The Federal Government has just announced significant changes to the First Home Buyer Guarantee.
Eligible buyers can now purchase a home with just a 5% deposit, with the government guaranteeing up to 15% of the property’s value.
This removes the need for Lenders Mortgage Insurance (LMI) and opens the scheme to more buyers by removing income limits and scheme places.
- Low Deposit: Buyers need only a 5% deposit.
- Government Guarantee: Covers up to 15% of the property’s value, eliminating LMI.
- No Caps: There are no income limits or restrictions on scheme places.
- Higher Price Limits: Purchase price caps will rise significantly by state/territory.
Eligibility Criteria
- Australian citizen or permanent resident
- At least 18 years old
- Must live in the property (owner-occupier)
- Not owned property in Australia in the last 10 years
- Deposit of at least 5%
- Principal & Interest loan, maximum 30-year term
From 1 October 2025, there will be no income eligibility limits or caps on the number of Scheme places available, allowing access for additional buyers.
Joint applications are included and eligible regardless of their combined income. which had a previous limit of $200,000. Learn more about co-buying property.
Potential buyers must still cover stamp duty, fees and loan repayments. There is also the major benefit of no LMI, which is often a significant impediment for buyers looking to enter the market.
Here's an example:
On a $700,000 property purchase, eligible buyers could avoid up to $36,000 in LMI.
This segment of the market is often most requiring of LMI, so this should be well received and make an sizeable impact.
Another meaningful change is the lifting of the property value for which the scheme applies. The new caps shown below are a welcome change that target a specific sector of the market who need access to more housing options.
Refer to our VIC, NSW and SA Property Guides for more general assistance when buying property in these states.
Related Schemes are still available, including:
All parties need to be aware that normal credit criteria will otherwise apply. The end loan will function like any conventional mortgage, acting as a guarantee and not a waiver.
This may help buyers access home ownership sooner and with lower upfront expenses, though they still need to meet the ongoing loan payment commitments.
There is a real risk of side initiatives created by demand creating upward pressure on prices. The Government will be working hard on stimulating property supply to ease structural shortages.
Overall, this updated scheme is an attractive proposition for the first home buyer market. Buyers should still mindfully approach their property purchase and attend to all their normal due diligence. Our Mortgage Finance Guide is a useful resource.
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