From 1 October 2025, the government’s First Home Guarantee scheme will expand, making it possible for more Australians to buy a home with a deposit as low as 5%.

Whether you’re preparing to buy your first property or simply watching how the market shifts, these updates could play a big role in shaping your plans this spring.

What is the First Home Guarantee Scheme?

The First Home Guarantee is part of the Home Guarantee Scheme, an Australian Government initiative designed to help home buyers with a small deposit to purchase a property.

Under the scheme, eligible home buyers with a minimum 5% deposit can purchase a home without having to pay costly lender’s mortgage insurance. Housing Australia provides a guarantee of up to 15% of the property’s value to participating lenders, allowing purchasers to borrow up to 95% of the property’s value.

To be eligible, you must be a first-home buyer or not have owned a property in Australia in the last 10 years (applies to both in a joint application).

Previously, there were income caps applied ($125,000 for individuals or $200,000 combined for couples), along with property price caps and place limits.

What are the changes?

From 1 October 2025, the scheme will be expanded to help more Australians buy their first home. Labor originally planned to introduce these changes in 2026, but they are being brought forward.

These changes include:

• No place limits: any Australian first home buyer who has saved a 5% deposit can apply.
• No income caps: first home buyers with higher incomes can access the scheme.
• Higher property price caps: for example, Sydney’s cap will increase from $900,000 to $1,500,000, and in Brisbane, it will rise from $700,000 to $1,000,000.
• Simpler access in regional areas: Regional First Home Buyer Guarantee will be replaced by the expanded scheme.

What does this mean for buyers?

For first-time buyers, the scheme could shorten the time it takes to save for a deposit. Let’s look at a few examples, courtesy of Cotality.

In Melbourne, the median home value is now $803,242. It would take the average first-time buyer nine years to save a 20% deposit of $160,685 (based on modelling income estimates from ANU Centre for Social Policy Research of median household income as at March 2025). However, under the scheme, they could save a 5% deposit of $40,171 in 2 years.

In Sydney, the median home value is $1,228,435. Saving a 20% deposit of $245,687 would take 13 years on average, but under the scheme, they could save a 5% deposit of $61,422 in 3 years.

What does this mean for property prices?

While the changes to the scheme are positive in the sense that more first-home buyers will be able to enter the market, some experts say the downside is that it may increase competition for housing stock and place upward pressure on property prices.

Treasury department modelling suggests the scheme will add 0.5% to home prices after six years. Other experts believe the scheme, combined with falling interest rates, will push prices higher than that and impact affordability.

Like to know more?

If you’d like to chat about your eligibility for the scheme, get in touch and we’ll run through the criteria. As your finance broker, we’ll explain your borrowing capacity, organise pre-approval with a participating lender and walk you through the home loan application process.

Get in touch today.