The First Home Guarantee Scheme (HGS) is nothing new and over the years, we’ve helped many clients purchase their first property using the scheme.
The First HGS can help first time buyers purchase a property sooner. By removing the need for Lenders Mortgage Insurance (LMI), it also helps first home buyers save on lending costs.
At the moment, the first HGS is only available to first time buyers who meet a strict set of conditions.
Specifically, to be eligible for the HGS in its current form:
- you need to purchase a property that’s lower than a set price cap (each state has different caps)
- your income needs to be lower than the threshold (single borrowers need to earn less than $125k and couples need to earn less than $200K in the financial year prior to applying)
- it’s different if you’re borrowing as a single vs couple) AND
- you need to secure one of the 35,000 FHGS spots made available each financial year
From 1 October 2025 though, this is all set to change!
The eligibility conditions are being expanded to allow more first home buyers to take advantage of the First Home Guarantee Scheme.
From 1 October 25 onwards, the eligibility criteria will be expanded to:
- Remove the income cap
- If you’re an Australian citizen or permanent resident over 18yrs, you’re eligible – regardless of how much you’re earning
- Increase the price of eligible properties
- Properties up to $1m in the ACT are eligible to be covered (this is an increase from the current cap of $750k) AND
- Allow unlimited numbers of first home buyers to take advantage of the scheme
- This means you don’t have to worry about missing out on a spot!
These changes are expected to have wide-reaching impacts, because borrowers previously ineligible to apply for the first HGS will now be eligible.
What impact will changes to the First Home Guarantee Scheme have on the property market?
The changes were expected to come into effect from 1 Jan 2026, although it wasn’t officially confirmed they would actually come into play.
Last week’s announcement (in late August) changed that. Not only was it confirmed that the first Home Guarantee Scheme would in fact be expanded, but the changes would become effective much sooner.
We suspect this will bring forward the purchase plans of many first home buyers.
If the all the discussions we’ve been having with clients this past week are anything to go by, that is!
What could happen to property prices?
The Insurance Council of Australia says the expansion of the scheme could see house prices in specific markets (i.e. those preferred by first home buyers) rise by 10% in the first year alone.
The logic here is that the expanded scheme will increase buyer demand in an already undersupplied housing market, thereby pushing up property prices.
How this all plays out – and whether the expanded scheme remains in place longer term – is anyone’s guess.
It’s all just speculation at this point.
We’ll be taking the approach we’ve always had….
A good time to buy is when *you’re* ready to buy, after considering your personal situation and your own objectives at any specific point in time.
When you’re a first home buyer, it’s important to be aware of all the benefits and concessions currently available.
You’re only a first home buyer once, so you want to take advantage of everything you’re eligible for!
Talk to us to find out if you’re home loan ready
If you’re keen to find out what’s possible for you – First Home Guarantee Scheme or not – reach out to our team today.
We’re here to help.
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