The popular Home Guarantee Scheme that lets first home buyers get into the market with just a 5% deposit has been expanded sooner than expected. But an unexpected twist means first home buyers may want to bring forward their buying plans.



The Home Guarantee Scheme (HGS) allows first home buyers to buy with just a 5% deposit – and not pay lenders mortgage insurance.

At present, the HGS is only available to first time buyers who meet various conditions around personal income and the price they pay for their home. There are also annual limits on the number of buyers who can access the scheme.

The HGS was due to be expanded in 2026 to allow all first home buyers to buy a home with as little as a 5% deposit.

This week saw these changes brought forward to 1 October 2025.

It’s great news for first home buyers who may not previously have been eligible for the HGS. However, as we’ll see, it could also be the cue to bring forward your buying plans.

How the 5% deposit scheme works

As home prices rise, it’s no mean feat pulling together the funds needed for a 20% deposit.

So it’s no surprise the HGS has proven very popular.

Since launching in 2020, the scheme has helped more than 230,000 first home buyers enjoy the rewards of home ownership with a deposit as low as 5%.

While the HGS doesn’t involve a cash payment to first home buyers, it can help you save in other ways.

As the federal government guarantees part of your home loan, this waives the need for lenders mortgage insurance – a saving that can be worth tens of thousands of dollars.

How the 5% deposit scheme is changing

From 1 October, all first home buyers will have access to apply for the HGS.

The current caps on the number of places, and income limits, will be scrapped.

The scheme’s property price limits will also be set higher, providing access to a greater variety of homes.

In addition, the Regional First Home Buyer Guarantee will be replaced by the First Home Guarantee.

Minister for Housing Clare O’Neil says these changes are all about getting more people into their first home sooner.

Why consider bringing forward buying plans?

The early expansion of the HGS may provide a valid reason to bring forward your buying plans.

The Insurance Council of Australia says the expansion of the scheme could see house prices rise up to 10% in the first year alone in markets preferred by first home buyers.

Nationally, it predicts prices could rise 3.5-6.6%.

The logic here is that the expanded scheme may create more buyer demand in Australia’s already undersupplied housing market, thereby pushing up prices.

Talk to us to find out if you’re home loan ready

The reality is that no one can say for sure how home prices will rise in the future.

What we can say, though, is that most people find it more rewarding to pay off their own home than they do their rent.

Remember too, you can still apply for the HGS before 1 October, as long as you meet the income caps and current property price limits.

Talk to us today to see if you could buy with a 5% deposit. You could be home loan ready right now!

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