The Federal Government has announced sweeping changes to the First Home Guarantee scheme—and they’re already live.

The new rules mean first home buyers can now purchase with:

• Just a 5% deposit and no LMI
• Massively increased property price caps
• No income restrictions—the cap has been completely removed

This is one of the biggest housing affordability interventions in recent memory. But it comes with consequences.

Why Removing Income Caps Changes Everything

Previously, income caps limited the number of buyers who could access the scheme. Now, with those restrictions gone, higher-earning households are free to take advantage of the 5% deposit and no-LMI offer.

The result? Demand across all major cities will surge—and much of it will be concentrated at the new, higher price thresholds.

We believe that by January 2028, there will be very little stock left under $1 million in any capital city.

What This Means for Buyers

If your plan was to buy in the next 12–18 months, this change is a signal: consider bringing that forward to within 6–9 months. Waiting risks being priced out as competition intensifies.

This is especially true in regional hotspots and capital city fringe suburbs, where the new price caps make far more homes eligible under the scheme.

What This Means for Homeowners

For existing homeowners, this is positive news. A surge in buyer demand could lift property values again, even in a high interest rate environment.

The Bottom Line

This policy opens the market to thousands of Australians who were previously sidelined. But without matching supply increases, it’s almost certain to push prices higher.

At Rate Tracker, we’re helping clients workshop their options under the new scheme—so they can take advantage of the opportunity before affordability slips further out of reach.

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