Buying Your First Home Just Got Easier: Changes to the Home Guarantee Scheme

From 1 October 2025, the Australian Government is expanding the Home Guarantee Scheme (HGS) in a big way. For first home buyers, this could be the break you’ve been waiting for.

Unlimited scheme places, no income caps and higher property price caps will make it easier for more Australians to get into their first home with as little as a 5% deposit, all while avoiding the cost of Lenders Mortgage Insurance (LMI).

What is the Home Guarantee Scheme?

The Home Guarantee Scheme (HGS) is an Australian Government initiative designed to help more people buy a home sooner. Instead of needing the usual 20% deposit to avoid paying Lenders Mortgage Insurance (LMI), eligible buyers can purchase with as little as a 5% deposit.

Here’s how it works:

• The buyer saves a smaller deposit, 2% or 5% of the property’s value, depending on the Guarantee.
• Housing Australia provides a guarantee to the bank, covering part of the loan.
• The buyer can borrow up to 95–98% of the property’s value without paying LMI.
• The buyer still needs to meet normal lending criteria, cover other costs (like stamp duty and legal fees) and make the loan repayments.

It’s not a cash handout or deposit payment; the guarantee is there to reduce risk for lenders, making it easier for buyers to enter the market.

Since it began, the Scheme has already supported over 230,000 Australians in buying their first home.

What’s Changing From 1 October 2025?

From 1 October 2025, the Home Guarantee Scheme will expand significantly:

• Unlimited places: No more caps on how many buyers can access the Scheme each year.
• No income limits: Higher-earning individuals and couples will also be eligible.
• Higher property price caps: Thresholds are rising across much of the country to reflect today’s market.
• Simpler access for regional buyers: The Regional First Home Buyer Guarantee will merge with the First Home Guarantee.

The Scheme will still be available through 30+ participating lenders, including major banks, customer-owned banks and regional banks.

New Property Price Caps

Here’s how the caps will shift from 1 October 2025:

Location	Current Cap	New Cap
NSW – Capital City & Regional Centre	$900,000	$1,500,00
NSW – other	$750,000	$800,00
VIC – Capital City & Regional Centre	$800,000	$950,00
VIC – other	$650,000	$650,00
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

Regional centres include Illawarra, Newcastle & Lake Macquarie (NSW), Geelong (VIC), and Gold Coast & Sunshine Coast (QLD).

Source: Unlimited places, higher property price caps for first home buyers from 1 October 2025, Housing Australia

How Could This Benefit You?

Let’s put this into perspective.

Imagine you’re in your mid-twenties, planning to buy your first home. Right now, under the Scheme, you could buy a $600,000 property with a 5% deposit of $30,000 (plus stamp duty and legal fees). From 1 October 2025, that budget jumps to $850,000 with the same 5% deposit of $42,500 (plus stamp duty and legal fees).

That extra $250,000 in borrowing power opens up a much wider range of suburbs and property types that may have previously been out of reach. Add in the savings on Lenders Mortgage Insurance (which can be $20,000–$40,000 depending on the property price) and you’re looking at entering the market sooner and with more options.

For every first home buyer who gains, there will be increased competition but the reality is the scheme creates more winners than losers.

What To Watch Out For

While the expanded Scheme is a huge opportunity, it’s not without challenges. Here are a few things to keep in mind:

• More competition: With more buyers able to access more properties, competition could heat up in certain suburbs. Having your finance pre-approval sorted will make your offer more competitive.
• Affordability still matters: Just because you can buy at a higher price doesn’t mean you should. Make sure repayments fit your budget.
• Other costs still apply: Stamp duty, legal fees and moving costs are still part of the equation. The guarantee only covers the lender’s risk, not the buyer’s costs.
• Not everyone benefits: Investors and non–first home buyers shopping in the same price brackets may face stiffer competition from new entrants.

Who is Eligible?

Eligibility depends on the type of Guarantee (First Home, Family or Regional) but in general terms applicants need to:

• Be Australian citizens or permanent residents aged 18 or over.
• Be buying a property to live in (not as an investment). Types of property include:
  • Existing houses, townhouses and apartments.
  • House and land packages.
  • Vacant land with a separate contract to build a home.
  • Off-the-plan apartments or townhouses.
• Meet deposit requirements – at least 5% for most buyers.
• Apply for a loan with a Participating Lender offering the Scheme.

Specific rules around income, property type and ownership history have applied in the past but many of these restrictions will change from October. Housing Australia has an updated Eligibility Tool available to check individual circumstances.

How Do You Apply?

You can’t apply for the Home Guarantee Scheme directly with Housing Australia; it has to be done through a participating lender. That’s where working with a broker really helps. Instead of you juggling the paperwork and comparing banks, your broker does the heavy lifting:

• Check eligibility: Your broker will run through the Scheme rules with you and confirm whether you qualify. You can also use the Eligibility Tool to understand the Scheme rules and property price caps in your area.
• Find the right lender: With access to a wide panel of banks and lenders (including those offering the Scheme), your broker can match you with the one that suits your situation best.
• Handle the application: Your broker prepares the paperwork, works with the lender and submits the application to Housing Australia on your behalf.
• Keep Things Moving: Once you’re pre-approved, your broker stays in touch to make sure everything’s on track while you search for a property.

Need Help Getting Finance Sorted?

One of the biggest takeaways from the Scheme changes is the importance of being ready. With more first-home buyers eligible and higher price caps in play, competition for properties is likely to increase. Having your finance pre-approval in place will make your offer stronger and give you confidence when the right home comes along.

That’s where working with a finance broker can make the difference. At Carbon, our Finance & Lending team works with a panel of banks and lenders (including those offering the Home Guarantee Scheme) to guide you through the application process. We help you understand your options, prepare the paperwork, and get you loan-ready sooner.

If you’re planning to buy in the next year, now is the time to start exploring your finance options so you’re ready when the new rules kick in on 1 October 2025.

Book an appointment with Carbon Finance & Lending to get started.