The Home Guarantee Scheme is changing from 1 October 2025. These updates widen who can qualify and lift property caps.
What is the Home Guarantee Scheme?
The Home Guarantee Scheme is a federal program, run through Housing Australia, that lets eligible first home buyers purchase a home with as little as a 5% deposit and avoid paying Lenders Mortgage Insurance (LMI).
Here’s how it works: the government doesn’t give cash to the buyer. Instead, it guarantees up to 15% of the property value so that lenders can waive LMI for loans up to 95%.
Buyers must still meet all lending criteria, repay their mortgage as usual and live in the property as their home.
What’s changing from 1 October 2025
The key changes will make it easier for more people to qualify:
- Income caps removed: Until now, applicants were limited to a taxable income of $125,000 for singles or $200,000 for couples. From 1 October, these limits are scrapped.
- Unlimited places: Previously, the scheme only offered a set number of places each financial year. From October, that cap disappears.
- Higher property price caps: Price thresholds have been lifted to reflect rising housing costs. In NSW, for example, the cap for properties in capital and regional centres jumps to $1.5 million, and in other NSW areas it rises to $800,000.
- Simplified access: The separate Regional First Home Buyer Guarantee has been merged into the main scheme.
Other requirements remain the same: buyers must be Australian citizens or permanent residents, at least 18 years old, and intend to live in the property.
What this means for first home buyers
Benefits:
- More buyers qualify thanks to no income cap.
- More homes now fall under the higher price caps.
- Avoiding LMI saves thousands upfront. For example, someone buying a $1 million home with a 5% deposit could avoid about $39,000 in LMI.
Risks and cautions:
- A 5% deposit still means taking on a 95% mortgage. That means higher monthly repayments and more interest over the life of the loan.
- Buyers still need to pass lenders’ serviceability tests.
- If property prices drop, a high-loan borrower could fall into negative equity.
- Not all lenders participate in the scheme.
Author: Steven Swan