From 1 October 2025, big changes are coming to the Home Guarantee Scheme, making it easier for first home buyers to break into the property market. The government has announced the scheme will expand earlier than expected, with new rules designed to cut years off the deposit-saving journey and remove costly Lenders Mortgage Insurance (LMI) – a common roadblock for buyers on Sydney’s Northern Beaches.
Here’s what you need to know.
What’s Changing on 1 October 2025
Three major updates are reshaping the scheme:
Unlimited places – no more caps or “first in, best dressed” rules.
No income limits – buyers won’t be restricted by earnings.
Higher property caps – in Sydney, the threshold will lift from $900,000 to $1.5 million, opening up far more choice on the Northern Beaches.
From this date, all first home buyers will be able to purchase with just a 5% deposit – without paying LMI – on eligible properties up to $1.5 million.
Why the $1.5M Cap Matters in Sydney
Previously, the $900,000 cap locked many first home buyers out of Sydney’s competitive market. With the new $1.5 million limit, the scheme now covers a much larger slice of the city – including townhouses, terraces, and quality apartments in well-connected suburbs.
For buyers who have the income to service a loan but have struggled to save a large deposit, this change can bring their purchasing timeline forward by years.
Market Impacts to Watch
While the scheme makes buying more achievable, it also risks increasing competition in already tight markets. Areas like the Northern Beaches, where supply of quality homes under $2 million is limited, may see a surge in demand as more buyers are able to bid.
The takeaway: buyers may have more opportunities, but they’ll also need to move quickly and strategically to secure the right property without overpaying.
What This Means for Buyers Under $1.5M
Eligible buyers can now aim for properties up to $1.5 million with only a 5% deposit.
LMI is removed, saving tens of thousands at settlement.
Apartments and townhomes in the $1.2M–$1.5M range are likely to see increased competition as demand ramps up.
Buyers will need to be finance-ready, decisive, and well-prepared.
How RE Collective Can Help
Navigating a fast-moving market is never simple, especially when new policies bring in fresh waves of competition. This is where expert guidance makes all the difference.
At RE Collective, we help buyers:
Identify value and avoid overpaying.
Access off-market opportunities.
Position strategically at auction or in negotiations.
Manage the risks around building, strata, and contracts.
With the 5% pathway opening up in October, aligning early with your broker, solicitor, and buyers’ agent will give you the best chance of success.
Key Takeaways
From 1 October 2025, the Home Guarantee Scheme expands: unlimited places, no income caps, and higher price caps (up to $1.5M in Sydney).
First home buyers can purchase with a 5% deposit and no LMI, significantly reducing upfront costs.
Expect more competition in the $1.2M–$1.5M bracket, particularly for quality apartments and townhomes on the Northern Beaches.
Preparation and representation will be essential to making the most of the scheme.
