What the Expanded First Home Guarantee Scheme Means for Buyers
The federal government’s First Home Guarantee scheme will roll out major changes on October 1, 2025. The expanded scheme could double the number of affordable homes in Australia and help first-time buyers get on the property ladder with a deposit of as little as 5%. Learn what these changes are and how they could benefit you.
What Is the First Home Guarantee Scheme?
The First Home Guarantee scheme is an Australian Government initiative to help buyers get on the property ladder and buy a home sooner.
The scheme enables first-time buyers to purchase a property with just a 5% deposit while the government acts as a guarantor for 15% of the property’s value and helps buyers to skip paying Lenders Mortgage Insurance (LMI).
How Is the Scheme Changing?
There are a number of changes coming into play on October 1, 2025, which will remove income and area restrictions which previously held first-time buyers back.
The changes will help more people qualify for the scheme and could double the number of affordable homes across Australia (Cotality).
Key Changes Starting October 1, 2025:
- No more income limits - people earning more than $125,000 and couples $200,000 were previously excluded from the scheme but will now qualify
- Increased property price caps - the price cap in Queensland will be raised to $1 million from $700,000
- Participant limit scrapped - previously only 35,000 buyers could benefit from the scheme
- Simpler access in regional areas - the First Home Guarantee will replace separate regional schemes
Am I Eligible for the First Home Guarantee Scheme?
The changes on October 1 will open the doors for more first-time buyers across Australia to get on the property ladder. You are eligible if you:
- Are an Australian citizen or permanent resident
- Are at least 18 years old
- Have saved enough to pay a deposit of at least 5%
- Are a first home buyer who hasn’t owned property in Australia in the last 10 years
- Will live in your new home - renting or investing the property is not allowed
Until the new changes on October 1, you won’t be eligible for the scheme if your taxable income is $125,000 or more (or combined $200,000 for couples).
What Do the Changes Mean for Buyers in Queensland?
The scheme will provide home buyers in Queensland with more choice of properties at higher price caps.
In Queensland’s major cities - like Townsville, Cairns, and Mackay - the price cap is now $1 million, up from $700,000.
Other areas in Queensland have had the price cap increased to $700,000 from $550,000.
It allows you to buy existing properties - houses, townhouses, or apartments - or a land and house package providing it costs less than the property price cap.
Are There Any Downsides?
The expanded First Home Guarantee scheme won’t suit everybody - particularly those with a lower income.
High repayments
Naturally, the higher your income, the higher the loan you can afford to borrow. This means single or lower income households won’t be able to afford properties at the top of the property price cap and could still be left at a disadvantage.
In Queensland, to qualify for a loan at the top of the price cap, a single person would need to earn around $167,303 and couples $94,504 each. Their repayments would be $5,394 a month or $1,348 a week (Canstar), which is rather high.
Increased demand = higher housing prices
An added worry is that more people qualifying for the scheme might push house prices up. Cities like Townsville are already struggling with increased housing demand and low supply, and this scheme could make it even worse.
No renting or investing allowed
To benefit from the scheme, you have to live in the property that you buy. Renting it out or purchasing a property for investment purposes will incur penalties.
Loan risk
Taking out a loan is inherently a financial risk so buyers should make sure they only borrow what they can afford to pay off.
How Do I Apply for the Expanded First Home Guarantee Scheme?
If you think you can benefit from the scheme, you can apply on the government website.
- Check your eligibility
- Check the property price caps for your area
- Submit an application to a lender - they’ll apply to Housing Australia and process pre-approval
- Work with an experienced builder to buy or build your dream home.
Cougar Home is the leading builder for high-quality homes in the North Queensland region. Build your first home in Cairns or Mackay with us - we offer a wide selection of home designs and layouts to meet all budgets.