Big changes coming: what the expanded First Home Guarantee means for you

Buying your first home is one of life’s biggest milestones and can also be one of the most overwhelming. Between rising house prices, the challenge of saving for a deposit, and all the hidden costs that come with buying, it can feel like the goalposts are constantly shifting. I see this every day when I sit down with clients: the excitement of wanting to take that first step, mixed with the worry of “how on earth do I get there?”

That’s why government support programs like the First Home Guarantee are so important. They don’t solve every challenge, but they can make a huge difference in getting you over the line sooner. And now, from 1 October 2025, the scheme is changing in some very big ways.

These changes will make it easier for more Australians to buy with a smaller deposit, in more locations, and without the stress of limited places or strict income limits. For first-home buyers who’ve been feeling locked out, this could be the opportunity you’ve been waiting for.

What is the First Home Guarantee?

For many buyers, the biggest hurdle to owning a home isn’t the loan itself; it’s saving up the deposit. Traditionally, banks have asked for a 20% deposit before they approve a mortgage. On a $700,000 home, that means finding $140,000 just for the deposit, plus enough extra to cover stamp duty and other costs.

If you don’t have 20%, you can still buy, but most lenders will make you pay Lenders Mortgage Insurance (LMI). This is an insurance policy that protects the bank if you can’t keep up your repayments, and it can easily add tens of thousands of dollars to your costs.

The First Home Guarantee (previously called the First Home Loan Deposit Scheme) is designed to help. Under this program, the government steps in to guarantee up to 15% of the property’s value, meaning you can buy with as little as a 5% deposit and skip LMI altogether.

Until now, the scheme has been limited — there were only a certain number of places available, there were income caps on who could apply, and there were strict limits on how much the property could cost.

What’s changing from 1 October 2025

The government has announced the most significant expansion of the First Home Guarantee since the scheme began, with changes taking effect on 1 October 2025. These updates are designed to broaden access and make the program more practical in today’s housing market. The key changes include:

• Unlimited spots

Previously, you had to secure one of a limited number of places, and they’d often run out quickly. From October, there’s no cap, so if you’re eligible, you can apply.

• No more income caps

Before, singles earning over $125,000 or couples earning over $200,000 didn’t qualify. From October, those income caps will be lifted, opening the program to a broader range of buyers.

• Higher property price caps

The maximum property price you can buy under the scheme has been lifted significantly. For example, in Sydney, the cap rises from $900,000 to $1.5 million, and in Melbourne from $800,000 to $950,000. This makes the scheme much more relevant in today’s property market.

• Simpler structure

The separate “Regional First Home Buyer Guarantee” will be consolidated into the main scheme, creating a single, consistent set of rules across the country.

Why this matters for first-home buyers

On the positive side, these changes open the door for many more Australians to get into the property market sooner. With no spot limits, higher property caps, and no income restrictions, the scheme is far more accessible than ever before.

Key benefits include:

• Smaller deposit needed: Instead of saving 20%, you only need 5%. On a $700,000 home, that’s $35,000 instead of $140,000.

• No LMI: Skipping this fee could save you anywhere from $10,000 to $30,000 (or even more, depending on the property value).

• More choice: Higher property caps mean you’re not restricted to the lower end of the market. In high-cost cities like Sydney and Melbourne, that makes a real difference.

• Certainty: With unlimited spots, you don’t have to worry about missing out just because applications closed.

  
  

What to watch out for

While the changes are mostly positive, they also come with some considerations you shouldn’t overlook.

• Bigger loan, bigger repayments: A 5% deposit means you’re borrowing more, so your monthly repayments will be higher. Make sure your budget can handle this and not just today, but also if interest rates go up.

• Market impact: Experts are already predicting that these changes could drive more demand in certain areas, which may push property prices higher.

• Other costs remain: Stamp duty, legal fees, building inspections, moving costs - the scheme doesn’t cover these, so you’ll need extra savings.

• Long-term planning: With a smaller deposit, you’ll start with more debt compared to equity in your home. It’s important to think about how you’ll manage that over time.

  
  

How can I help as your mortgage broker?

Purchasing your first home is one of the biggest financial decisions you might ever make. While these changes remove some barriers, they don’t remove the complexity - choosing the right loan structure, understanding the risks, and planning ahead are critical. Here’s where I can support you along the way:

• Check your eligibility: I’ll confirm whether you qualify for the scheme and explain exactly how it applies to your situation.

• Secure a pre-approval: I’ll complete the loan application with you and apply to the bank for pre-approval* on your behalf. Once your finance is conditionally approved, the bank will also secure a place in the scheme for you, which remains valid for 90 days.

• Compare lenders: Not every bank participates in the First Home Guarantee. I’ll guide you towards lenders that do, and find the loan structure that best fits your goals.

• Run the numbers: Together, we’ll look at repayments, fees, and your budget so you feel confident before making an offer.

• Plan ahead: I’ll help you factor in not just the deposit, but all the other costs and your future financial plans.

The expansion of the First Home Guarantee is exciting news. From October, more Australians will be able to buy with a smaller deposit, no LMI, and access to a wider range of properties. It could be the opportunity you’ve been waiting for.

But like all big financial decisions, it pays to go in with eyes wide open. A 5% deposit might get you into the market faster, but it also means a larger loan and bigger repayments. My role is to make sure you understand both the opportunities and the risks, and to help you structure your loan in a way that sets you up for long-term success.

If you’re considering buying your first home, whether now or after the October changes, I’d love to chat. We can look at your options, map out the costs, and put you on the path to owning your first home with confidence.

Get in touch today: chris@lyricfinance.com.au 

*A pre-approval is confirmation that the bank is willing to lend you the money to purchase, assuming their standard conditions are met.