The Home Guarantee Scheme just changed — here’s what it really means (and what’s coming next)
You’ve probably heard the word on the street: from 1 October, the Home Guarantee Scheme (HGS) got a serious upgrade. If you’re a first-home buyer, this one’s for you — but let’s keep it real about what it does (and doesn’t) cover, how the new price caps work, why a “5% deposit” isn’t always the whole story, and how other schemes are coming to complement this scheme.
What changed on 1 October?
From 1 October 2025, the Scheme moved to unlimited places, removed income caps, simplified the regional rules, and lifted property price caps across the country. That combo is designed to let more first-timers buy with as little as 5% deposit while avoiding Lenders Mortgage Insurance (LMI).
New price caps (highlights)
VIC (Melbourne & Geelong): now $950,000 (up from $800,000).
VIC – other: $650,000 (unchanged).
NSW (Sydney & major regional centres): $1.5m.
QLD (Brisbane, Gold & Sunshine Coasts): $1.0m.
SA (Adelaide): $900,000.
WA (Perth): $850,000.
ACT: $1.0m.
(Full table is on Housing Australia’s site.) Housing Australia
Plain-English version: More properties now fit under the caps, and you’re no longer battling for a limited “place” — if you’re eligible and your lender approves you, the guarantee is available. Housing Australia
About that “5% deposit”: why you’ll still need extra cash
Even with the guarantee covering the LMI requirement, you still need purchase costs. In particular:
Stamp duty: FHBs get full exemption up to $600k and a sliding concession from $600,001–$750,000. Above $750k you pay standard duty rates, which is around 5.5%. So if you are seeking to purchase over $750,000, you’ll need more like 10 - 11% to get into the market.
Other costs: conveyancing, transfer/registration, building & pest (always recommended), moving, and potential lender fees.
Cash buffer: while this one isn’t necessarily a cost, it should still be factored in. If you are looking to undertake a 30 year loan commitment, you want to make sure you have a little bit of a buffer in place.
Will the Scheme make homes more expensive?
Short answer: it adds demand in a market where supply is tight, so it can put upward pressure on prices, especially at price points near the caps.
Economists and commentators have already warned that expanding low-deposit access without new supply tends to lift prices; some critiques quantify sizeable aggregate impacts over time.
Media and policy analysis over the past few months consistently note that cheaper/expanded finance in a constrained market typically fuels prices rather than making housing more affordable.
We’re also starting from a base where first-home-buyer activity is above average despite poor affordability — so giving that cohort broader access can intensify buyer competition.
Bottom line: good for access (if you qualify), but don’t be surprised if entry-level stock gets more competitive and price-sensitive.
My take: the Government derives too much revenue from property. They aren’t interested in slowing it down but they will try and give you a leg up to get into the market. Considering the growth expectations, looking to get in earlier than later may work out to be beneficial and more affordable.
Where this leads next: Help to Buy (shared equity)
Here’s the bridge: you might have enough cash for the deposit and costs, but not the borrowing capacity (income vs. repayments). That’s exactly where Help to Buy can slot in.
How it works (at a glance): the government takes up to 30% equity on an existing home (40% for new), you contribute as little as 2%, and you borrow less — boosting your purchasing capacity. Effectively, you can get into a more expensive home, but still have a smaller loan - the catch? You just have a smaller piece of a larger pie.
Timing/status: The program directions were published mid-2025 and government messaging/industry guides point to applications opening late 2025. The official web pages have been progressively updated, which is a good sign we’re close.
If that lands this year, it could become the go-to path for buyers who are deposit-ready but capacity-constrained.
So… what could this do to the property market?
Here’s the consensus-ish read across policy watchers and econ commentary:
More eligible buyers at once → more demand at entry-level price points (especially around the new caps). Expect tighter competition for A-grade stock and anything priced just under the cap in each city/region.
Price pressure without matching supply. Multiple analyses flag that demand-side support (HGS, future Help to Buy) nudges prices up unless construction and listings lift materially.
First-home-buyer share stays elevated. Despite affordability headwinds, FHB participation has been running above average in 2025; demand support is likely to sustain or lift that share.
Serviceability relief if Help to Buy launches. Shared equity reduces the loan size (and repayments), potentially unlocking capacity for buyers just outside the bank’s calculator today — which again adds demand where new price caps already funnel buyers.
How I’d guide a first-home buyer (in plain steps)
Step 1 — Reality check the costs. If you’re targeting $700k–$750k in VIC, run exact stamp duty via the SRO calculator, then add say $4,000 - $5,000 to make sure you cover additional costs. Don’t rely on a 5% deposit alone.
Step 2 — Test your borrowing power: We’ll model your borrowing capacity as if you were submitting a loan application.
Step 3 — Choose your lane.
If you’re deposit-tight / capacity-tight → prepare for Help to Buy.
If you’re capacity-okay / deposit-tight → 5% Scheme may be suitable, provided costs are covered.
Step 4 — Shop within the cap (smartly). Listings just under the new caps may attract the most competition — have finance and conveyancer ready so you can move decisively.
Want me to tailor this to your situation?
Easy, just book a meeting!
You can reach out via the contact form, or book a meeting to chat through your goals and next steps.
