Big Changes for First Home Buyers: What You Need to Know

Mitchell James Posted on 22 Sep 2025

If you’ve been following the property news lately, you’ll know there have been some major updates to the First Home Guarantee Scheme and they’re happening sooner than expected. From October 1, 2025, these changes could make it much easier for first home buyers across the Illawarra and Shoalhaven to get into the market.

What’s the First Home Guarantee Scheme?

The scheme allows the government to act as guarantor for eligible buyers, meaning you only need a 5% deposit (plus stamp duty and legal fees) if your borrowing capacity stacks up. The biggest drawcard? No Lenders Mortgage Insurance (LMI) saving buyers tens of thousands and often better interest rates.

Since 2020, around 80–90% of my first home buyers have relied on this scheme to get started. It really does help.

What’s Changing from October 1?

No income caps – previously capped at $125K (single) or $200K (couple).

No limits on scheme places – no more “waiting for a spot.”

Higher price caps:

Illawarra / Sydney: up from $900K → $1.5M
Shoalhaven / Southern Highlands: up from $750K → $800K

While $1.5M purchases are rare for first home buyers, these increases open the door for more realistic budgets in the $950K–$1.1M range. The scheme also covers land + construction, as long as total costs stay under the new thresholds.

Why It Matters

Let’s compare:

Without the scheme on a $1M home:

$130K minimum cash needed
Interest rates ~1% higher
$33K LMI cost applies

With the scheme:

$95K cash input (5% deposit + costs)
No LMI
Access to market-leading rates

That difference can mean getting into the market years earlier.

Don’t Forget the Other First Home Benefits

Stamp duty relief in NSW: no duty up to $800K for first home buyers, discounts up to $1M.

First Home Owners Grant (FHOG): $10K for new homes up to $600K, or house + land packages up to $750K.

The Bottom Line

For Illawarra and Shoalhaven first home buyers, October 1 is a date to circle on the calendar. With bigger price caps, no income restrictions, and unlimited places, the First Home Guarantee Scheme is now more flexible than ever.

If you’re looking to buy, it’s worth checking how these changes could fast-track your first purchase.

If you’re looking to take advantage of these changes and want to know how they could work for you, give me a call. I’d be happy to walk you through the details and help you map out the best path into your first home.

— Mitchell James