What you think these schemes do is not what they actually do
Government schemes for first home buyers are widely misunderstood. The belief that the government gives you deposit money, or that these programs make housing affordable, shapes decisions before you have checked the fine print. changes what you pay and what risks you carry, not what a home costs.
- AHURI found current Australian schemes mainly bring forward purchases for households already close to buying, rather than opening home ownership to households otherwise excluded .
- The same research found demand-side assistance measures add to housing demand and therefore to house prices .
- The benefit to individual buyers is partially offset by the price impact on the broader market .
The gap between expectation and reality is where poor financial decisions get made.
Misconception 1: The government gives you 15% of the deposit
The First Home Guarantee does not give you money. It does not contribute to your deposit.
The guarantee means the lender does not require LMI, because the government has taken on that risk instead . You still borrow 95% of the property's value. You still repay 95% of the property's value, plus interest. The guarantee reduces your upfront costs by removing LMI, which can save $10,000 to $30,000 depending on the loan size. But your loan is larger, your repayments are higher, and your equity buffer is thinner than a buyer who saved 20%.
Misconception 2: These schemes make housing affordable
AHURI's modelling found that demand-side assistance, including grants and guarantee schemes, increases house prices because it puts more buyers into the market competing for the same supply . A report commissioned by the Insurance Council of Australia estimated the expanded First Home Guarantee could lift prices by 3.5% to 6.6% overall, and by up to 9.9% in lower-priced market segments where first home buyers concentrate .
Cotality (formerly CoreLogic) data showed that in the December 2025 quarter, properties priced below the scheme's caps grew 50% faster than those above them (3.6% versus 2.4%) . The price uplift began before the scheme officially launched on 1 October 2025, as buyers moved early in anticipation of increased competition .
These schemes help individual buyers get into the market sooner. They do not make housing cheaper. The price impact falls on the next cohort of buyers who now face higher prices.
Misconception 3: Everyone qualifies
Since October 2025, the First Home Guarantee has removed income caps and place limits . This is a significant expansion. But eligibility requirements still exist:
- You must be an Australian citizen or permanent resident aged 18 or over
- You must not have previously owned property in Australia (or not in the last 10 years)
- You must live in the property as your principal place of residence
- You must apply through a participating lender
- The property must fall within your area's price cap
The First Home Owner Grant has tighter restrictions. In most states, it applies only to new builds, not established homes . Income thresholds, property value caps, and contract date requirements vary by state. Help to Buy has 10,000 places per year, income caps of $90,000 for singles and $120,000 for couples, and its own property price caps .
"Available to all first home buyers" applies to one scheme. It does not apply to the full suite of assistance.
Misconception 4: Using a scheme means you are getting a good deal
A 5% deposit on a $750,000 property means you owe $712,500. If the property drops 5% in value to $712,500, your equity is zero. If it drops further, you owe more than the property is worth.
RBA Governor Michele Bullock warned that with high loan-to-value ratios, it does not take long for housing price declines to put buyers into . She noted that the removal of income caps means more people will take on higher LVR loans and higher debt-to-income ratios, resulting in larger repayments relative to income .
Cotality data showed that in the four months after October 2025, 22,921 guarantees were issued under the scheme, a 75% increase on the previous four-month period . The average first home buyer mortgage reached a record $607,500 in the December 2025 quarter . These are not small loans.
Misconception 5: You can combine all schemes freely
You can generally stack schemes from different levels of government. For example, you can use the First Home Guarantee (federal) alongside a state First Home Owner Grant and a stamp duty concession . You can also use the First Home Super Saver Scheme to build your deposit and then apply for the guarantee .
But there are limits. You cannot use the First Home Guarantee and Help to Buy on the same purchase, because they are both federal programs that address the deposit gap in different ways . Some state-level schemes have exclusivity clauses. And each scheme has its own eligibility criteria, so qualifying for one does not guarantee you qualify for another.
Check each scheme's requirements independently. Do not assume that being eligible for the guarantee automatically makes you eligible for the FHOG or stamp duty relief. The property type, value, and your circumstances need to satisfy each program separately.
Misconception 6: The FHOG applies to existing homes
In most states, the First Home Owner Grant applies only to new homes, substantially renovated properties, or new builds you construct yourself . It does not apply to established (previously occupied) homes in NSW, VIC, QLD, SA, or WA . The Northern Territory is the exception, offering a grant for established homes, though at a lower amount and with different eligibility periods .
This catches many first home buyers by surprise, particularly those searching in established suburbs. If you are buying an older home, the FHOG is likely not available to you. Stamp duty concessions and the First Home Guarantee may still apply, depending on your state and property value.