Buying your first home in Sydney just got easier. From 1 October 2025, the Australian Government expanded the Home Guarantee Scheme with unlimited places, no income caps, and property price limits that accurately reflect the current cost of homes in Sydney. For first home buyers who’ve been stuck saving while rents keep climbing, this could cut years off your timeline.
Here’s what changed, what it means for your wallet, and how to make the most of it.
Key Insights
- Unlimited places: No more missing out because the quota ran out. If you’ve saved 5%, you can apply
- No income caps: Previously capped at $125,000 (singles) or $200,000 (couples), now scrapped entirely
- Sydney price cap: Jumped from $900,000 to $1.5 million, putting real family homes within reach
- LMI savings: Avoid tens of thousands in lenders’ mortgage insurance with just a 5% deposit
- Live-in only: Must be your principal residence (not for investors or second homes)
What’s Changed with the Home Guarantee Scheme?
The home guarantee scheme expansion that kicked in on 1 October 2025 removes the three biggest barriers first home buyers faced:
Unlimited Access
Previously, 35,000 places were allocated each year across the First Home Guarantee, Regional, and Family Home categories. Once they were gone, you waited until the next financial year. Now there’s no cap. Every eligible buyer can access the scheme.
Income Limits Removed
Under the old rules, singles earning over $125,000 and couples earning over $200,000 combined were automatically excluded. That locked out plenty of dual-income households in Sydney, where even modest salaries add up quickly. Those income caps are gone.
Property Price Caps Increased
The biggest change for Sydney buyers is the price cap jumping from $900,000 to $1.5 million across NSW capital cities and regional centres like Newcastle, Lake Macquarie, and the Illawarra. That’s a $600,000 increase that brings genuine family homes into the scheme, rather than just studio apartments in the outer suburbs.
The 5% deposit requirement stays the same. The government still guarantees up to 15% of the loan value, which means lenders waive the lender’s mortgage insurance (LMI). However, you still need to meet the bank’s lending criteria and prove you can service the loan.
Who Can Access the Home Guarantee Scheme Now?
Eligibility hasn’t changed much beyond the income cap removal. You need to be:
- An Australian citizen or permanent resident
- At least 18 years old
- A first home buyer (or haven’t owned property in Australia in the past 10 years)
- Buying a property to live in as your principal residence
- Previously, joint applicants must be spousal partners; now it can be siblings or friends
The scheme covers new and established homes, apartments, townhouses, and even some land and build packages (as long as the combined cost stays under the price cap for your area).
What hasn’t changed: You can’t use the Australian Government Home Guarantee Scheme for investment properties or holiday homes. It’s owner-occupiers only. And you can’t combine it with other government home buying assistance, like state-based shared equity schemes.
One underrated change worth noting: You can now apply with friends or family members, not just spouses or de facto partners. That flexibility opened the door for siblings, mates, or other co-buyers to pool resources and get into the market together.
Sydney Property Price Caps: What You Can Actually Buy
Sydney’s $1.5 million cap means you’re no longer forced to compromise on location or property type just to qualify.
You can realistically look at:
- Three-bedroom houses in growth areas like Marsden Park, Kellyville, or Oran Park
- Newer townhouses in the Hills District or Ryde
- Quality two-bedroom apartments in suburbs closer to the CBD
- Family homes in regional centres like Newcastle or Wollongong
You still need to check the specific price cap for your postcode using Housing Australia’s property price cap tool, as some areas are classified differently. But for most Sydney buyers, the $1.5 million limit dramatically expands what’s possible.
How Much Money Can You Save?
The financial impact of the 5% deposit scheme Australia offers through the home guarantee scheme is significant, especially when you factor in both deposit savings and avoiding LMI.
Deposit Savings
Instead of needing 20% ($300,000 on a $1.5 million home), you only need 5% ($75,000). That’s $225,000 less to save upfront. Data from the Housing Industry Association suggests this could reduce the time and cost burden on first home buyers by about 1.7 years (or around $25,000).
LMI Savings
Lenders’ mortgage insurance on a $1.5 million home with a 5% deposit would typically cost between $70,000-$80,000 upfront. The government guarantee eliminates this entirely. On a $1 million purchase, you’d save around $39,000 in LMI costs.
Combined Savings
Between reduced deposit requirements and no LMI, first home buyers using the scheme save roughly $25,000 in costs and 1.7 years in time, based on Housing Industry Association research. And potentially get your stamp duty waived under state government incentives, see the NSW Assistance Scheme here.
The trade-off? You’re borrowing 95% of the property value, which means higher monthly repayments and more interest paid over the life of the loan. On a $1.5 million home with a 5% deposit ($75,000) at current interest rates around 6.5%, you’re looking at roughly $9,200 per month in repayments. Make sure you can genuinely service that before you commit.
Should You Wait or Buy Now?
This is a question we’re hearing constantly from Sydney first home buyers. The scheme changes started on 1 October 2025, so if you’re reading this now, the new rules are already in effect.
But there’s a timing consideration that matters: property prices.
Several property analysts have flagged that the scheme expansion could push prices up, particularly in the entry-level and mid-tier brackets where most first home buyers are active. Sydney’s already tight housing supply means more buyers competing for the same stock.
If you’re ready now, there’s no compelling reason to wait. Prices aren’t going to drop just because the scheme got easier to access. In fact, the opposite is more likely in the short term.
If you’re not quite ready, use the next few months to get your finances sorted, speak to a mortgage broker who specialises in the scheme, and start researching suburbs that fit within the $1.5 million cap.
How to Apply for the Scheme
The application process is straightforward, but you can’t apply directly to Housing Australia and need to go through a participating lender.
- Check your eligibility using Housing Australia’s eligibility tool and confirm the property price cap for your target suburbs.
- Speak with a mortgage broker or a lender directly. Housing Australia data shows 77% of home guarantee scheme loans originated through mortgage brokers in FY2024-25 – brokers know the process inside out and can fast-track your application.
- Get pre-approval. Your lender will assess your income, expenses, credit history, and borrowing capacity just like any other home loan. The home guarantee scheme doesn’t change lending standards; you still need to prove you can afford the repayments.
- Find your property and make an offer. Once you’ve got a contract, your lender submits your application to Housing Australia for the government guarantee.
- Settlement. After approval, you proceed to settlement like any other property purchase.
Timeline-wise, the whole process typically takes 4-6 weeks from application to approval, assuming your paperwork is in order and you’ve found the right property.
Ready to Get Into Your First Home?
The October 2025 changes to the Australian Government Home Guarantee Scheme genuinely shift what’s possible for Sydney first home buyers. With unlimited places, no income barriers, and a $1.5 million price cap, you can buy sooner with less saved. However, you still need expert guidance to navigate lenders, property markets, and your long-term financial position. That’s where an experienced mortgage broker makes all the difference.
MXJ Finance specialises in helping first home buyers secure the right home loan for their situation. We’ll walk you through eligibility, compare lenders, and handle the entire application process so you don’t miss out on Sydney’s competitive market. Get in touch with our team to start your application today.
