---
title: First Home Guarantee Income Caps Gone: 2026 Guide | GNT Finance
description: Since October 2025 the First Home Guarantee has no income caps, unlimited places and a $950,000 Melbourne price cap. What Melbourne buyers should do in 2026.
url: https://gntfinance.com.au/blog/first-home-guarantee-no-income-cap-what-changed/
author: Gorakh Timilsina
published: 2026-06-01
category: Law updates
---

# First Home Guarantee with no income cap: what changed and what Melbourne buyers should do in 2026

**In short:** From October 2025 the First Home Guarantee has no income caps and no limit on places. Eligible first home buyers can purchase with a 5% deposit and pay no lenders mortgage insurance, on properties up to $950,000 in Melbourne and Geelong or $650,000 in regional Victoria. You must be an Australian citizen or permanent resident, 18 or over, and plan to live in the home.

The October 2025 expansion of the Home Guarantee Scheme was the biggest change to first home buyer support in years. For a lot of Melbourne households, especially dual-income couples who used to earn a few dollars too much, it turned a 20% deposit problem into a 5% deposit plan. This post explains exactly what changed, who benefits most, and the practical steps to take if you want to buy in 2026.

## What changed in October 2025

Three things moved at once.

| Rule | Before October 2025 | From October 2025 |
|---|---|---|
| Income cap | Yes, capped for singles and couples | None |
| Places per year | Limited allocation | Unlimited |
| Melbourne and Geelong price cap | Lower | $950,000 |
| Regional Victoria price cap | $650,000 | $650,000 |
| Minimum deposit | 5% | 5% |
| Lenders mortgage insurance | Not required | Not required |

The core mechanics are the same. The federal government, through Housing Australia, guarantees the portion of your loan above 80% of the property value, so the lender does not need you to pay LMI. You still borrow the full 95% and you still make normal repayments. The guarantee simply removes the insurance premium that would otherwise be added to a low-deposit loan. Our [First Home Guarantee guide](/guides/first-home-guarantee-5-percent-deposit/) covers the mechanics in more depth.

### Who is eligible now

- Australian citizen or permanent resident (joint applications need both parties to qualify)
- 18 years or older
- Buying as an owner-occupier and moving in
- Have not owned property in Australia in the last 10 years
- Property at or under the price cap for its location
- At least 5% deposit, which lenders usually want to see as genuine savings

Income is no longer a test. Whether you earn $70,000 or $270,000, the guarantee is available if you meet the other rules. Run the [First Home Guarantee eligibility calculator](/calculators/first-home-guarantee-eligibility/) for a quick check.

## Why the income cap removal matters in Melbourne

Under the old rules, two nurses, two tradies or a teacher and an IT worker could easily sit above the couple threshold and be pushed back to saving 20% or paying LMI. Those are exactly the households buying in Craigieburn, Wollert, Point Cook and Clyde North.

### A worked example: $650,000 in Craigieburn

Say a couple earning a combined $185,000 buys a $650,000 house in Craigieburn.

| Item | With the guarantee | Without the guarantee (5% deposit) |
|---|---|---|
| Purchase price | $650,000 | $650,000 |
| Deposit (5%) | $32,500 | $32,500 |
| Loan | $617,500 | $617,500 plus LMI premium capitalised |
| LMI | Nil | Payable, typically thousands to tens of thousands of dollars depending on the lender |
| Stamp duty (first home buyer) | Sliding concession applies | Sliding concession applies |

The LMI saving alone is often the difference between buying this year and buying in three years. Estimate the premium you are avoiding with the [LMI calculator](/calculators/lmi/).

Because the property is a new build valued under $750,000, the couple may also qualify for the $10,000 [First Home Owner Grant](/guides/first-home-owner-grant-victoria/) if it has never been occupied, and for the Victorian first home buyer duty concession on the sliding scale between $600,001 and $750,000. Stack the three and a 5% deposit purchase becomes very achievable.

## The $950,000 cap opens up more of Melbourne

At $950,000 the guarantee now covers most established houses in the northern and western growth corridors, most townhouses across the middle ring, and many apartments closer in. The cap is a property price cap, not a loan cap, so a $940,000 townhouse in Bundoora with a 5% deposit of $47,000 fits inside the scheme.

Two cautions:

1. The deposit is still 5% of a bigger number. On $950,000 you need $47,500 saved plus upfront costs, and stamp duty at that price is the full general rate of $52,070 because it is above the $750,000 first home buyer concession ceiling.
2. Lenders still assess serviceability at your rate plus 3 percentage points. A $902,500 loan needs a strong income to pass that test. Check your position with the [borrowing power calculator](/calculators/borrowing-power/).

## What Melbourne buyers should do in 2026

### Step 1: confirm eligibility early

The 10-year ownership rule catches people who owned a small unit years ago, and the citizenship rule catches temporary visa holders. If you are on a 482 or 491 visa, the guarantee is not available yet, but you may still have options through our [home loans for visa holders](/services/home-loans-for-visa-holders/) service.

### Step 2: get your 5% into shape

Most lenders want to see the 5% as genuine savings held for at least three months. Gifts from family can be used for the balance of costs in many cases, but the timing matters. Read [genuine savings explained](/guides/genuine-savings-explained/) before you shuffle money between accounts.

### Step 3: choose the lender, not just the scheme

Not every lender participates, and participating lenders differ on how they treat casual income, HECS debts, credit card limits and new-build valuations. This is where a broker earns their keep. We compare the panel and place you with the lender most likely to approve your file, at no cost to you for our home-loan service in most cases.

### Step 4: get pre-approved before you inspect

A written pre-approval tells agents you are serious and tells you the ceiling you are shopping under. Our [pre-approval guide](/guides/home-loan-pre-approval/) explains what to expect. Pre-approvals typically run for 90 days, so line it up when you are genuinely ready to buy.

### Step 5: compare with Help to Buy

If your income is under $100,000 as a single or $160,000 as a couple, the federal Help to Buy shared equity scheme is worth a look. The government takes an equity stake of up to 40% in a new home or 30% in an existing one, and you need only a 2% deposit. Repayments are smaller, but you share the future capital growth. See our [Help to Buy guide](/guides/help-to-buy-shared-equity-scheme/) for the trade-offs.

## Frequently asked questions

### Does the First Home Guarantee have an income cap in 2026?

No. The income caps were removed in October 2025. Eligibility now depends on citizenship or permanent residency, age, the 10-year ownership rule, buying as an owner-occupier, and the property price cap for your area. Lenders still assess whether you can afford the loan, so income matters for approval, just not for scheme eligibility.

### What is the First Home Guarantee price cap in Melbourne?

The cap for Melbourne and Geelong is $950,000. For the rest of Victoria it is $650,000. The cap applies to the purchase price of the property, not the loan amount, and it is checked at the time you enter the contract. Some outer suburbs sit near the boundary, so confirm your address with Housing Australia's postcode tool.

### Can I use the guarantee with the First Home Owner Grant?

Yes. The federal guarantee and the Victorian $10,000 First Home Owner Grant are separate programs and can be combined, provided the home is new, valued at $750,000 or less, and you live in it for 12 continuous months starting within 12 months of settlement. Many house-and-land buyers in Melbourne's north use both.

### Is there a limit on how many people can use it?

Not anymore. Places used to be allocated each financial year and could run out. Since October 2025 the scheme has unlimited places, so there is no need to rush an application purely to secure a spot. Rushing a property decision for that reason alone would be a mistake.

## Talk to GNT Finance

If you have a 5% deposit and a steady income, 2026 is the first year the guarantee has been open to almost every Melbourne first home buyer. Gorakh Timilsina and the team at GNT Finance can confirm your eligibility, match you with a participating lender and get a pre-approval moving. [Book a free consultation](/contact/) or call 0426 403 703.