What the Government’s New First Home Buyer Scheme Actually Means for First Home Buyers

What’s changing, effective from 1 October 2025.

The Albanese Government has accelerated the rollout of its expanded First‑Home Guarantee Scheme, starting 1 October 2025, three months earlier than originally planned.

Key updates include:

No cap on participant numbers: Previously capped at 50,000, the scheme will now be open to all eligible first‑home buyers

No income limits: Full removal of income eligibility thresholds

Higher property price caps: In NSW capital and major regions (like the Central Coast), the cap increases from $900,000 to $1.5 million

Low‑deposit purchase: Buyers can now secure a home with just a 5% deposit, avoiding lenders’ mortgage insurance (LMI) thanks to a government-backed guarantee

Potential savings: Buyers could collectively avoid around $1.5 billion in LMI costs in the first year alone

The Impact: A Double-Edged Sword

What’s Positive for Buyers:

Faster entry into the market: A 5% deposit scheme dramatically shortens the time needed to save for a home.

Greater flexibility and wider access: Higher price caps in NSW make it easier to consider markets like the Central Coast.

Cost savings: Avoiding LMI could amount to tens of thousands of dollars depending on property value

What Experts Are Warning About:

Potential for price inflation: Analysts warn that unleashing wider demand with constrained supply may push property prices higher in the short term. Lateral Economics projects a 3.5–6.6% price hike in 2026, and up to 9.9% in areas where first-home buyers are most active, equating to $28,000 to $90,000 more on a typical home

Mixed economic projections: While Treasury forecasts only a modest 0.5% rise over six years, experts caution this may be a vast underestimation

Risk of over‑leverage: With only 5% equity, borrowers may find themselves highly exposed if property prices falter

What This Means for Central Coast Buyers

Boosted Reach, But Greater Competition

With the $1.5 million cap, buyers who may have previously been limited to lower‑priced Central Coast suburbs now have access to a broader range of properties. However, with more buyers competing, desirable coastal homes may become more contested, potentially inflating local prices.

Need for Strategic Timing

If you’re planning to buy soon, this scheme offers lowered financial barriers. But keep a close eye on how local prices evolve, particularly at the lower end, which is often most affected by first‑home buyer activity.

Important to Balance Emotion with Prudence

Getting into the market quickly is appealing but only if the purchase aligns with long-term affordability. Higher competition and big price jumps can backfire if you’re stretching financially.

Stamp Duty Relief Still Applies

Don’t forget other NSW schemes warmly received by Central Coast buyers, such as the First Home Buyers Assistance Scheme, offering stamp duty exemptions up to $800,000 and concessions up to $1 million

Top Tips for Local Buyers

Act with intention, not emotion: Research the Central Coast market carefully. Look beyond headline price and assess total costs, even if the government is covering LMI.

Stay aware of affordability metric: Talk to a mortgage broker, build accurate budget projections, and include potential interest rate shifts.

Combo of incentive: First-time buyers in NSW may benefit from both this federal scheme and the state’s stamp duty concessions. Stack smartly.

Market timing matters: If multiple buyers flood the market simultaneously, consider slightly off-peak periods to avoid bidding wars.

Keep an eye on supply-side reform: Experts highlight that long-term price moderation requires more housing supply, not just demand incentives, so follow Local Council developments and new builds.

 

The government’s expanded First-Home Guarantee scheme begins 1 October 2025, offering real, immediate relief for aspiring Central Coast homeowners. It lowers key barriers like deposit size and LMI, opens access to higher-priced homes, and stands to save buyers thousands. But with great opportunity comes heightened responsibility. Rising purchaser numbers and limited supply may push prices higher, potentially offsetting your upfront savings and eroding affordability.

To succeed in this evolving landscape, plan carefully, consider your long-term financial resilience, and make full use of both federal and state-first buyer support. Prioritise value, not just accessibility. Stay informed on both demand drivers and supply side changes, sooner or later, true affordability depends on them.