Exciting Changes to the First Home Guarantee Scheme From October 1
You may have heard about the exciting changes to the First Home Guarantee Scheme (FHBG), coming into effect from 1 October 2025. Originally planned for January 2026, the launch has been brought forward three months, giving many first home buyers the chance to purchase their first home sooner!
The scheme has been running for several years, but until now, many buyers have missed out due to strict income caps, purchase price limits, and limited places. This has been especially challenging in higher-priced areas such as the Illawarra.
From October 1, the basics of the scheme remain the same:
A minimum 5% deposit (genuine savings)
A 15% government guarantee (so you can avoid LMI (Lenders Mortgage Insurance))
But the new changes are even more exciting:
Income caps removed – singles and couples at any income level can now apply
Unlimited places available – no more stress about missing out
Significantly higher property price caps – making it possible to buy in more expensive markets (Capital City & Regional Centres in NSW will increase to $1,500,000-Illawarra included)
On top of this, the Regional First Home Buyer Guarantee will be merged into the FHBG, simplifying access for regional buyers, including those in the Illawarra.
It’s also important to note that stamp duty exemptions remain unchanged in NSW:
Full exemption up to $800,000
Discounted duty from $801,000 to $1,000,000
So those buying above $800K will need additional savings for stamp duty on top of their 5%.
Example Scenarios -
For an $800,000 purchase, a 5%* deposit is $40,000, with no stamp duty payable, meaning the loan required would be $760,000.
For an $850,000 purchase, the 5%* deposit is $42,500, and stamp duty of $10,000 applies, resulting in a required loan of $807,500.
For a $900,000 purchase, the 5%* deposit is $45,000, with $20,000 in stamp duty, bringing the loan amount needed to $855,000.
*5% deposit does not include additional purchase costs such as conveyancing, pest & building report, and bank/government fees etc. a $5k buffer is generally advised and will leave change at settlement.
In addition to the changes to the scheme, there are several bank policies with new flexibility around the way HECS debt is considered & the acceptance of boarder income. Fantastic news for those planning to rent out a room in their new home!
So, great news all round and the sign of exciting times ahead.
As always, reach out to our team if you have any questions. We love helping with your planning process, so no time is too early to start working together.