First Home Guarantee changes from 1 October 2025

From 1 October 2025, the Federal Government has expanded the Home Guarantee Scheme in ways that materially lower the deposit hurdle for first‑time buyers. If you’ve been saving hard but struggling to bridge the gap, this could be your moment to step in.

Quick take: Buy with as little as a 5% deposit, no income caps, unlimited places, and higher property price caps — including a Sydney cap now listed at $1.5m.

What changed on 1 October 2025

• Unlimited places: there’s no longer a quota to ‘miss out’ on.
• Income caps have been removed: higher earners are now eligible — the focus is on deposit size and lender assessment.
• Higher property price caps: ceilings have been lifted nationally; in Sydney, the cap has been widely reported at $1.5m. Use the official postcode tool to check your area.
• Still owner‑occupied: you must live in the home. Joint applications by friends/siblings/family remain allowed.
• Same core mechanic: the Government guarantees up to 15% of the loan, allowing you to avoid Lenders Mortgage Insurance (LMI) with a 5% deposit (2% for eligible single parents under the Family Home Guarantee).

Useful links:
• Australian Government 5% Deposit Scheme overview: firsthomebuyers.gov.au
• Housing Australia price‑cap lookup: housingaustralia.gov.au/support-buy-home/property-price-caps
• First Home Guarantee overview: housingaustralia.gov.au/first-home-guarantee

What this means is that if you’re building new.

You can use the Scheme for new builds and house‑and‑land packages. For a land‑and‑build pathway, the combined land price + build contract must be at or under the relevant price cap for your postcode. Your lender will assess the property value and eligibility.

Example (Sydney): under a $1.5m cap, a land purchase of $900k and a build contract of $600k could qualify if approved by your lender under the Scheme and other credit criteria. Stamp duty and upfront costs still apply, so budget for these in addition to your 5% deposit.

Benefits — and a few watch‑outs

Why it helps
Lower deposits and no LMI can shave tens of thousands off your upfront costs and may improve your borrowing capacity. It also means you can buy sooner rather than waiting years to reach a 20% deposit.
What to watch

• Competitive pressure: expanded eligibility can push more buyers into the same price bands. Price growth and auction competition may lift in some suburbs.
• Repayment reality: a 95% loan magnifies rate and cost changes. Stress‑test your budget for higher repayments and build a cash buffer.
• Timeline discipline: once pre‑approved under the Scheme, you’ll have a set period to find and exchange — plan your search/build steps accordingly.

How to get started

• Check caps and eligibility for your target suburbs using the Housing Australia tool.
• Speak to a participating lender or broker for pre‑approval under the 5% deposit settings.
• Decide your pathway: established home, new build, or duplex. If you’re considering a new build, bring your wish‑list and a budget range — we’ll help map land options, design fit, and total costs against the cap.
• Plan for costs beyond the deposit: stamp duty, legal, inspections, site works, landscaping, and contingencies.-

Your opportunity to enter the market

If you’re deposit‑ready but short of the traditional 20%, these changes reduce the upfront hurdle. For many first‑timers, especially in the Inner West and Greater Sydney, that can be the difference between waiting and watching — and owning and planning the future.**