October Home Guarantee changes: what they mean for you

By Andrew Paterson

I’ve been fielding a lot of questions about the Home Guarantee Scheme changes coming in October.

For those looking to buy in areas like Geelong, Ballarat, Bacchus Marsh and surrounding regions, these changes matter. They open doors that have been closed and remove barriers that have frustrated many potential buyers.

The three big changes from October 1st

1. Income caps are gone. Previously, individuals were capped at $125,000 and couples at $200,000. From October, income limits disappear entirely.
   
2. Place limits vanish. The annual quota system that left many clients waiting until the next financial year ends. All eligible first homebuyers can access the scheme.
   
3. Property price caps increase. Victoria sees caps rise from $800,000 to $950,000 in Melbourne and Geelong, while other regional areas remain at $650,000.

How your borrowing capacity changes

Let me walk through some scenarios that show what this means in practice.

Take a couple I’ve been working with – both professionals living in Geelong, earning $220,000 combined. Under current rules, they’d be excluded due to income caps (couples are currently limited to $200,000). From October, they can purchase up to $900,000 with just $45,000 deposit while avoiding around $37,000 in LMI costs. Without the scheme, they’d either need $180,000 for a 20% deposit or pay that $37,000 LMI fee on top of their mortgage.

Then there’s a single professional in Ballarat earning $90,000. Currently eligible but stuck waiting for place allocations. The October changes guarantee access plus remove that uncertainty. For a typical $510,000 family home, the scheme lets them avoid LMI entirely:

• Required deposit: $25,500 (5%)
• LMI avoided: About $20,000
• Without scheme: Same $25,500 deposit but with $20,000 LMI on top
• Alternative: $102,000 needed to avoid LMI entirely

The key difference isn’t enabling lower deposits – banks have always offered that. It’s eliminating the LMI fee that comes with it.

Regional Victoria specifics

Geelong gets special treatment as a designated “regional centre” alongside Newcastle and the Gold Coast. This means the higher $950,000 cap rather than the standard regional $650,000 limit.

For context on current market conditions:

• Geelong median: $880,000 (within new $950,000 cap)
• Regional areas: Generally well within the $650,000 cap, though some markets are approaching these limits

The scheme works by having the government guarantee up to 15% of the property value. Combined with the buyer’s 5% deposit, this gives lenders their required 20% buffer without traditional mortgage insurance.

What buyers need to know

Eligibility stays mostly the same: First homebuyer status (or 10+ years since ownership), Australian citizenship or permanent residency, owner-occupier commitment, genuine savings for the 5% deposit.

Standard lending applies: Banks still assess serviceability, employment, credit history. This isn’t loose lending – just a different deposit structure.

Timeline matters: Changes don’t take effect until October 1st. Current scheme limitations persist until then.

Market implications worth considering

Increased buyer capacity will likely put some upward pressure on property prices, particularly in the $500,000-800,000 range where the scheme has most impact.

A potential catch: If property prices rise beyond the scheme caps due to this increased demand, buyers might find themselves priced out of properties they previously qualified for. The caps don’t adjust automatically with market movements, so areas approaching those limits need watching.

Regional Victoria’s affordability advantage should persist overall. Areas like Ballarat and Bacchus Marsh remain well within caps and accessible compared to Melbourne’s $940,000 median.

The scheme also creates market movement. When first homebuyers can enter earlier, it helps the whole chain – current owners can upgrade, investors can reposition.

What this means for existing homeowners

While first homebuyers get the headlines, the flow-on effects matter for current property owners too.

• Upward price pressure typically benefits existing owners. More buyers competing for the same properties – especially in that $500,000-800,000 sweet spot – generally pushes values higher. For homeowners, rising property values mean increasing equity in their homes.
  
• Higher equity opens doors. As your loan-to-value ratio drops, you move into lower risk categories from the banks’ perspective. This can mean access to better interest rates when refinancing, or the ability to tap into equity for renovations, investment properties, or other financial goals.
  
• The upgrade opportunity. When first homebuyers can enter the market more easily, it creates movement throughout the property chain. The young family in their starter home can suddenly afford to upgrade to something larger, knowing there’s a ready pool of scheme-assisted buyers for their current property.

For existing owners in regional Victoria, the changes represent an opportunity to reassess their position. That equity you’ve built up might be worth more than you realised, and the financing landscape might be more favourable than when you first bought.

Industry reactions

Financial industry professionals are generally positive about removing barriers that have excluded qualified buyers. The certainty of unlimited places removes the rush to secure annual allocations.

Major banks support the changes. NAB’s home ownership executive noted that many assume they can’t buy without 20% deposits, when schemes like this prove otherwise.

Practical preparation

From October, expect increased inquiry from previously excluded higher-income earners alongside traditional first homebuyers.

Documentation remains standard: Three months genuine savings, standard employment verification, usual loan paperwork. The process doesn’t simplify – just the deposit requirement.

Property search expands: Particularly in Geelong, buyers can consider properties that were previously beyond reach due to scheme caps.

Timing considerations: If you’re considering a purchase, understand current limitations persist until October 1st.

Frequently Asked Questions

What exactly changes with the Home Guarantee Scheme in October 2025?

Three major changes: income caps are completely removed (no more $125,000/$200,000 limits), place limits are eliminated (unlimited access instead of 35,000 annual spots), and property price caps increase in some areas (Geelong rises to $950,000, other regional Victorian areas stay at $650,000).

Who benefits most from these October 2025 changes?

Couples earning over $200,000 or individuals over $125,000 who were previously excluded due to income caps. Also anyone who’s been stuck on waiting lists due to the annual place limits.

How much can I save with the Home Guarantee Scheme?

On a $900,000 Geelong property, you’d save around $37,000 in lenders mortgage insurance while only needing a $45,000 deposit instead of $180,000. For a $510,000 Ballarat home, save about $20,000 LMI with just $25,500 deposit instead of $102,000.

Which Victorian regional areas get higher property price caps?

Only Geelong qualifies as a “regional centre” with the increased $950,000 cap. Ballarat, Bacchus Marsh, Koo Wee Rup and other regional areas remain at the $650,000 cap.

Do I still need genuine savings for the 5% deposit?

Yes, standard lending criteria still apply. You need three months of genuine savings for your 5% deposit, stable employment, and must meet the lender’s serviceability requirements.

When exactly do these changes take effect?

October 1, 2025. Current scheme limitations remain in place until then, so timing your application matters.

Before vs After: October 2025 Changes

Criteria	Before October 2025	After October 2025
Income Limits	$125,000 individual / $200,000 couples	No income caps
Annual Places	35,000 limited spots	Unlimited access
Geelong Price Cap	$800,000	$950,000
Regional Victoria Cap	$650,000	$650,000 (unchanged)
Deposit Required	5% minimum	5% minimum (unchanged)
LMI Requirement	Waived with guarantee	Waived with guarantee

What this means moving forward

The changes represent a shift in government policy – acknowledging that income caps and quotas were excluding qualified buyers rather than targeting assistance effectively.

If you’ve been excluded by income caps or discouraged by quotas, October 1st changes the equation. The fundamentals still matter – genuine savings, stable employment, realistic borrowing capacity – but the deposit barrier drops substantially.

These policy changes don’t solve every first homebuyer challenge, but they remove significant barriers that have kept qualified buyers on the sidelines.