Breaking News: First Home Guarantee Cap Jumps to $1 Million in Queensland

Big news for Little Mountain and all of Queensland’s aspiring home buyers! The federal government has announced a major change to the First Home Guarantee (5% deposit scheme) that will make it easier for first-time buyers to enter the market. Effective 1 October 2025, the property price cap under this scheme in Queensland will increase from $700,000 to $1,000,000. This means buyers can now consider a much larger range of homes (including many in Little Mountain) without needing a full 20% deposit.

According to Colin Mason from Mason Finance, this expansion marks a huge step towards helping first home buyers keep pace with the rapidly rising property market across the state.

What is the 5% Deposit First Home Guarantee?

The First Home Guarantee is a government program that helps first-time buyers purchase a home with as little as a 5% deposit. Under this scheme, the government guarantees part of the home loan, allowing buyers to avoid paying costly Lenders Mortgage Insurance (LMI) despite the smaller deposit.

In other words, you don’t need to save for a 20% deposit – the scheme bridges the gap, helping you buy sooner.

Originally, the scheme had limits on how many people could use it each year and caps on the property price depending on location. For instance, in Queensland, the price cap was $700,000 for properties in Brisbane and major regional areas, which, in today’s market, made it tough to find many eligible homes. Many popular suburbs (like our own Little Mountain) have median house prices around the low $1 millions, meaning the old cap excluded a lot of homes that first home buyers might otherwise consider.

This change ensures buyers are fully informed about the property before they commit, which is an important step in reducing disputes and contract terminations.

What’s Changing on 1 October 2025?

Several important updates are coming that will benefit first home buyers:

• Higher Price Caps: In Queensland’s metro and key regional areas, the price limit jumps from $700,000 to $1,000,000. More homes will now fall under the scheme’s reach, giving buyers a wider selection including larger or newer homes that were previously above the old cap. (For context, Brisbane’s cap is rising to $1M, and Sydney’s to $1.5M.)
• Small Deposit, No LMI: The minimum deposit remains just 5% – you still do not need a 20% deposit or to pay LMI, thanks to the government guarantee. For example, on a $1,000,000 home a first home buyer could secure it with around a $50,000 deposit instead of $200,000, potentially saving years of additional saving and avoiding tens of thousands in insurance fees.
• Unlimited Places: Previously, there was a limited number of spots each year for this scheme. From October, all eligible first home buyers can apply at any time – there’s no quota to worry about. If you meet the criteria, you’re in.
• No Income Caps: The expansion also removes any income limit for buyers using the scheme. Whether you’re a low or high income earner, as a first home buyer, you can take advantage of the 5% deposit guarantee without being disqualified for earning “too much.”