Big Changes to the First Home Guarantee: What You Need to Know

The October expansion of the First Home Guarantee could make the difference between waiting years to buy and moving into your first home sooner.

Buying your first home is never easy, and for many Australians the hardest part is saving a deposit. The government’s First Home Guarantee (FHG) has been helping people overcome that hurdle, and from 1 October 2025 the scheme is set to become even more generous.

Here’s what’s changing, what’s staying the same, and how you can prepare.

What is the First Home Guarantee?

The FHG allows eligible buyers to purchase their first home with as little as a 5% deposit while avoiding the added cost of Lenders Mortgage Insurance (LMI). Normally, if you have less than a 20% deposit, you’d be charged LMI—which can add up to tens of thousands of dollars. With the FHG, the government guarantees the difference, saving you money and helping you buy sooner.

Until now, there have been strict income and property price caps that ruled many people out. That’s where October’s changes come in.

What are the changes to the First Home Guarantee from 1 October 2025

1. No more income capsAt present, singles earning over $125,000 or couples earning over $200,000 combined are excluded. From October, these limits disappear—opening the scheme up to many professionals and dual-income households.

2. Higher property price capsThe maximum value of homes you can buy under the scheme is rising significantly. For example, new caps are expected to reach up to $1.5 million in Sydney, $950,000 in Melbourne, and $1 million in Brisbane.

3. Earlier start dateThese changes were originally planned for 2026 but have been brought forward to 1 October 2025, meaning you may be able to take advantage sooner than expected.

   
   

What’s staying the same

• Deposit: You still need at least 5% genuine savings.

• Owner-occupier rule: This is not for investors—you must live in the home.

• Citizenship/PR: Both Australian citizens and permanent residents remain eligible.

• Joint applicants: Friends, siblings, and family can continue to apply together, not just couples.

  
  

What this means for buyers

• Singles on higher incomes can finally access the scheme, making inner-city markets more realistic.

• Couples and dual-income households will no longer be held back by income caps and can combine resources freely.

• Friends and family buying together will benefit from the higher price caps, giving them more choice in where and what to buy.

• Regional buyers are also likely to see caps lifted, making the scheme more practical in growing regional centres.

  
  

Why it matters

Let’s look at a simple example:

• A $900,000 property with a 10% deposit ($90,000) would usually attract a hefty LMI bill.

• With the FHG, you could buy the same property with just a 5% deposit ($45,000) and no LMI.

That’s a massive difference in how quickly you can get into your first home.

How to get ready

If you’re planning to buy around October or later, now’s the time to prepare:

1. Check your eligibility – You must not have owned property in Australia in the last 10 years.

2. Get your paperwork together – Payslips, bank statements, and savings history will all be needed.

3. Save more than 5% – Remember, you’ll still need to cover stamp duty, legal fees, and moving costs.

4. Think about timing – If you plan to buy before October, today’s caps and rules apply. If after, the new rules could make it easier.

5. Talk to an expert – Lenders will still assess affordability carefully, so getting advice on borrowing capacity is crucial.

   
   

Final word

The October changes to the First Home Guarantee could make the difference between waiting years to buy and moving into your first home sooner. With no income caps and higher property price limits, the scheme is opening up opportunities for a much wider group of Australians.

If you’re thinking about buying in the next 12 months, it’s worth getting advice now so you’re ready to act when the new rules come in.

Ready to explore your options?

At Etairos Finance, we specialise in helping first-home buyers navigate the market and make the most of government support programs like the First Home Guarantee. We can also provide you with a detailed property report on any home you’re considering, so you can make an informed decision.

Get in touch with us today to discuss your borrowing power and put a plan in place for when the October changes take effect.