The Australian Government has moved to remove all caps on its First Home Guarantee scheme from October 1, allowing an unlimited number first-time buyers to purchase properties with just a 5% deposit.
The expanded scheme delivers on the government's election commitment to support all Australians into home ownership, according to Housing Australia. The changes eliminate both placement limits and income restrictions that previously capped individual earnings at AU$125,000 (US$81,000) and joint applications at $200,000.
Price caps increase across major cities
Sydney buyers will see price caps jump from $900,000 to $1.5 million, whilst Melbourne's limit rises from $800,000 to $950,000. Brisbane's ceiling increases to $1 million from $700,000, and Perth climbs from $600,000 to $850,000.
These adjustments reflect surging property price growth that has pushed median house values up to $825,000 (as of April).
But whether the caps will meaningfully expand access remains questionable when Sydney's median house price sits well above even the new $1.5 million threshold.
Mechanics unchanged
Housing Australia provides a guarantee to participating lenders, enabling buyers to borrow up to 95% of the property value. The guarantee covers up to 15% of the property value if buyers default and property sales don't cover outstanding mortgage amounts.
This protects lenders, not buyers, and provides no cash payment or deposit assistance and buyers will still need to save the 5% deposit themselves, as well as meet lender credit requirements.
The program has supported over 230,000 home buyers since launching in January 2020. Almost one in three first home buyers used the scheme in 2022-23, up from one in seven in 2021-22.
However, these figures coincide with rapidly rising property prices that have pushed home ownership rates from 70% in the 1990s to 66% today. The scheme appears to be helping existing near-buyers rather than fundamentally expanding access to home ownership.
Buyers cannot apply directly to Housing Australia and applications must go through one of the participating lenders, who assess eligibility and submit applications.
Once pre-approved, buyers have 90 days to find a property and sign a purchase contract. The process requires Australian citizenship or permanent residency, plus comprehensive income documentation.
The scheme consolidates the separate Regional First Home Buyer Guarantee, simplifying access for buyers outside major cities and maintaining the Family Home Guarantee for single parents with 2% deposits.
