What First Home Buyers Need to Know: Major Changes to the Home Guarantee Scheme (from 1 October 2025)
If you’re dreaming of buying your first home, some very encouraging changes are coming. The Australian Government is expanding the Home Guarantee Scheme to make it easier for more first home buyers to get into the property market. These reforms kick in from 1 October 2025, and they could reduce barriers around deposit size, income eligibility, and property price caps.
Let’s break down what’s changing, why it matters, and how to best prepare so you can take advantage.
What is the Home Guarantee Scheme?
The Home Guarantee Scheme (HGS) is a Commonwealth government program designed to help home buyers get into their first property sooner. It allows eligible buyers to purchase a home with a much smaller deposit than usual and/or avoid paying Lenders Mortgage Insurance (LMI), by having the government guarantee a portion of the loan. (Housing Australia)
There are different parts (guarantees) of the scheme, such as:
- First Home Guarantee (for first home buyers)
- Regional First Home Buyer Guarantee
- Family Home Guarantee (for single parents or legal guardians)
What’s Changing from 1 October 2025
From 1 October 2025, several significant reforms will make the scheme more accessible. Here are the key updates:
| Feature | Before 1st Oct | After 1st Oct |
|---|---|---|
| Place limits (quotas) | There were caps on how many first home buyers could use the scheme each year. | Unlimited places. All eligible first home buyers who meet the criteria can apply. (Housing Australia) | Income caps | Individual and joint taxable income limits applied (e.g. $125,000 for individuals, $200,000 for couples) (Housing Australia) | Income caps removed. The scheme will be open to more Australians, including higher income earners. | Property price caps | Property price caps varied by area; in many capitals and regional centres these had become a significant constraint. | Higher property price caps, adjusted to reflect the current market, especially in capital cities and regional centres. (Housing Australia) | Regional vs First Home Guarantee | There was a separate Regional First Home Buyer Guarantee for regional buyers. (Housing Australia) | The Regional Guarantee will be merged into the broader First Home Guarantee, simplifying access and rules. (Housing Australia) | Deposit / LMI | Buyers needed to meet certain deposit requirements (5% in many cases, 2% in some under Family Home Guarantee) and pay LMI if deposit was lower or the risk was high. | Buyers with the minimum deposit (approx. 5%) can avoid LMI thanks to the government guarantee. |
New Property Price Caps by Location (Highlights)
Here are some examples of the new property price caps that come into effect 1 October 2025. This determines the maximum value of a property you can buy under the scheme in your city or region.
- Sydney (Capital City & Regional Centres): ~$1,500,000 (up from ~$900,000) (Housing Australia)
- Melbourne (Capital City & Regional Centres): ~$950,000 (up from ~$800,000) (Housing Australia)
- Brisbane & major QLD regional centres: ~$1,000,000 (up from ~$700,000) (Housing Australia)
- Perth, Adelaide, Hobart etc. also see increases in their caps. See official tables for your postcode. (Housing Australia)
Why These Changes Matter
For first home buyers, these reforms are game-changers. Here are the main benefits:
- Easier access: Without place limits and income caps, more people will qualify.
- Lower deposit barrier: Being able to get in with ~5% deposit, and avoid LMI, significantly reduces upfront costs.
- Better buying options: Increased price caps mean you can aim for better suburbs, more modern homes, larger properties, or more centrally located places than before.
- More certainty: Because you won’t have to compete for a limited number of spots, you can plan ahead with more confidence.
What to Watch Out For / Things to Do Now
Even with the changes, there are still important steps and risks first home buyers should keep in mind:
- Double-check eligibility
Use the official Home Guarantee Scheme Eligibility Tool once it’s updated after 1 Oct 2025. Make sure you meet all the criteria—citizenship, property purpose (owner-occupier), etc. (Housing Australia) - Save for deposit & fees
The scheme allows smaller deposits, but you still need money for stamp duty, legal fees, inspection, moving costs, and sometimes other upfront payments. Don’t underestimate those. - Pre-approval is key
Get pre-approval from a participating lender so you know how much you can borrow. That helps when you find a property you like—especially in a competitive market. - Know local property price caps by postcode
The cap in your suburb or postcode matters: just because you could buy in a city at a certain cap doesn’t mean every suburb qualifies. Checking your area early will avoid disappointment. - Beware higher interest rates / loan repayments
Just because you’re putting down a smaller deposit doesn’t mean the loan is cheap long-term. You’ll want to compare interest rates, mortgage repayment stress, and make sure you can afford monthly repayments. Also, smaller deposits can be riskier in volatile markets. - Act at the right time
Since the changes take effect 1 October 2025, if you’re ready, it might be worth aligning your searches, finance approvals, and inspections around that date. But also be aware that many buyers will be doing the same, so competition may increase in certain price bands.
Final Word
The changes to the Home Guarantee Scheme from 1 October 2025 are a huge boost for first home buyers in Australia. With no place limits, no income caps, and increased price ceilings, the scheme will finally match more closely the realities of today’s housing market. If you’ve been waiting, saving, and planning, now is the time to:
- Get your finances in order
- Find a lender familiar with the scheme
- Research suburbs and price caps in your area
- Be ready to move when the right property comes along
Buying your first home is never risk-free, but with these changes, those risks are lower—and the opportunity is greater.