What’s Changing?
From 1 October 2025, the Albanese Government will roll out the expanded First Home Guarantee (FHBG), enabling all first-home buyers—regardless of income—to enter the market with just a 5 per cent deposit and no cap on places. The start date has been brought forward from January 2026.
Key features include:
- Government guarantee of up to 15 per cent of the loan, allowing buyers to avoid expensive Lenders' Mortgage Insurance (LMI).
- Median home price affordability: With the national median at $844,000, a buyer would only need around $42,200 as a deposit.
- Higher property caps:
- Sydney: up to $1.5 million
- Melbourne: up to $950,000
- Brisbane: up to $1 million
Why This Matters
- Bridges the deposit gap: Buyers won’t need to wait years to save a large deposit.
- Saves money: Avoiding LMI can save tens of thousands of dollars.
- Wider access: No income cap and no limit on participant numbers makes this the most accessible scheme yet.
There is, however, a risk that increased demand could push property prices higher, particularly in markets with limited supply.
How First-Home Buyers Can Access the Scheme
- Start preparing now: Speak with participating lenders to check eligibility and begin the pre-approval process.
- Save a 5 per cent deposit: This remains the minimum requirement.
- Choose an eligible property: Ensure the purchase price falls under the relevant regional or capital city cap.
- Apply through your lender: From 1 October, lenders will coordinate the guarantee with Housing Australia.
- Finalise the loan: With the guarantee in place, buyers can move ahead without paying LMI.
- Consider stacking incentives: Combine the FHBG with state-based stamp duty concessions or the First Home Super Saver Scheme if eligible.
What Property Types Fit Within Value Caps? (For Sellers Looking to Entice Buyers)
Current property owners should be aware that homes priced close to the new thresholds will be especially attractive to first-home buyers. The following examples highlight key bands:
| Location | Max Value Cap | 5 % Deposit Required |
|---|---|---|
| Sydney (capital city or region) | $1.5 million | ~$75,000 |
| Melbourne (capital city) | $950,000 | ~$47,500 |
| Brisbane (capital city) | $1 million | ~$50,000 |
| National median-priced markets | $844,000 | ~$42,200 |
Properties in these brackets will be positioned well for motivated first-home buyers. Sellers who bring such homes to market may see stronger demand and quicker sales.
Tips for First-Home Buyers
- Budget realistically: Stamp duty, legal fees, and moving costs still apply.
- Beware over-borrowing: A 95 per cent loan-to-value ratio means higher repayments and risk.
- Plan for rate rises: Ensure repayments remain manageable if interest rates increase.
- Focus on value, not just eligibility: Don’t rush into the first property within the cap—consider location, growth, and liveability.
- Seek professional help: Mortgage brokers and advisers familiar with the scheme can help navigate the process.
In Summary
The expanded First Home Guarantee represents a major shift in housing affordability policy. Launching early in October 2025, it removes income and participant caps, lifts property value limits, and reduces the deposit hurdle to just 5 per cent without the need for LMI.
For first-home buyers, this is a genuine opportunity to enter the market sooner. For sellers, particularly those with properties priced near the new caps, the expanded buyer pool could present the perfect moment to sell.
How MMJ Real Estate Can Help
Navigating government schemes, finance, and property searches can feel overwhelming. MMJ Real Estate’s experienced team provides expert guidance, ensuring buyers understand eligibility, available properties, and market opportunities. By combining market insight with tailored advice, MMJ supports first home buyers in turning their property aspirations into reality.