By Legal Home Loans -
Sponsored content
From 1 October 2025, the Australian Government’s First Home Guarantee scheme expanded, allowing more Australians to purchase a home with as little as a 5% deposit.
Whether you had been preparing to buy your first property or simply watching how the market evolved, these updates play an important role in shaping home ownership plans across the country.
What is the First Home Guarantee Scheme?
The First Home Guarantee formed part of the Home Guarantee Scheme, an Australian Government initiative designed to help buyers with a smaller deposit purchase a property.
Under the scheme, eligible buyers with a minimum 5% deposit are able to purchase a home without paying Lender’s Mortgage Insurance. Housing Australia provided a guarantee of up to 15% of the property’s value to participating lenders, allowing purchasers to borrow up to 95% of the property’s value.
To be eligible, applicants needed to be first home buyers or individuals who had not owned property in Australia within the past ten years. This applied to both applicants in joint purchases.
Previously, the scheme included income limits ($125,000 for single applicants and $200,000 for couples), property price caps and place restrictions.
What changed?
From 1 October 2025, the scheme was expanded to help more Australians enter the property market. These updates were originally scheduled for 2026 but were brought forward by the government.
The changes included:
- No place limits: any Australian first home buyer who has saved a 5% deposit can apply.
- No income caps: first home buyers with higher incomes can access the scheme.
- Higher property price caps: for example, Sydney’s cap will increase from $900,000 to $1,500,000.
- Simpler access in regional areas: Regional First Home Buyer Guarantee will be replaced by the expanded scheme.
What it meant for first-home buyers
The expansion significantly reduced the time required for many first home buyers to save for a deposit.
For example, in Sydney, with a median home value of $1,228,435, saving a 20% deposit of $245,687 would have taken roughly 13 years. With the scheme, a 5% deposit of $61,422 could be achieved in about three years.
What it meant for property prices
Although the scheme provided a welcome boost for first home buyers, some experts noted that it added to competition and placed upward pressure on prices.
Treasury modelling suggested the scheme would add around 0.5% to home prices over six years. Other analysts expected a stronger effect, particularly when combined with falling interest rates, which may have influenced affordability further.
Want to know more?
If you’re considering your next move, reach out to discuss how current government incentives may help you achieve your property goals.
Legal Home Loans is a dedicated mortgage broking partner for the Law Society of NSW, and your experts to coordinate your home loan. Plus, as part of the member benefits program with Law Society of NSW, we offer a $500 cash rebate on loan settlement.*
enquiries@legalhomeloans.com.au
(02) 9030 0420
www.legalhomeloans.com.au
*Rebate applies to the member’s first loan settled with Legal Home Loans. Legal Home Loans will honour the highest valued rebate that applies to the client. Limit of one rebate per loan in the case of multiple qualifying applicants. The loan value must exceed $250,000 to be eligible. This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Credit Representative (500773) is authorised under Australian Credit Licence 389328.
