It’s good news for home buyers, as the Albanese Government brings forward its plan to make home ownership more accessible for all Australians. Starting 1 October 2025, home buyers with just 5% deposit may be able to step onto the property ladder sooner than expected. Find out what’s changed in the Home Guarantee Scheme, how to apply for a mortgage under the scheme, and tips to help you get ready to buy your home sooner.

What is the Home Guarantee Scheme?

The Home Guarantee Scheme is an Australian Government initiative designed to make home ownership more achievable. Under the scheme, eligible home buyers can buy a home with a smaller deposit – usually 5% – and avoid the extra cost of Lenders Mortgage Insurance (LMI).

How does it work?

Government guarantees part of your home loan with a participating lender, acting as a top-up to your deposit so the bank treats you as though you have a 20% deposit. By bridging the gap between your 5% deposit and the deposit required by the lender, you don’t need to pay LMI, potentially saving tens of thousands of dollars.

What’s changing from 1 October 2025?

The Home Guarantee Scheme is changing earlier than expected, with the following changes effective from 1 October 2025:

• No place limits: Previously the scheme limited the number of first home buyers to 50,000 per year. Removing these limits opens up the scheme to all eligible first home buyers
• No income caps: First home buyers with higher incomes are no longer excluded from the scheme.
• Higher property price caps: These have been adjusted to help first home buyers in areas where property prices have risen.
• Simpler access in regional areas: The Regional First Home Buyer Guarantee will now be replaced by the First Home Guarantee, helping to simplify the process.
• No Lenders Mortgage Insurance (LMI): Government guarantees up to 15% of the loan, so first home buyers with only 5% deposit avoid paying LMI altogether.

How much could you save without LMI?

Using a $570,000 home loan with a 95% LVR as an example, the cost of Lenders Mortgage Insurance (LMI) could add more than $26,000 to the loan. Removing this cost under the Home Guarantee Scheme means buyers not only avoid paying LMI but also benefit from lower monthly repayments of around $160 less per month. Over the life of the loan, that’s a whopping $56,776 in extra interest that no longer has to be repaid!

For more help and personalised mortgage advice, whether you’re a first home buyer, existing homeowner, or seasoned investor, contact Oshin Home Loans and connect with a mortgage broker.