The First Home Guarantee Just Removed Income Caps: Re-Engineering Your FHB Funnel for the New Addressable Market

A Quiet Policy Change With Loud Pipeline Consequences

The changes that took effect on 1 October 2025 to the First Home Guarantee Scheme have been described in plain terms by the federal government and most banks: no income cap, no waitlist, no Lenders Mortgage Insurance for eligible first-home buyers with a 5% deposit. Property price caps were lifted as well — Sydney to $1.5 million, Brisbane to $1 million, Melbourne to $950,000, with regional movement in line.

For consumers, the offer is straightforward. For brokers, the implications are bigger than the headline. The expanded scheme has restructured the economics of first-home buying for an income tier that previously sat completely outside the scheme. It has also extended what ‘first-home buyer’ means inside a broker’s database — and most broker funnels were not designed around the new shape.

The brokers who treat this as a marketing event will pick up a few extra leads. The brokers who treat it as a structural change in the addressable market — and re-engineer their FHB funnel accordingly — will own a generationally large segment of new originations through 2026 and 2027.

What Changed, and Why It Matters Commercially

Before October 2025, the First Home Guarantee was rationed. Places were capped at 35,000 nationally. Singles earning over $125,000 and couples over $200,000 were excluded. Property price caps were tighter. The scheme worked best for entry-level borrowers in middle-priced markets — which made it useful but not central to most broker books.

The expanded scheme reshapes that pool. With no income cap and no place cap, the addressable market is now defined almost entirely by deposit size and property price. That brings in cohorts brokers historically routed elsewhere:

• Dual-income professionals in Sydney and Melbourne. Couples earning $250K–$350K who previously hit the income cap can now access the scheme. These borrowers were typically referred to standard 80% lend pathways or LMI-funded 90%–95% lend pathways.
• High earners with thin deposits. Senior employees and partners early in their careers with strong income but $80K–$120K deposits now qualify for $1M+ property purchases.
• Existing clients re-entering the market. Many existing clients’ family members and adult children who were previously over income are now in scope. The referral conversation has changed.

The commercial point: the same broker who used to write a $700,000 LMI-funded loan for a Sydney couple may now be writing a $1.4 million FHG-backed loan for the same demographic — without LMI, with full government support, and with a meaningfully different documentation pathway.

The Broker Funnel Most Firms Are Still Running

Most broker FHB funnels look like this: lead arrives → qualify deposit and savings → estimate borrowing capacity → match to a lender → discuss LMI options or guarantor structure → submit. The funnel was built around an environment where the FHG was a constrained pathway accessed by a minority of FHBs.

That funnel is now misaligned with the addressable market in three specific ways:

1. The Qualification Question Has Shifted

Old funnel: ‘Are you within the income cap?’ New funnel: ‘Are you within the property price cap and have you held PR for the qualifying period?’. Brokers who haven’t refreshed their intake forms will continue to drop higher-income FHBs into LMI-funded pathways when they could be routed through the guarantee.

2. The Lender Selection Set Has Changed

Not every lender participates in the FHG, and the participating panel includes both major banks and a meaningful set of non-banks and mutuals. Broker tech stacks that surface ‘first-home buyer’ as a checkbox often default to a small subset of lenders — typically the brand-leading FHB lenders rather than the most policy-aligned FHG participants. This needs a fresh review.

3. The Education Layer Is Underbuilt

The expanded scheme is genuinely new. Most clients haven’t internalised that the income cap is gone. Most parents helping with deposits haven’t either. Brokers who don’t include short, clear education at the top of the funnel — what the scheme covers, who qualifies, what changed — will lose deals to whoever does, often direct to lender.

A Funnel Redesign That Matches the New Economics

The funnel worth running through 2026 has four reshaped stages.

Stage 1 — Discovery and Education

Update broker website and email content to address the new scheme explicitly. Lead-magnet assets that worked in 2024 — generic FHB calculators, basic deposit guides — should be supplemented with content that frames the expanded scheme in plain terms. The single most valuable asset is a short FAQ that answers: ‘Does the income cap really gone?’ ‘How does the 5% deposit interact with stamp duty?’ ‘What’s the difference between FHG and the family equity options?’ ‘How does this affect my LMI conversation?’

Stage 2 — Smarter Qualification

Intake forms should be restructured to identify FHG eligibility on first contact. Required fields: residency status and duration, deposit amount, target property location, target price range, and existing property history (including any title held in a partner’s name). This single change moves higher-income FHBs into the right pathway from the first conversation, rather than the third.

Stage 3 — Lender Routing

Build (or update) an internal matrix of FHG-participating lenders covering: policy quirks (e.g. how each lender treats genuine savings rules in combination with the scheme), turnaround time for FHG-tagged applications, pricing differential against the lender’s standard product, and product features the borrower will actually use. This matrix should be reviewed quarterly — FHG participation is dynamic and lender appetite shifts with allocation.

Stage 4 — Settlement and Onboarding

FHG-backed loans have specific settlement and onboarding requirements that differ from standard high-LVR lending. Building checklists for conveyancer coordination, certificate verification, and post-settlement compliance is straightforward administrative hygiene — but it is also where many brokers lose hours to lender callbacks. Investing two hours in the checklist now saves twenty across the year.

Three Client Conversations Worth Pre-Empting

The expanded scheme generates three predictable client questions. Brokers ready with sharp answers convert better.

‘Is this scheme actually free, or does the government have a stake in my property?’ The FHG is a guarantee, not a shared equity arrangement. The government covers the LMI a lender would otherwise charge — borrowers don’t repay it, and the government doesn’t take a share of capital gain. This needs to be said clearly because clients often conflate FHG with state-based shared equity programs.

‘If the income cap is gone, why doesn’t everyone use this?’ Two reasons. The property price caps are real and tight in some markets (Brisbane’s $1M cap, for example, narrows the field meaningfully for inner-suburb purchases). And not every borrower qualifies on standard lender serviceability — particularly with the 3-percentage-point assessment buffer still in place. The scheme expands access to LMI savings, not to borrowing capacity.

‘What if I want to upgrade in three years — is there a clawback?’ Generally, no. Unlike some state schemes, FHG doesn’t create a clawback if the borrower sells or refinances normally. Refinancing internally with the guarantee in place needs to be handled carefully — and is a useful future client touchpoint.

The Compliance and BID Angle

Best Interest Duty applies to FHG recommendations the same way it applies to any recommendation. The two specific risks brokers should monitor:

Recommending a non-FHG lender to an FHG-eligible client. If the client qualifies for FHG and the recommended loan saves them $25,000+ in LMI, the file needs to show clear reasoning if a non-FHG lender was recommended instead. This will be a common BID review touchpoint over the next 12 months.

Routing high-income FHG-eligible borrowers into LMI products by default. The old assumption that FHG is for lower-income borrowers is now wrong. A $250K-income couple in Melbourne buying at $920K may be the strongest possible FHG candidate. Reviewers will check whether the broker considered the scheme and documented the reasoning.

Marketing and Referral Recalibration

Three marketing moves are worth making this quarter. First, refresh referral-partner conversations with conveyancers, accountants, and buyer’s agents. Many of them are still using outdated FHG information in their own client conversations. A single coffee meeting with an accountant who advises six prospective FHBs can be worth more than $500 of paid lead generation.

Second, mine the existing database for clients with adult children or referred contacts in the FHG range. The expanded income cap means a significant cohort of previously ineligible borrowers in client networks is now in scope.

Third, rebuild any FHB campaign content from scratch. Generic FHB messaging that doesn’t reference the expansion will underperform messaging that does — and competing brokers, lenders, and proptech platforms are already running expansion-focused campaigns.

What This Means for Your 12-Month Pipeline

The structural read: the FHG expansion is one of the largest single broker-channel-relevant policy moves of the past five years, and its effect on origination volumes will build through 2026 rather than spike. The borrowers most affected — higher-income, well-employed FHBs — typically have longer property search timelines and stronger broker relationships. Pipeline impact follows by 6 to 12 months.

Brokers who rebuild their funnel now will see meaningful upside from Q3 2026 onward. Brokers who treat the change as marketing-only will see incremental upside in the same window. Brokers who don’t engage with the change at all will lose share in a category that is structurally growing — and will spend 2027 explaining to referral partners why the brokers down the road moved faster.

A 30-Day Action Plan

1. Week 1: Update website FHB pages and lead-magnet content to reflect the expanded scheme. Refresh intake form fields.
2. Week 2: Rebuild internal lender matrix for FHG participants. Test routing logic in the broker CRM.
3. Week 3: Run a referral-partner refresh — accountants, conveyancers, buyer’s agents. One coffee per partner, single message: the rules changed, here’s how to refer.
4. Week 4: Mine the existing database. Identify clients with adult children or referrals in the new addressable range. Outreach with a single, well-written email.

Four weeks of structured work positions a brokerage to capture a disproportionate share of a generationally large segment. The brokers who do it now will be the ones who define the FHG pathway for clients for the next two years.