The Australian Government has expanded the Home Guarantee Scheme (HGS) as of October 2025, significantly improving access for first home buyers. The reforms remove income limits, increase property price caps, and raise the government guarantee threshold. This expansion allows more Australians to enter the property market with a minimum 5% deposit and without paying Lenders Mortgage Insurance (LMI).
Purpose
The scheme supports eligible first home buyers who have found saving a full deposit challenging due to rising housing costs. It enables them to buy or build a home sooner, using government-backed guarantees to reduce borrowing barriers. The reforms aim to promote ownership stability and improve long-term affordability in both metropolitan and regional areas.
Eligibility
Applicants must meet specific ownership and deposit criteria.
- A minimum 5% genuine deposit is required (2% for single parents under the Family Home Guarantee).
- The property must be owner-occupied within six months of settlement.
- Applicants must not have owned property in Australia within the past ten years.
- There are no income limits or restrictions on the number of available scheme places.
Eligible property types include existing homes, new builds, apartments, townhouses, and house-and-land packages—provided the purchase price does not exceed the local property price cap.
Advantages
Under the expanded arrangement, the government guarantee covers up to 15% of the property’s value, allowing lenders to approve loans worth up to 95% of the purchase price without requiring LMI. This can save buyers tens of thousands of dollars in upfront costs and make ownership achievable with a smaller deposit.
The absence of LMI provides flexibility in budgeting for other expenses such as stamp duty, conveyancing, and relocation costs.
Price Caps
The October 2025 update includes higher price limits reflecting current housing market values.
City | New Cap |
|---|---|
Sydney | $1.5 million |
Melbourne | $950,000 |
Brisbane | $1 million |
Adelaide | $900,000 |
Perth | $850,000 |
Hobart | $700,000 |
Canberra | $1 million |
Darwin | $600,000 |
Regional areas have also seen increased caps aligned with local median prices, expanding opportunities for first home buyers outside major capitals.
Application
Applications are made through participating lenders who assess eligibility and manage the government guarantee. Buyers should:
- Prepare a minimum 5% deposit.
- Budget for associated costs including stamp duty and legal fees.
- Submit an application through an approved lender.
- Ensure the home is occupied within six months of settlement to comply with scheme rules.
Considerations
Before applying, buyers should assess long-term affordability and seek professional financial advice. Fixed or variable loan options should be compared, and pre-approval secured early. Staying informed on local property caps ensures compliance and prevents delays in approval.
The expanded Home Guarantee Scheme offers first home buyers a faster, more affordable pathway into ownership. With no income restrictions, no LMI, and higher property caps, it provides a clear advantage for Australians looking to enter the market in 2025 and beyond. Eligible applicants should prepare their deposit and engage with participating lenders to take full advantage of the opportunity.