Expansion of the First Home Guarantee Scheme

In the past few days, the media has gone crazy with the news that the low deposit government scheme for first home buyers has been extended to include any first home buyer, regardless of their income.

How does this Scheme work?

Usually, when a person has less than a 20% deposit to buy a home, they must pay lenders mortgage insurance (LMI). This insurance is protecting the bank to minimise their risk of the purchaser only covering 5% of the purchase price with their own money and the remainder coming from a bank loan. The cost of LMI is usually the same or similar to a 5% deposit.

For this Scheme, the LMI fee is waived, so this is essentially a saving of 5% of the purchase cost in fees.

How to Qualify?

The current Scheme has been limited to those earning 125K per year as a single person or 200K for a couple. The new guidelines now allow any first home buyer (subject to residency requirements) to qualify, regardless of your income.

Purchase Price

The maximum purchase price to buy a home under the new Scheme guidelines for Sydney metro will be $1.5mil. This is an increase from the original cap of 900K, so this would now give an opportunity to purchase a house in Western Sydney or an apartment closer to the city, subject to your personal borrowing limit meeting the bank guidelines.

What Isn’t Included?

Each state regulates its own stamp duty exemptions and reductions and as of today’s date, there has been no change to these figures. This means that while the new Scheme guidelines allow for LMI exemptions up to 1.5mil in Sydney metro, the cap for the stamp duty exemption still sits at 800K, with a sliding scale up to 1mil. So if a first home buyer was to buy a property for 1.45mil, they would be required to provide a 5% deposit of $72,500, plus the stamp duty of $62,159.

To calculate the stamp duty payable, go to my link https://www.jblhomeloans.com.au/calculators to the Property Fees calculator. Include the State, the purchase price, and tick the First Home box. For purchases under 1mil you will see the discounted stamp duty liability. When Can I Apply?

The above terms will come into effect on 1 October.

Not all banks offer this Scheme, so it is best to see a broker who will provide you with the details of the banks that are eligible.

To start the process to apply for a Scheme position, a form is completed and on approval, a place will be offered to you and you can start looking for your first home. I note that if the form is completed prior to 1 October, you will only be eligible for the current provisions which are much more limited both in salary and purchase price cap.

For more details of the Scheme, including purchase price limits outside Sydney metro and interstate, go to the link https://www.housingaustralia.gov.au/media/unlimited-places-higher-property-price-caps-first-home-buyers-1-october-2025

If you have any questions and to find out how much you can borrow, please contact me on 0414670151 or jennifer@jblhomeloans.com.au