The federal government’s Home Guarantee Scheme expands today. It aims to make it easier for all first-home buyers to purchase a home. However, many people are criticising the choice by the government and believe the scheme isn’t a good idea.

So, what is the Home Guarantee Scheme and why are people criticising it? We’ll break it down for you.

What is the Home Guarantee Scheme?

The scheme, that launched in 2020, allowed first-home buyers to buy a property with a deposit of five percent instead of the typical 20 percent. The government would then guarantee a portion of the loan, so that buyers would not have to pay Lenders Mortgage Insurance (LMI).

LMI is used to protect lenders for when people borrowing money are unable to repay their loan. It is usually required if people borrow more than 80 percent of the value of the property. This meant that under normal circumstances, people only depositing five percent would have to pay LMI. This scheme stopped that for first-home buyers.

When it was first released there was a limit on the amount of homes available, income caps and house price caps. However, since 2020 there have been eligible homes added to the scheme and caps on house prices have risen. And in 2025 the Albanese government announced an expansion of the scheme for all first-home buyers.

“Getting more Australians into their own home quicker, while saving them money along the way,” Prime Minister Anthony Albanese said.

So, what’s expanding in the scheme?

From today there will be no limits on the amount of people who can use the scheme, meaning all first-home buyers can apply with a deposit of at least five percent.

There will also be an increase in property price caps, which means that properties that were previously too expensive for this scheme may now be eligibile. For example, the current price cap on homes for the scheme in Victoria was $800,000 but is now $950,000.

On top of this, there is are no longer any income caps. So first-home buyers previously not allowed to access the scheme, due to their higher earnings, can now access it.

What are people saying about it? Good or bad?

The goal of the scheme is to help people buy their first home sooner. Research from real estate company Domain suggests that borrowers in Melbourne would only need to save for two years under the scheme, rather than seven years.

However, experts have also warned of negative consequences from the scheme.

Experts have firstly warned about higher mortgage repayments. Since deposits are smaller, home owners will have to pay hundreds of thousands of dollars more over time than they otherwise would with a 20 percent deposit. Cotality, a data and technology company, showed that home owners who use the scheme would pay more than $250,000 more than people who deposited 20 percent over 30 years for a median price home.

Experts have also warned that it will increase house prices across Australia. While the treasury has said that house prices will rise by less than one percent over six years, experts believe that prices will rise more than this. Lateral Economics estimates that house prices could raise by ten percent due to the scheme.

Photo: Black Handled Key on Key Hole by AS Photography found HERE and used under a Creative Commons licence. The image has not been modified.