The Government has recently announced changes to the Home Guarantee Scheme. Combining the First Home and Regional Home into one scheme.
The previous schemes allowed applicants to borrow up to 95% of the property value without the need for mortgage insurance. In simple terms, the government provides a guarantee to the lender to reimburse them to a set limit should they suffer a loss. Good news: there are no changes on this front under the revised scheme.
Basic eligibility criteria for the current and the revised scheme,
Australian citizen or permanent resident
Purchase an owner-occupied home (& remain owner occupied while under the scheme)
Loan must be a principal and interest repayment from a scheme participant lender
Purchasing your first home OR re-entering the market after not owning a property for 10 years+
5% genuine savings (i.e. funds saved or held for 3 months). Funds for stamp duty and other costs do not need to be genuinely saved.
The previous scheme also included the criteria below.
Income cap – based on most recent taxable income (Notice of Assessment)
Property Price Cap – based on location
Number of scheme places – divided between scheme participant lenders.
These last three points made the scheme difficult to utilise, especially in recent years.
Applicant circumstances and lender credit policies would sometimes mean only a limited number of scheme lenders would be available, but often these same lenders would have no scheme places available. Meanwhile, the other lenders would have places available.
Scheme property price caps have only increased once (July 2022) since the introduction of the scheme in January 2020. Given the nationwide rapid increase in prices, the scheme has been made somewhat redundant based on this criterion alone – especially in the capital and major regions.
With the combination of higher property prices, existing client liabilities and serviceability buffers, incomes tended to be higher than the income caps to qualify for lender serviceability.
Changes
From the 1st of Oct 2025, the eligibility for the Home Guarantee Scheme has been drastically simplified,
No income caps
Property price caps have increased
No limit on the number of scheme places
Since the introduction of the scheme, many more lenders are now participants. This means more credit policy niches are available. Great for those with variable incomes (i.e. overtime, commission, bonuses, etc.) or self-employed. Similarly, there is a greater variety of serviceability calculators to consider.
The removal of income caps now allows applicants with higher income levels to participate. Often applicants have existing expenses (i.e. income protection, private health insurance, child support payments). During a lender assessment, it is quite challenging to show affordability covering these important obligations and a proposed loan under an income cap.
Unlimited scheme places should make the application process smoother and allow applicants to qualify across a broader range of participant lenders. Assisting in obtaining a competitive loan rather than settling for what loan/lender is available.
Property price caps are much more achievable for a first home, for example, Sydney rising from $900K to $1.5m, Gold Coast $700k to $1m or Perth $600k to $850k. Applicants can combine this scheme with any other federal or state incentive(s). For example, First Home Owners Grants (FHOG) or stamp/transfer duty concessions.
On a side note, the Family Home Scheme will continue to operate as a separate Scheme but with similar improvements. Eligible single parent applicants can utilise the higher property price caps, no income caps and still only require a 2% deposit.
It is great to see these improvements come into effect.
The scheme application is easily folded into the standard home loan application. These improvements should make it even more streamlined. Many of our clients have used this scheme with great impact and are now in a better financial position as a result.
If you want to discuss your circumstances and understand if this scheme is right for you, please get in touch.
Simon Podger, Director of Lending, Your Future Strategy
“After more than a decade in financial services, I still enjoy the buzz of being a part of a team that helps clients achieve their financial goals. Finding the right loan for each client can make a world of difference to their overall financial position.
My number one financial tip for clients is to never lose sight of your big picture goals, and remember to consider how every decision is helping you get a step closer to achieving them.”
“It’s probably those people who were thinking about it, but really didn’t have any sense of urgency, that all of a sudden, went, ‘Oh, I can see what’s coming. Let’s dive in before the tidal wave comes,” - Gareth Croy
"Historically, we would see people get into their 50s, and in some cases their early 60s, and only start asking the question then about whether they are actually in a position to retire," - Gareth Croy
The Government has recently announced changes to the Home Guarantee Scheme. Combining the First Home and Regional Home into one scheme.
The previous schemes allowed applicants to borrow up to 95% of the property value without the need for mortgage insurance. In simple terms, the government provides a guarantee to the lender to reimburse them to a set limit should they suffer a loss. Good news: there are no changes on this front under the revised scheme.
Basic eligibility criteria for the current and the revised scheme,
The previous scheme also included the criteria below.
These last three points made the scheme difficult to utilise, especially in recent years.
Applicant circumstances and lender credit policies would sometimes mean only a limited number of scheme lenders would be available, but often these same lenders would have no scheme places available. Meanwhile, the other lenders would have places available.
Scheme property price caps have only increased once (July 2022) since the introduction of the scheme in January 2020. Given the nationwide rapid increase in prices, the scheme has been made somewhat redundant based on this criterion alone – especially in the capital and major regions.
With the combination of higher property prices, existing client liabilities and serviceability buffers, incomes tended to be higher than the income caps to qualify for lender serviceability.
Changes
From the 1st of Oct 2025, the eligibility for the Home Guarantee Scheme has been drastically simplified,
Since the introduction of the scheme, many more lenders are now participants. This means more credit policy niches are available. Great for those with variable incomes (i.e. overtime, commission, bonuses, etc.) or self-employed. Similarly, there is a greater variety of serviceability calculators to consider.
The removal of income caps now allows applicants with higher income levels to participate. Often applicants have existing expenses (i.e. income protection, private health insurance, child support payments). During a lender assessment, it is quite challenging to show affordability covering these important obligations and a proposed loan under an income cap.
Unlimited scheme places should make the application process smoother and allow applicants to qualify across a broader range of participant lenders. Assisting in obtaining a competitive loan rather than settling for what loan/lender is available.
Property price caps are much more achievable for a first home, for example, Sydney rising from $900K to $1.5m, Gold Coast $700k to $1m or Perth $600k to $850k. Applicants can combine this scheme with any other federal or state incentive(s). For example, First Home Owners Grants (FHOG) or stamp/transfer duty concessions.
On a side note, the Family Home Scheme will continue to operate as a separate Scheme but with similar improvements. Eligible single parent applicants can utilise the higher property price caps, no income caps and still only require a 2% deposit.
It is great to see these improvements come into effect.
The scheme application is easily folded into the standard home loan application. These improvements should make it even more streamlined. Many of our clients have used this scheme with great impact and are now in a better financial position as a result.
If you want to discuss your circumstances and understand if this scheme is right for you, please get in touch.
Simon Podger,
Director of Lending, Your Future Strategy
“After more than a decade in financial services, I still enjoy the buzz of being a part of a team that helps clients achieve their financial goals. Finding the right loan for each client can make a world of difference to their overall financial position.
My number one financial tip for clients is to never lose sight of your big picture goals, and remember to consider how every decision is helping you get a step closer to achieving them.”
References
Links Scheme Update – https://www.housingaustralia.gov.au/media/unlimited-places-higher-property-price-caps-first-home-buyers-1-october-2025
The views expressed in this article are opinions only and do not constitute personal financial advice.