The Housing Industry Association (HIA) has welcomed the expansion of the Home Guarantee Scheme, stating it believes the changes will reduce the time to save a deposit by up to four years.
On 25 August, the Labor government announced plans to bring forward the start of the First Home Guarantee Scheme to 1 October 2025, three months earlier than originally planned.
The scheme will give an unlimited number of eligible first home buyers access to a 5 per cent deposit guarantee, removing the income and place caps that were previously in place.
The government also raised the scheme’s property price limits in reaction to the increase in average house prices.
On average, the scheme’s expansion will reduce the time and cost burden on first home buyers by 1.7 years or around $25,000, the HIA said.
How else does the HIA believe the scheme will assist First Home Buyers?
Commenting on the scheme, HIA senior economist Tom Devitt noted that the latest expansion will allow first home buyers to purchase a home without having to pay lenders mortgage insurance (LMI).
“First home buyers pay between $25,000 and $30,000 in LMI to purchase an average home. Because this cost is paid up-front, it is effectively added to the loan and is repaid over 25 years, inflating the real cost of LMI,” Devitt said.
“Removing LMI reduces the timeframe to save the deposit for a first home buyer by up to four years.
“The real costs of LMI to the economy are significantly higher than the upfront cost to the first home buyer.”
The property body also recently released its HIA Affordability Index for the June 2025 quarter, suggesting it expects changes to the guarantee scheme to put downward pressure on home prices and claiming it will add to the supply of homes, without adding to demand.
However, the HIA added that Treasury’s conservative estimates showed the scheme will lead to a “modest rise in home prices initially”, as first-time buyers shift out of the rental market into home ownership, before changes create incentives for more home building.
“Over the medium- to long-term, demand for housing is only derived from a change in population or the number of people per home. As this policy doesn’t change either of these variables, it has no impact on demand,” Devitt said.
How do you find out more?
Your best bet is to get in touch with a lending specialist.
There are a few different government schemes, some at a federal level, and some at state levels. A lending specialist will help you choose the right scheme for you and can assist with your application.
Our lending specialists have access t lenders who are participating in the schemes (not all lenders do!). It’s not only about choosing the right scheme, it’s also about getting he right home loan for you!
If you’re not ready, we can help set you up with a plan. If you’re ready to start looking, we can load you up with a pre-approval and help with your property research.
Home loans made simple.
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This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.