For many Australians, saving a deposit for their first home feels like a never-ending uphill climb. Rising property prices and the added cost of Lenders Mortgage Insurance (LMI) have made home ownership feel out of reach for a growing number of people.
The Federal Government has announced major changes to the Home Guarantee Scheme (HGS) from 1 October 2025. The removal of income caps and an increase in property price limits are designed to help more first home buyers enter the market sooner.
What Has Changed in the Home Guarantee Scheme
Two significant changes will have a direct impact on first home buyers:
Removal of income caps
Previously, the scheme placed restrictions on how much you could earn to qualify. This excluded many people on higher wages who still struggled to save a 20 per cent deposit.
From October 2025, the income caps will be removed, making the scheme more inclusive.
Increase in property price caps
House prices have risen significantly in recent years, and the old caps often did not reflect real market conditions. The new limits make more homes eligible under the scheme.
For Western Australia in particular, the changes are substantial:
- Perth metro price cap: $850,000 (up from $600,000)
- Regional WA price cap: $600,000 (up from $450,000)
This brings many more properties within reach for buyers across the state.
How Much Could You Save with the Home Guarantee Scheme
The biggest saving comes from avoiding Lenders Mortgage Insurance (LMI).
- LMI is generally required when a deposit is under 20 per cent. Based on the WA median house price of $780,000, that means saving $156,000 plus fees.
- First home buyers often pay $25,000 and $30,000 + in LMI.
- Since LMI is often added to the loan, the real cost is even higher once repaid over 25 years.
By using the Home Guarantee Scheme, buyers can purchase with just a 5 per cent deposit and avoid paying LMI altogether. According to the Housing Industry Association, this could reduce the saving time by up to four years.
Family Guarantor vs Home Guarantee Scheme
Some buyers use a family guarantor loan to avoid LMI, where parents or relatives provide additional security. While this can work, it is not an option for everyone. Many families do not have the ability to provide this support, or it may place financial strain on relationships.
The Home Guarantee Scheme provides an alternative path to avoid LMI without relying on family guarantees.
Why These Changes Matter for WA Buyers
Western Australian first home buyers are big winners from the changes.
- Perth’s new $850,000 cap makes a much larger pool of homes eligible.
- Regional WA buyers benefit with the cap rising to $600,000.
- WA remains more affordable compared to Sydney and Melbourne, so these reforms create a strong opportunity for first home buyers to purchase before prices rise further.
Key Takeaways
- Income caps removed, making the scheme more accessible.
- Price caps increased, especially in WA ($850k metro and $600k regional).
- Avoiding LMI can save $25,000 to $30,000 and cut years off saving time.
- The scheme offers a solution for buyers without a family guarantor.
For many, these reforms could be the difference between staying in the rental cycle and stepping into their first home.
???? Ready to take the next step with confidence? Download our Smart Property Buyers Guide for strategies to navigate today’s property market.
