Big changes are coming for Tasmania’s First Home Buyers

Saving for a deposit can often feel like climbing kunyanyi in thongs- slow, frustrating, and more often than not a little cold.

But the recent overhaul of the First Home Guarantee might just hand you the boots you need to reach the summit.

The Federal First Home Guarantee scheme just got a major upgrade. The Australian Government is fast-tracking an expansion of its 5% deposit scheme. From the 1st of October, eligible first-home buyers across Tasmania to purchase with just a 5% deposit, no income caps, no quotas, and no Lenders Mortgage Insurance (LMI).

But what do all those numbers and jargon really mean? Let’s unpack it a little to try and help get our head around what the FHBG is and how it can help you.

So, what exactly is the First Home Guarantee?

Normally, banks require a 20% deposit for home purchasers to avoid expensive Lenders Mortgage Insurance (LMI). Under the FHBG scheme, the government will guarantee up to15% of your home loan, which helps you avoid having to pay those hefty LMI fees.

Since its launch in 2020, the scheme has helped thousands of Australians purchase sooner. But until now, access was limited. There were annual caps on how many people could get in, income thresholds, and pretty tight limits on the price of eligible properties. For many Tasmanians, those restrictions meant missing out.

What’s changing in October 2025

On August 25, the government announced it will expand and accelerate the First Home Guarantee scheme to reach more buyers. Originally slated for next year, the expanded program will now kick in from 1 October 2025.

Here are the key changes effective then:

• No cap on the number of places. Previously, only 50,000 buyers per year could access the guarantee. Now, anyone who meets the criteria can apply.
  
• No income thresholds. Whether you earn $60k or $160k, you’ll be eligible if you’re a first home buyer.
  
• Higher property price caps. In Hobart, the price limit rises from $600,000 to $700,000. In regional Tasmania, it climbs from $450,000 to $550,000.
  
• Regional scheme merged into the main FHBG. This means a simpler, more unified process regardless of whether you’re buying in the city or country.
  

Together, these changes open the door wider than ever before. Treasury estimates about 80,000 buyers will use the expanded scheme in the first year, a sharp rise from previous numbers.

What this means for First Home buyers in Tasmania

Aaron Murray from 4one4 Property Co. sees it as a step in the right direction. “This is exactly the kind of support young people and renters in Hobart have been waiting for. Anything that helps cut down the time it takes to move from renting to owning is a win for the community,” he says.

For many locals, this could bring the dream of home ownership within realistic reach. Let’s look at a few key benefits:

1. Buy years sooner. Instead of saving for a 20% deposit (which could be $140k on a $700k home), you only need 5% ($35k). For most buyers, that means entering the market years earlier.
   
2. Save on LMI. That’s potentially tens of thousands of dollars back in your pocket. And if you’re in a place like Moonah or Glenorchy, where prices are competitive but rising, those savings go even further.
   
3. Choose from more homes. The price cap increases are big news here. With Hobart’s new cap of $700k, you’re no longer restricted to units or homes in need of major work. You can explore mid-range options in areas like Berriedale or even parts of Rosny.
   
4. Avoid the rent trap. Every year you keep renting while saving that last 15% is a year you’re helping pay off someone else’s mortgage. Getting into your own place means starting to build equity sooner.
   
5. Higher earners now qualify. Young professionals in Hobart with decent incomes but high expenses (think HECS, rent, cost of living) were previously told they earned “too much” to get support. That’s no longer a barrier.
   You might also be wondering about other cost-saving opportunities in Tasmania beyond the First Home Guarantee itself. Luckily, there’s a helpful companion piece on our blog — the article “Massive Savings on Stamp Duty for Tasmanian First Home‑Buyers” — that walks you through how current stamp duty reforms could save you tens of thousands on entry-level properties. It’s a must-read to see how both initiatives—federal and state—can stack to make that first home closer than you think.

A Note of caution for First Home Buyers

The FHBG doesn’t mean your home is cheaper, it simply means you can access it with less saved upfront. You’ll still be borrowing 95% of the property’s value, which means higher mortgage repayments. It’s essential to do the maths. Before considering any home purchase its important to make sure your income supports the repayments. Be wary to factor in if the interest rates shifts, or whether you have a buffer for repairs or emergencies?

You might also be wondering about other cost-saving opportunities in Tasmania beyond the First Home Guarantee itself. We have previously covered off on another blog, Massive Savings on Stamp Duty for Tasmanian First Home‑Buyers, it walks you through how current stamp duty reforms could save you tens of thousands on entry-level properties. It’s a must-read to see how both initiatives—federal and state—can stack to make that first home closer than you think.

Will this majorly affect Hobart’s property market?

Possibly. Federal modelling suggests the impact on prices will be modest, around 0.5% over six years. But other experts argue the increase could be steeper, especially in areas with limited housing stock.

Here in Tasmania, where supply is already tight, we might see more competition in 4one4’s local backyard of the Northern Suburbs with homes within the sub-$700k segment. That said, being able to enter the market earlier often outweighs the impact of a small price bump. You’re still better off buying at $690k now than waiting five years and facing a $770k price tag.

How to get started

• Check your eligibility at Housing Australia’s website.
  
• Talk to a mortgage broker about what a 95% loan would look like for your situation.
  
• Start house hunting with a clear budget and loan pre-approval.
  

And above all, ask questions. Buying your first home isn’t something you have to do solo. The team here at 4one4 are great to talk to, whether you’re just starting to think about buying or already knee-deep in listings. We’ll listen to what you’re hoping for, answer the questions you might not even know to ask yet, and help you feel confident about your next steps.

Let’s talk it through

Here at 4one4 Property Co., we’ve helped hundreds of Tasmanians make their first step into the market, and we know the emotional, financial, and practical questions that come with it.

We can talk through what the new FHBG means for you: whether you qualify, what’s realistic in your budget, and what’s actually available in your preferred suburbs.

You don’t have to memorise the fine print or decode government policy. That’s our job. Yours is to bring the questions. Let’s chat.