From October, every first-home buyer in Australia — regardless of income — will be able to purchase a property with just a 5% deposit, as the federal government fast-tracks its expanded Home Guarantee Scheme.

The momentous change for budding first-time buyers, combined with the Reserve Bank’s signals of further interest rate cuts, is tipped to ignite a record-breaking spring property market in 2025[i].

From 1 October 2025, every first-home buyer in Australia, no matter how much they earn, will be able to purchase a property with just a 5% deposit under the federal government’s expanded Home Guarantee Scheme.

The scheme, which has been brought forward from 2026, removes both the income cap and the place limits that previously restricted access. It also raises property value caps to $1.5 million, opening the door for thousands of first-home buyers in markets where entry-level homes are priced well above the old $950,000 threshold.

In practical terms, the expanded scheme means a first-home buyer in Brisbane could purchase a $1 million property with just a $50,000 deposit. That could cut up to 10 years off the time it takes to save, according to the federal government, eliminate around $42,000 in lender’s mortgage insurance, and allow them to put as much as $350,000 towards their own loan instead of paying rent[ii].

Until now, only a limited number of first-home buyers have been able to access the scheme (50,000 places nationally per year[iii]). Once those places were filled, buyers had to wait until the next allocation opened.

What’s changing from 1 October?

• All first-home buyers are eligible: no income caps, no place limits.
• Higher property price caps: up to $1.5 million in major cities.

Simplified regional access: The Regional First Home Buyer Guarantee will be replaced by the First Home Guarantee.

Angus Raine, Executive Chairman of Raine & Horne, said the expanded scheme will be a “game-changer” for first-home buyers but cautioned against the risks of government intervention.

“Whilst I applaud the Federal Government for this initiative, history shows that first-home buyer packages from both federal and state governments often have the opposite effect, artificially inflating prices at the lower end of the market and ultimately proving more beneficial for sellers than buyers.”

Craig Betalli, Senior Broker at Our Broker, said the move will make a “big difference” to professional couples who were previously locked out.

“Take a couple looking to buy a $1.2 million property. Under the old rules, if their household income exceeded $200,000, they required more than just a 5% deposit.

“On top of the $60,000 deposit, they also had to cover around $50,000 in stamp duty and fees and another $35,000–$40,000 in lenders’ mortgage insurance. All up, they needed over to $150,000 before they could even get started.”

“The bottom-line is that a couple earning more than $200,000 combined could not qualify for the scheme under the old rules. Now they can, and in markets such as Sydney or Melbourne that’s critical.”

While it’s still early days since the announcement, Craig said he hasn’t seen an immediate lift in first-home buyer enquiries. “However, in conversations with clients who are over the existing $200,000 income limit or targeting higher price points, we’ve been discussing what they can do now to prepare for the beefed-up scheme.”

Craig added that the indications are that the scheme may no longer be lender-based, which would be a significant shift. “At present, a lender must agree to participate in the scheme, and not all do.

“If broader lender participation is introduced, it could give borrowers far greater access to their first home across a wider range of lenders.”

Property price caps from 1 October 2025

* Regional centres are (1) in New South Wales - Illawarra, Newcastle and Lake Macquarie, (2) in Victoria - Geelong, and (3) in Queensland - Gold Coast and Sunshine Coast.

Source: https://www.housingaustralia.gov.au

If you’re planning to buy a property this spring, contact your local Raine & Horne agent today. To learn more about your eligibility for the Home Guarantee Scheme, call Our Broker on 1800 913 677

[i] https://www.rba.gov.au/monetary-policy/rba-board-minutes/2025/2025-08-12.html

[ii] https://www.pm.gov.au/media/albanese-government-delivers-5-deposits-all-first-home-buyers-sooner

[iii] https://www.housingaustralia.gov.au/media/50000-new-home-guarantee-scheme-places-available-support-and-accelerate-home-ownership