Home Guarantee Scheme Overhaul: What First Home Buyers Need to Know from 1 October 2025

Home Guarantee Scheme Overhaul: What First Home Buyers Need to Know from 1 October 2025

Overview

The Australian Government is implementing a major expansion of the Home Guarantee Scheme (HGS) from 1 October 2025, aimed at making home ownership more accessible for first-time buyers. Administered by Housing Australia, the scheme enables eligible buyers to purchase a home with a 5% deposit, while avoiding Lenders Mortgage Insurance (LMI).

This update removes key restrictions and increases property price thresholds, reflecting the evolving housing market and government priorities.

Key Changes Effective 1 October 2025

• Unlimited Scheme Access: All eligible first home buyers can apply without restriction.

• No Income Limits: Buyers of all income levels are now eligible.

• Increased Property Price Caps: New thresholds apply across all states and territories.

Updated Property Price Caps (from 1 October 2025):

• NSW (Capital & Regional Centres)

Previous Cap: $900,000

New Cap: $1,500,000

• VIC (Capital & Regional Centres)

Previous Cap: $800,000

New Cap: $950,000

• QLD (Capital & Regional Centres)

Previous Cap: $700,000

New Cap: $1,000,000

• WA (Capital City)

Previous Cap: $600,000

New Cap: $850,000

• SA (Capital City)

Previous Cap: $600,000

New Cap: $900,000

• ACT

Previous Cap: $750,000

New Cap: $1,000,000

Simplified Regional Access: The Regional First Home Buyer Guarantee will be merged into the First Home Guarantee.

How the Scheme Works

• Buyers can purchase a home with a minimum 5% deposit.

• Housing Australia provides a guarantee to the lender, covering up to 15% of the property value.

• The guarantee is not a cash payment or deposit—it is a risk mitigation mechanism for lenders.

Eligibility Criteria (Post-October 2025)

• Must be an Australian citizen or permanent resident.

• Must be 18 years or older.

• Must be purchasing a home to live in.

• Must have saved at least 5% of the property value.

• No income limits apply.

• No property ownership in the last 10 years.

Application Process

1. Check Eligibility: A new online tool will be available from 1 October.
2. Contact a Participating Lender: Applications must be submitted through one of 30+ authorised lenders.
3. Submit Documentation: Includes proof of identity, deposit, and residency.
4. Find a Property: Must be within the new price caps.
5. Settlement: Final approval and guarantee issued by Housing Australia.

Market Implications

The removal of income and place caps is expected to increase demand, particularly in entry-level price brackets. While this may accelerate home ownership for many, it could also contribute to short-term price inflation in competitive markets.

Conclusion

The 2025 expansion of the Home Guarantee Scheme marks a significant shift in Australia’s housing policy. By removing barriers such as income limits and place caps, and adjusting price thresholds, the scheme opens the door for more Australians to achieve home ownership. For full details and eligibility, visit Housing Australia.