First Home Guarantee 2025: Buy your first home with a 5% deposit and higher property caps
- Luke McKenzie
- Sep 18
- 3 min read
Updated: Sep 19
A turning point for first home buyers
For many Australians, saving for a deposit has been the biggest hurdle to home ownership. From 1 October 2025, the path to buying a first home will be easier.
The Federal Government has expanded the First Home Guarantee as part of the Home Guarantee Scheme. From October, there will be unlimited places, no income caps, and higher property price caps, giving more first home buyers the chance to enter the market with just a 5% deposit — without paying Lenders Mortgage Insurance (LMI).
Aspire2Wealth Mortgage Broker Luke McKenzie says the changes are significant, noting that with property price caps lifted, more homes are now within reach. He adds that the ability to buy with a smaller deposit and avoid LMI removes one of the biggest barriers for first-time buyers.
Key facts about the new First Home Guarantee
Deposit as low as 5% – Borrow up to 95% of the property’s value with only a 5% deposit.
Government guarantee – The scheme guarantees up to 15% of the property value, removing the need for LMI.
Unlimited places – From October, there will be no cap on the number of buyers who can access the scheme.
No income limits – Buyers are no longer excluded based on their earnings.
Higher property price caps – The purchase price must still sit under the maximum cap for your location. Check the current caps here.
Owner-occupier only – The scheme is limited to first home buyers who intend to live in the property. Investment properties are not eligible.
Eligible property types – Houses, townhouses, apartments, and in some cases new builds (where the combined land and build cost is under the cap).
What to consider before applying
Even with the new rules, buying a home is a major financial decision. Luke highlights three important considerations.
First, understand your borrowing power. A 5% deposit does not guarantee affordability, as lenders will still assess income, expenses, and debts before approving a loan.
Second, remember that additional costs such as stamp duty, legal fees, settlement costs, and moving expenses still apply.
Finally, ensure you choose the right loan structure. Features such as variable or fixed rates, offset accounts, and repayment terms can have a big impact on long-term affordability.
Why professional advice matters
The expanded First Home Guarantee creates opportunities, but navigating eligibility, lenders, and the right loan structure can be complex. Working with a broker ensures you confirm eligibility, understand how much you can borrow safely, compare lenders, and build a financial plan that supports your future goals.
Aspire2Wealth’s role is to make sure buyers are not just accessing the scheme but also making the right long-term choices. For many people, this is the biggest financial decision of their life, and having guidance at the start can set them up for success.
Ready to explore your options? Book a complimentary call with Aspire2Wealth to discuss how the First Home Guarantee could help you.
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References:
Aspire2 Wealth Advisers Pty Ltd ABN 42 125 897 903 is an authorised representative and credit representative of Charter Financial Planning Limited ABN 35 002 976 294, AFSL and Australian Credit Licence No. 234665.
This website contains information that is general in nature. It does not take into account the objectives, financial situation, or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.
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