Saving a deposit for your first home has become an increasingly daunting challenge. In 2025 the median Australian home costs about $844,000, meaning a traditional 20 per cent deposit would require more than $168,000.
As house prices have climbed, wage growth has lagged and renters have watched their savings struggle to keep pace. This disconnect between earnings and property values has created a generational obstacle: by the time many prospective buyers accumulate enough cash, the goalposts have already moved. This frustration is so common that it often pushes people to put off home ownership altogether, settling into a cycle of rising rents and perceived hopelessness.
As part of its housing reform agenda, the Australian Government has sought to break down some of these barriers, and this week it just got much easier for first-home buyers to enter the market. The Home Guarantee Scheme (HGS), now coming into effect three months earlier than first announced, allows eligible first‑home buyers to purchase a property with as little as a 5 per cent deposit while avoiding lenders’ mortgage insurance (LMI).
What has just changed with the First Home Buyer Guarantee and why it matters
In May 2025’s federal Budget, Labor announced that it would expand the Home Guarantee Scheme to remove income caps and place caps from 1 January 2026. On 25 August 2025, the Prime Minister and Housing Minister brought that start date forward. The expanded scheme will now commence on 1 October 2025
The key elements of the reform are significant:
Unlimited places
The previous scheme limited the number of guarantees each year. From October there will be no cap on the number of first‑home buyers who can use the 5 per cent deposit guarantee. This removes the annual “race” for scarce places.
No income caps
The current scheme restricts eligibility to individuals earning up to $125,000 or couples earning up to $200,000. From October, those limits disappear, meaning higher‑income singles and couples can still access the guarantee.
Higher property price caps
The maximum purchase price has been raised substantially in capital cities and many regional centres. In Brisbane and other Queensland metropolitan areas the cap rises from $700,000 to $1,000,000. In Sydney it increases from $900,000 to $1.5 million. These changes reflect current market prices and open the scheme to buyers who previously couldn’t find suitable properties under the cap.
Simplified regional access
The Regional First Home Buyer Guarantee will be folded into the First Home Guarantee, meaning regional buyers no longer need to navigate a separate program.
These changes are intended to level the playing field. The government notes that a 5 per cent deposit on the median Australian home now equates to $42,200, a figure which, back in 2002, would have constituted a 20 per cent deposit. By reducing the deposit hurdle, the scheme aims to let younger buyers keep pace with the market rather than chasing it.
New property price caps
The table below summarises the current price cap and the new cap effective from 1 October 2025. These caps apply to the property’s purchase price, not its valuation, and you must still provide a 5 per cent deposit.
| Region | Current cap (A$) | New cap 1 Oct 2025 (A$) |
| QLD – capital city & regional centre (e.g., Brisbane, Gold Coast) | 700,000 | 1,000,000 |
| QLD – other | 550,000 | 700,000 |
| NSW – capital city & regional centre | 900,000 | 1,500,000 |
| NSW – other | 750,000 | 800,000 |
| VIC – capital city & regional centre | 800,000 | 950,000 |
| VIC – other | 650,000 | 650,000 (unchanged) |
| ACT | 750,000 | 1,000,000 |
| WA – capital city | 600,000 | 850,000 |
| SA – capital city | 600,000 | 900,000 |
| TAS – capital city | 600,000 | 700,000 |
| NT | 600,000 | 600,000 (unchanged) |
Understanding your eligibility for the Home Guarantee Scheme
Even after October’s expansion, several core eligibility requirements remain.
- You must be an Australian citizen or permanent resident
- You must be at least 18 years old
- You must intend to live in the property rather than rent it out
- Applicants must not have owned property in Australia in the previous 10 years
- Applicants must have saved at least a 5 per cent deposit.
You can apply alone or jointly with one other person, and that other person can be a partner, friend or family member.
Because income caps will be removed, higher‑income earners can still benefit from the scheme, however, you must still meet the lender’s serviceability assessment. The guarantee protects the bank, not the borrower, so your credit history, employment stability and ability to repay the loan will be assessed. You are also responsible for other costs such as stamp duty, legal fees and moving expenses, which should be factored into your savings plan.
Real‑life scenarios – examples you can use to determine your eligibility
To make the implications tangible, imagine several common situations.
Scenario 1: A single professional earning well over the old $125 k income cap currently saves diligently but can only put together $50,000 after years of work. Under the existing scheme they would be ineligible. From October, that person could purchase a Brisbane apartment valued at $900,000. Their deposit would be $45,000, and they would avoid an LMI premium that might otherwise exceed $30,000. The government guarantee fills the gap between the buyer’s deposit and the lender’s usual 20 per cent requirement.
Scenario 2: A couple have a combined income of $230,000. Under current rules they exceed the joint income limit. They might want a family home in a Brisbane suburb costing $1 million. With the new cap and removal of the income threshold, they would need a $50,000 deposit. Without the scheme, a 20 per cent deposit would be $200,000, which could take close to a decade to save. The scheme therefore accelerates their timeline substantially and allows them to allocate the difference towards renovations or an emergency buffer.
Scenario 3: A more creative example involves two siblings on moderate incomes who decide to buy together. Their combined deposit of $60,000 allows them to purchase a $1.2 million townhouse in a Sydney suburb using the scheme after October. With a 5 per cent deposit and government guarantee they avoid LMI, although they should be mindful that serviceability will be assessed on joint income and that co‑ownership agreements need careful legal consideration.
The expanded scheme enables a first‑home buyer to purchase a $1 million home with a $50,000 deposit, cutting up to 10 years off the savings timeframe, saving about $42,000 in LMI and directing as much as $350,000 toward their own mortgage instead of rent. This underscores the scale of potential savings now available to you if you are eligible.
What you can do to prepare between now and 1 October
October may seem close, but there is still time to put yourself in the strongest possible position. The expanded Home Guarantee Scheme will open unlimited places, yet competition for suitable properties may be fierce. Taking the following steps now can turn hope into readiness:
- Review your finances comprehensively. This means more than glancing at your savings account; assess your income stability, existing debts and discretionary spending. Lenders will examine your bank statements for consistency and responsible behaviour. Reducing unsecured debts (credit cards, personal loans) can enhance your borrowing capacity.
- Firm up your deposit strategy. Even though the minimum deposit is only 5 per cent, you must still show genuine savings, funds you have accumulated over at least three months. Gifts from parents can help with stamp duty and other costs but will not always count as genuine savings. Aim to have your 5 per cent deposit fully saved by September so you can move quickly once the scheme opens.
- Improve your credit profile. Pay bills on time, avoid unnecessary credit enquiries and review your credit report for errors. A strong credit score gives lenders confidence to approve your loan under the scheme.
- Research the market and set expectations. Look at comparable sales in your preferred suburbs and consider whether a townhouse, apartment or house‑and‑land package will suit your lifestyle. Remember that under the scheme you must live in the property, at least initially; if you plan to rent it out later, different rules may apply.
- Most importantly, speak to a financing expert now. A free, no‑obligation conversation with an experienced broker can clarify your eligibility, reveal potential pitfalls and broaden your options. At SW Brokerage, our philosophy goes beyond securing a loan – we act as long‑term partners in your financial journey. We take the time to understand your short‑ and long‑term goals, explain the nuances of the Home Guarantee Scheme, and compare it with other pathways such as the upcoming Help to Buy shared‑equity program, guarantor loans or rentvesting strategies. We can also connect you with trusted professionals, legal advisers, buyers’ agents, financial planners, to build a holistic plan. Starting this dialogue well before October allows time to address issues like deposit shortfalls, credit blemishes or unrealistic expectations. When the scheme opens, you will be ready to act with confidence rather than scramble under pressure.
Take action – seek advice from a financial expert
Choosing the right broker can make all the difference. At SW Brokerage, we specialise in helping first-home buyers navigate the complex lending landscape with confidence. Our deep understanding of lender policies, government schemes and the unique challenges faced by new buyers means we can tailor strategies that align with both your immediate goals and long-term financial security.
Unlike going directly to a bank, where you’re limited to one set of products, an experienced broker gives you access to a wide panel of lenders and negotiates on your behalf to secure competitive terms. More importantly, a trusted adviser ensures you don’t just get into your first home, but you do so in a way that supports your financial wellbeing for years to come.
At a time when opportunities are expanding but competition remains fierce, professional guidance has never been more essential. SW Brokerage is here to simplify the process, reduce stress and give you clarity on your options. Take the first step today: book your free consultation and let us help you turn the dream of home ownership into a reality. Contact us now for a 15min chat.