First Home Buyers NSW 2025: New Scheme with 5% Deposit and No LMI up to $1.5 Million
2025-08-26
The Australian Government has announced significant changes to the Home Guarantee Scheme that will take effect from 1 October 2025. These reforms are designed to make home ownership more accessible, particularly for first home buyers in NSW and across Australia.
The expansion will remove long-standing barriers, giving buyers the opportunity to purchase a property with a 5% deposit and no LMI (Lenders Mortgage Insurance). With higher property price caps, including the ability for buyers in Sydney and regional centres to purchase up to $1.5 million dollar no LMI, this update marks one of the most substantial shifts in government-backed support for first home buyers in recent years.
Key Changes to the Scheme
From 1 October 2025, the following adjustments will apply to the Home Guarantee Scheme:
Unlimited places: All eligible buyers can apply without the risk of missing out due to limited allocations.
Removal of income caps: Higher-income earners will now be able to access the scheme.
Increased property price caps: Reflecting rising market conditions, price caps have been raised significantly. In NSW, Sydney and regional centres now have a new cap of $1.5 million (up from $900,000).
Simplified access for regional buyers: The Regional First Home Buyer Guarantee will be streamlined into the broader First Home Guarantee, creating a simpler process for applicants.
What This Means for First Home Buyers in NSW 2025
One of the most notable advantages of the new scheme for first home buyers NSW 2025 is the ability to enter the market with just a 5% deposit LMI-free. Under current conditions, buyers with less than a 20% deposit are typically required to pay substantial LMI fees, which can add tens of thousands of dollars to the cost of purchasing a property.
By removing this burden, the scheme makes it possible for buyers to secure a home sooner while keeping overall costs lower. For those searching in Sydney and key regional centres, the new $1.5 million dollar no LMI threshold ensures that the scheme is more aligned with the actual prices in today’s property market.
How to Apply
From 1 October 2025, buyers will be able to:
- Check eligibility using the official Home Guarantee Scheme eligibility tool.
- Review the updated property price caps for their chosen location.
- Apply through one of more than 30 participating lenders across Australia, including customer-owned banks, regional banks, and major lenders.
- Obtain pre-approval and begin the property search.
The Opportunity Ahead
The expansion of the Home Guarantee Scheme reflects the Government’s commitment to helping Australians achieve home ownership. For many first home buyers, particularly in high-demand areas like Sydney, the new scheme first home buyers NSW 2025 update represents a genuine opportunity to purchase a property that was previously out of reach.
At Sapphire Estate Agents, we are committed to guiding first home buyers through the process. Whether you are preparing to buy immediately or planning ahead for the October 2025 changes, our team is here to provide expert advice, connect you with participating lenders, and help you find the right property within the updated price caps.