By George Rentzepis – Director of Lending, Navigate Advisory
From 1 October 2025, the expansion of the government’s Home Guarantee Scheme means all first-home buyers can put down a 5% deposit – no income caps, no limits on places, and significantly higher property price caps.
I’ve sat across from too many frustrated first-home buyers who felt locked out of the market. They’re good with money, they have stable jobs, but the moving goalposts made home ownership feel impossible.
With these changes, the outlook looks brighter for Australians looking to get on the property ladder: a first-home buyer in Sydney can now purchase a $1.5 million home with a $75,000 deposit, instead of waiting years to save $300,000 or paying tens of thousands in lenders’ mortgage insurance.
What’s Actually Changing?
The expansion of the scheme reduces hurdles to first-home buyers entering the market.
5% Deposit Only: You’ll only need to save 5% of the property value, with the government guaranteeing up to 15% to your lender.
No Lenders Mortgage Insurance: This alone could save you between $10,000 and $40,000, depending on your purchase price.
No Income Caps: The old income limits ($125,000 for singles, $200,000 for couples) are history. Whether you’re earning $80,000 or $180,000, you can now access the scheme.
No More Place Caps: Previously, there were caps on the number of people who could use the scheme each year. Once those spots were filled, you had to wait. That’s gone. If you’re eligible, you can apply.
Realistic Property Price Caps: The price limits have been bumped up to reflect actual market conditions:
- Sydney: up to $1.5 million (from $900,000)
- Melbourne: up to $950,000 (from $800,000)
- Brisbane: up to $1 million (from $700,000)
- Regional areas: significant increases across the board
Let’s Be Real About the Challenges
As your mortgage broker, I’d be doing you a disservice if I didn’t mention the potential downsides:
Higher Debt-to-Income Ratio: Buying with a 5% deposit means a 95% loan. Your monthly repayments will be higher than those with a 20% deposit, and you’ll have a smaller equity buffer if property values dip.
Interest Rate Sensitivity: With such a high loan amount, even small interest rate rises have a bigger impact on your repayments. We’ll need to stress-test your budget carefully.
Potential Price Pressure: Some economists suggest the scheme could lead to competition in the property market, which has the effect of pushing prices up. More buyers in the market typically means upward pressure on prices.
Serviceability Requirements: While income caps are gone, lenders will still assess whether you can actually afford the repayments. The lending criteria haven’t relaxed – just the government guarantee requirements.
Making It Work for Your Great Life
At Navigate Advisory, we don’t just look at getting you a loan – we want to make sure this decision supports Your Great Life vision. Here’s how to approach this opportunity:
Get Your Financial House in Order: Lenders will scrutinise your spending, savings patterns, and debt levels more closely with a 5% deposit. Start building a track record of consistent saving and debt reduction now.
Consider the Total Cost: Yes, you’ll save on LMI, but factor in the higher loan amount. Run the numbers on total interest over the life of the loan, not just the upfront savings.
Build Your Buffer: Even though you only need 5%, having extra savings for stamp duty, legal costs, building inspections, and moving expenses is crucial. Plus, some additional equity gives you peace of mind.
Think Long-Term: Will this property work for you in 5-10 years? With higher debt levels, you want to be confident about your choice.
Your Next Steps
Get Pre-Approved: Know exactly what you can borrow and afford before you start looking. Pre-approval gives you confidence in your budget.
Understand Your Budget: Just because you can borrow more doesn’t mean you should. We’ll help you find the sweet spot between achieving your homeownership goals and maintaining financial comfort.
Research Your Target Areas: Use the new property price caps to expand your search area. Properties that were previously out of reach are now possibilities.
Ready to explore your options?
Book a consultation with our lending team, and we’ll map out a strategy that fits your circumstances.
Because when your whole financial world makes sense, you gain the power to say ‘yes’ to bold life choices – like finally getting on the property ladder.
George Rentzepis is Director of Lending at Navigate Advisory, with extensive experience helping first home buyers navigate the property market. Navigate Advisory offers complete financial confidence through financial planning, accounting, business advisory, lending, and property advisory – all in one place.
Book an introductory chat at navigateadvisory.com.au/contact/
Navigate Advisory has offices in Balmain, Brighton-Le-Sands and Hurlstone Park.