What Is the First Home Guarantee?
The First Home Guarantee is part of the Australian Government’s Home Guarantee Scheme.
It allows eligible buyers to purchase a property with as little as a 5% deposit, without having to pay Lenders’ Mortgage Insurance (LMI). The government effectively guarantees up to 15% of your loan, saving you tens of thousands in costs and years of saving.
Who can apply?
Currently, you’re eligible if you:
- Are an Australian citizen or permanent resident, aged 18+
- Haven’t owned property in the last 10 years
- Earn under $125k (single) or $200k (couple)
- Intend to live in the property (not for investment)
- Choose a home under the price caps for your state/region
Why It Matters
The FHBG helps first-home buyers:
- Enter the market sooner, with less upfront saving
- Avoid paying LMI (which can be $20k+)
- Combine with other grants or concessions, like:
- First Home Owners Grant
- Stamp duty exemptions/concessions
- First Home Super Saver Scheme
For many, this is the difference between renting for years and actually stepping into their own home.
The Big Changes Coming – 1 October 2025
From 1 October 2025, the First Home Guarantee is getting a major upgrade.
Here’s what’s new:
1. Unlimited Places
No more annual quota—any eligible first-home buyer can apply.
2. No Income Caps
The current income limits will be scrapped. Whether you earn $60k or $260k, you’ll be able to apply.
3. Higher Property Price Caps
Caps will rise to better reflect the market. Some examples:
- Sydney: $900k → $1.5m
- Melbourne: $800k → $950k
- Brisbane: $700k → $1m
Regional areas will also see higher caps.
4. Regional Access Simplified
The Regional First Home Buyer Guarantee will be rolled into the main scheme—making it simpler, with the same rules nationwide.
What This Means in Plain English
| Before 1 Oct 2025 | From 1 Oct 2025 |
| 35,000 places per year | Unlimited places available |
| Income caps ($125k / $200k) | No income caps |
| Lower property price limits | Higher property price caps |
| Separate regional scheme | Single, nationwide scheme |
The Upside—and the Risks
While this is fantastic news for many buyers, there are some important things to consider:
✅ Upside
- More people can access the scheme
- Higher caps mean more choice in major cities
- Easier entry into the market without waiting years to save a 20% deposit
⚠️ Risks
- Increased competition: With unlimited spots, more buyers may flood the market, which could push up property prices
- Higher repayments: Buying at the top of your budget can be risky if interest rates rise
- Low deposit = higher exposure: With just 5% equity, you’re more vulnerable if property prices fall
What Does This Mean for First-Home Buyers in Victoria?
In Melbourne, the new $950k cap means buyers will have access to a much broader slice of the market. For example:
- Suburbs like Preston, Coburg, or Footscray, which are currently out of reach for many first-home buyers, may become realistic options.
- Regional areas such as Geelong and Ballarat could also see a surge in buyer activity, as the regional guarantee merges with the main scheme.
This is a big opportunity—but it also means competition could heat up across both city and regional markets.
Final Thoughts
The First Home Guarantee is already a powerful tool to help first-time buyers break into the property market. From 1 October 2025, the new rules will make it even more accessible—unlimited spots, no income limits, and higher price caps.
But remember: just because you can buy, doesn’t mean you should stretch your finances to the limit. A 5% deposit can get you into the market faster, but it also comes with risks.
💡 At Pursue Wealth, we recommend looking at your long-term financial goals—not just the short-term benefit of getting into the market.
Need Help Navigating Your First Home Purchase?
Book a chat with our team—we’ll help you understand your options, plan your finances, and make sure you’re buying a home that supports your future wealth.
