Changes to the First Home Guarantee Scheme: What does it mean for first homebuyers
The federal government’s expanded Home Guarantee scheme came into effect on 1 October 2025, helping first homeowners enter the property market with a deposit as low as 5% and avoid having to pay lenders mortgage insurance (LMI).
The First Homebuyer Guarantee Scheme
The First Home Guarantee Scheme is a federal government run incentive designed to assist first homebuyers entering the housing market. Home buyers usually need a 20% deposit to obtain a home loan and those with a deposit less than 20% will often be required to pay LMI.
As part of the Scheme, the federal government provides a guarantee (protecting the participating lender) so that first home buyers will only need a 5% deposit.
What’s New
From 1 October 2025 the federal government is reforming the scheme to increase the number of first home buyers eligible for assistance.
Previously the amount had been capped to 50,000 new places for first home buyers each year. However, under the changes to the scheme these caps will be lifted and all eligible Australian first home buyers can apply.
The federal government also announced that the previous limits on income will be lifted allowing first home owners with higher incomes to access the scheme.
Additionally, price caps on the value of the property will be increased in line with increased house prices in metropolitan and regional areas. The price cap will be lifted from $800,000 to $950,000 in Geelong and Melbourne but will remain at $650,000 for other regional towns across Victoria
Eligibility Criteria
With the changes to the scheme, you will be eligible if you are:
A first home buyer who has saved 5% of the property value
An individual or two eligible persons who are over 18 years of age
An Australian citizen or permanent resident
Meet the income thresholds
You will live in the property within 6-months of purchase and remain living in the property as your principle place of residence while under the scheme
Future Impacts
It is predicted that the changes will result in over 20,000 additional first home buyers purchasing a property under the scheme in the first year, due to the significant decrease of time required for first home buyers to save for a deposit.
If you have any questions or require advice in relation to the changes to the scheme, please contact:
Vittoria De Stefano
Principal
M 0407 091 301 | T 03 5226 8520
E vdestefano@ha.legal
Madeleine Luppino
Senior Associate
T 03 5226 8564
E mluppino@ha.legal
Judy Baker
Law Clerk
T 03 5226 8566
E jbaker@ha.legal
Allison Thomson
Law Clerk
T 03 5226 8534
E athomson@ha.legal
Sally Cole
Law Clerk
T 03 5226 8536
E scole@ha.legal
