home Guarantee Scheme

The Australian Government has implemented reforms to the First Home Guarantee Scheme, effective from 1 October 2025. These changes are designed to address the growing challenges of housing affordability and accessibility, providing first-time buyers with enhanced opportunities to enter the property market, according to the current Government.

This article provides a detailed overview of the scheme’s updates, its operational framework, and its broader implications for the housing market.

Key Reforms to the First Home Guarantee Scheme

The expanded scheme introduces several significant changes aimed at reducing barriers to home ownership:

1. Unlimited Places: The removal of the annual cap on government guarantees ensures that all eligible first-home buyers can access the scheme without the risk of missing out due to limited availability. This change eliminates the previous quota system, which often left buyers waiting for the next financial year to apply.

2. Abolition of Income Caps: The previous income thresholds of $125,000 for individuals and $200,000 for couples have been eliminated. This reform broadens the scheme’s accessibility to higher-income earners who were previously excluded.

3. Increased Property Price Caps: The property price caps have been adjusted to reflect current market conditions, ensuring that more properties fall within the scheme’s eligibility criteria. For instance:

   • In Melbourne and Geelong, the cap has increased from $800,000 to $950,000.

   • Regional Victoria remains capped at $650,000.

   • Other states and territories have seen similar adjustments, with Sydney’s cap rising to $1.5 million and Brisbane’s to $1 million.

4. Streamlined Regional Access: The Regional First Home Buyer Guarantee has been integrated into the broader First Home Guarantee, simplifying the application process for buyers in regional areas.

5. Enhanced Lender Participation: The scheme is available through over 30 participating lenders, including major banks, customer-owned banks, and regional financial institutions. This diversity provides buyers with greater choice and flexibility in selecting a lender.

Operational Framework of the Scheme

The First Home Guarantee Scheme allows eligible buyers to purchase a property with a deposit as low as 5%, while avoiding the need to pay Lenders Mortgage Insurance (LMI). The government guarantees up to 15% of the property’s value, enabling buyers to meet the 20% deposit requirement typically imposed by lenders. This structure significantly reduces upfront costs and accelerates the timeline for entering the property market.

Considerations for Prospective Buyers

While the scheme provides substantial benefits, prospective buyers should carefully evaluate the following:

• Eligibility Criteria: Applicants must be Australian citizens or permanent residents, purchasing an owner-occupied property within the designated price caps. Buyers must also demonstrate genuine savings for the 5% deposit.

• Additional Costs: Stamp duty, legal fees, and other ancillary costs remain applicable. Buyers should budget for these expenses in addition to the deposit.

• Long-Term Financial Planning: While a reduced deposit lowers initial costs, it may result in higher monthly repayments and increased total interest over the life of the loan. Buyers should assess their long-term financial capacity before committing.

• Lender Selection: Not all lenders participate in the scheme, and interest rates may vary. Buyers are encouraged to compare options and negotiate terms to secure the best deal.

What's next?

To speak to an experienced professional about the purchase of your property, please contact us on 03 9450 9400.