Home guarantee scheme to open doors for more first home buyers

Australia’s first home buyers will now have access to a wider range of suburbs and more attainable price points, thanks to major changes to the federal government’s Home Guarantee Scheme, set to take effect from 1 October 2025. The reforms aim to better reflect the realities of the current housing market, with property price caps lifted, eligibility broadened, and the removal of previous income and property limits. The changes mark a significant step towards improving affordability and accessibility for younger and lower-income Australians eager to step onto the property ladder.

More buyers, more options

The scheme enables eligible buyers to purchase a home with as little as a 5% deposit, while avoiding lenders’ mortgage insurance (LMI).

Under the revised rules, a 63.1% of suburbs nationally now fall within the new price caps, nearly double the coverage under the previous thresholds. This includes 51.6% of house markets and 93.7% of unit markets, making it far easier for first home buyers to find a property that suits their budget and lifestyle.

According to economist Kaytlin Ezzy from research firm Cotality, the adjustments are long overdue. “Since the caps were last revised in 2022, values across the mid-sized capitals have grown significantly, which has seen first home buyers reliant on the scheme to purchase a house essentially priced out,” she said. “The new price caps are more in line with each region’s median values.”

Key price cap increases

Some of the most significant changes include:

Sydney, Illawarra, Newcastle and Lake Macquarie: Cap increased by $600,000, from $900,000 to $1.5 million
South East Queensland: Raised by $300,000 to $1 million
Adelaide: Lifted from $600,000 to $900,000

These revised limits have opened up new opportunities in areas that were previously out of reach. In Adelaide, for example, only 2.9% of suburbs qualified under the old cap, now that figure has jumped to 46.6%. In Brisbane, 97.5% of unit markets are now under the new limit, compared with just 36.9% before.

Levelling the playing field

While there are concerns the expanded access could increase demand and place further pressure on prices, Ms Ezzy said the move is essential for improving equity in the market. “This will create a more equitable starting point and provide more options for those looking to get on the property ladder, particularly those who don’t have parental support,” she said.

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