Big Changes to the First Home Guarantee from 1 October 2025

From 1 October 2025, the Australian Government has expanded the First Home Guarantee in one of the most significant updates we have seen to the scheme. The changes are designed to make home ownership more accessible for Australians struggling to break into the property market. With lower barriers to entry, thousands of first-home buyers will now have the opportunity to purchase a property sooner, and with fewer costs along the way.

What’s New?

The biggest news is that the government has removed income and property price caps. Previously, strict thresholds limited eligibility based on your annual earnings and the value of the home you were buying. By scrapping these restrictions, the scheme is now open to a much wider pool of buyers, particularly in capital cities and regional centres where prices had quickly outgrown the old caps.

The other game-changing benefit remains in place. You only need a 5% deposit. Normally, a buyer with less than a 20% deposit would be required to pay costly Lender’s Mortgage Insurance (LMI). Under the First Home Guarantee, the government essentially steps in as guarantor for the remaining portion of the deposit, which means you can avoid paying LMI altogether. For many first-home buyers, this can save tens of thousands of dollars.

Who Can Apply?

To be eligible, you need to meet the following requirements:

• Age: You must be at least 18 years old.

• Residency: You must be an Australian citizen or permanent resident.

• Property ownership history: You must be a first-home buyer, or a former homeowner who has not owned residential property in Australia in the past 10 years.

• Purpose: The property must be your principal place of residence. Investment properties do not qualify.

• Applicants: You can apply on your own, or jointly with a partner, family member, or a friend.

This flexibility makes the scheme more adaptable to modern living arrangements and housing affordability strategies.

What You Need to Do

1. Save your deposit. The minimum is 5% of the property purchase price.

2. Check your eligibility. Make sure you meet the requirements outlined above.

3. Apply through a participating lender. The scheme is only available via approved lenders and the loan must be an owner-occupier loan with principal and interest repayments.

4. Find your property. Once approved, you will have a set timeframe to secure and settle on your new home.

Why This Matters

The removal of income and property price caps signals a huge shift in housing policy. It means buyers who may have been locked out because they earned too much or wanted to purchase in higher-value markets now have the same opportunities as others. In practice, this expansion could help thousands of Australians achieve home ownership sooner, without the stress of saving for a 20% deposit or paying for expensive LMI.

Work With the Best in the Central Highlands

Of course, navigating government schemes and lender requirements can be overwhelming. That is where I come in. As the leading mortgage broker in the Central Highlands, I specialise in helping first-home buyers understand their options, access government schemes like the First Home Guarantee, and secure the right loan to fit their financial goals.

If you are ready to take advantage of these changes, reach out today. I will guide you through every step of the process and make sure you get the very best start on your property journey.