Time to read : 6 Minutes
The dream of owning your own home could become a reality much sooner than you think.
The government is fast-tracking support for first home buyers which could open the door for thousands of Aussies to finally call a place their own.
The key changes to the Home Guarantee Scheme from 1 October, 2025:
Eligible first home buyers may be able to buy a home before the end of the year, with just a 5% deposit, without having to pay Lender's Mortgage Insurance (LMI).
Property price caps will be raised to better reflect average house prices in each state and territory, across both capital cities and regional areas.
Income limits will be removed, opening it up to more Aussies.
There will be unlimited places available (not first in best dressed).
Let’s take a closer look at what these changes could mean for anyone looking to buy their first home.
What’s the government Home Guarantee Scheme?
While this scheme was set to begin on 1 January 2026, the Albanese government is fast-tracking it, bringing it forward three months to 1 October 2025.
The scheme allows first home buyers to pay just 5% deposit to buy a home. This means it will shave years off the time it would otherwise take to save 20%, which is how much deposit you would need to avoid LMI. More on this in a tick.
Here’s an example of how it can save you. Let’s say you’re looking to buy a home in Brisbane with a $1 million dollar price tag. At 5%, the deposit you’d be required to pay would be $50,000. Without this scheme, if you were to pay a 20% deposit, you’d be looking at paying $200,000.
In this example, it could:
Cut out around 10 years of saving for a much larger deposit.
Help pay up to $350,000 towards your mortgage for the home you buy as opposed to it going towards paying rent.
Save you roughly $25,000 on LMI.
What’s LMI?
LMI is a type of insurance that you’d typically have to pay if you don’t have a 20% deposit for the property you’re buying.
In the eyes of your lender, not having the 20% deems you as being a risky investment. So this would protect the lender if something happens and you can’t repay the loan.
With the Home Guarantee Scheme, the government guarantees a portion of the loan removing the need for LMI.
Be aware: paying a 5% deposit also means borrowing 95% of the purchase price, which could be financially risky.
Increases to property caps
The previous version of this scheme received criticism that the government was out of touch with the real cost of housing – in other words the property price caps were too low to buy a home for that price.
The property caps have been adjusted to better reflect the average cost of housing for each capital city and regional areas.
If you look at the table below, from 1 October the property cap for Sydney will increase by almost 67% from $900,000 to $1.5 million, while in the ACT, the increase is 33% from $750,000 to $1 million.
Take a look at your preferred location to see what the new property price cap will be.
First Home Guarantee Property Price Caps
Location | Current Property Price Cap | Property Price Cap 1 Oct, 2025 |
|---|---|---|
NSW – capital city/regional centre | $900,000 | $1,500,000 |
NSW – other | $750,000 | $800,000 |
VIC capital city/regional centre | $800,000 | $950,000 |
VIC – other | $650,000 | $650,000 |
QLD capital city/regional centre | $700,000 | $1,000,000 |
QLD – other | $550,000 | $700,000 |
WA – capital city | $600,000 | $850,000 |
WA – other | $450,000 | $600,000 |
SA – capital city | $600,000 | $900,000 |
SA – other | $450,000 | $500,000 |
TAS – capital city | $600,000 | $700,000 |
TAS – other | $450,000 | $550,000 |
ACT | $750,000 | $1,000,000 |
NT | $600,000 | $600,000 |
Jervis Bay Territory / Norfolk Island | $550,000 | $550,000 |
Christmas Island / Cocos (Keeling Islands) | $400,000 | $400,000 |
Source: Housing Australia
Lifting limits on income and spots available
The other change which will make it accessible for more Aussies is that salary caps will be removed.
Previously, singles had to earn less than $100,000 a year, while couples or single parents could earn up to $160,000 to qualify. From October, these income caps will no longer apply.
There would also be no limits on the number of Aussies who can take up the scheme.
Are you eligible for the Home Guarantee Scheme?
Housing Australia has a tool to check if you’re eligible. It only takes a few minutes to find out.
What about the future impacts?
While the PM has said the scheme will help younger Aussies and first-home buyers achieve their dreams of home ownership sooner, there is some criticism as well.
Shadow housing minister Senator Andrew Bragg has slammed the scheme in the media claiming that with the scheme uncapped, even children of billionaires can access it. And that means tax-payers will potentially be helping the wealthy, rather than those who might struggle to save a deposit.
Other experts have suggested that as more people can use the scheme, it’s likely to increase demand for housing – pushing property prices even higher.
Bottom line
The changes to the first Home Guarantee Scheme, starting 1 October 2025, aim to help more Aussies buy their first home sooner.
With unlimited places, no income caps, higher property price limits, and the ability to enter the housing market with just a 5% deposit – without paying LMI – means that more potential buyers may become home owners faster and with less upfront cost.
But there are concerns these changes might push property prices up, especially with the changes being brought forward three months. This could make properties even more expensive in 2026 and beyond.
While the scheme offers a great boost for first home buyers now, its long-term success may depend on addressing broader housing supply issues to keep prices fair and affordable for home buyers in the future. Time will tell how well this balance is managed.
Go deeper:
Here's what to factor in when starting the home buying journey
Are you across these must-dos when buying your first property?
Here's what to factor in when starting the home buying journey
Disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
