Federal Government Fast-Tracks Low Deposit Loans for First-Home Buyers
In a move aimed at helping more Australians achieve home ownership, the federal government has announced that its expanded Home Guarantee scheme will commence on 1 October 2025, several months ahead of schedule.
Background
The scheme, which was initially set to launch next year, allows first-home buyers to purchase a home with a deposit as low as 5% and avoid paying lenders mortgage insurance (LMI).
The government will guarantee a portion of the home loan, making it more accessible to first-time buyers.
Key Changes
Under the updated scheme, there will be no income caps or limits on the number of places available.
Property price caps will also be increased to better reflect house prices in different cities and regions.
This means that all first-home buyers, regardless of their income, will be eligible to access the scheme.
Benefits for First-Home Buyers
According to government estimates, the scheme is expected to save tens of thousands of dollars on LMI costs for first-home buyers.
In the first year alone, it’s estimated that buyers using the scheme will avoid around $1.5 billion in potential LMI costs.
For example, a first-home buyer in Brisbane could purchase a $1 million home with a $50,000 deposit, saving up to 10 years off the time it would take to save for a deposit and about $42,000 in LMI.
Criticisms and Concerns
Shadow housing minister Senator Andrew Bragg has criticised the expanded program, arguing that it should have income caps to prevent wealthy individuals from accessing the scheme.
Other experts have expressed concerns that supporting more first-home buyers in a time of severe housing shortages could drive prices even higher.
Industry Reaction
However, housing groups, including the Housing Industry Association, Property Council, and Urban Development Institute of Australia, have welcomed the move, saying it will help first-home buyers enter the property market sooner.
The government has committed over $43 billion to housing since its election in 2022, with a significant portion going towards building more homes and schemes to help Australians onto the property ladder.