Victoria Leads the Nation in Home Guarantee Scheme Uptake. Cohen Handler Victorian Business Director, Zac Jacobs, featured in Realestate.com.au
Getting into the market is step one. Getting it right is the harder part.
Victoria is leading the country in first-home buyer activity. New figures from Housing Australia show 89,400 Victorians have used the federal government’s Home Guarantee Scheme since it launched in 2020, more than any other state. The scheme, which allows eligible buyers to purchase with a deposit as low as 5 per cent, has opened the door for thousands of Victorians who would otherwise have spent years on the sidelines. But getting in and getting ahead are two different things. Zac Jacobs was recently featured in realestate.com.au discussing exactly this tension. His advice cuts to the core of what the scheme means for buyers in practice and what to watch out for if you want the decision to pay off over the long term.
What the scheme actually does for you
The Home Guarantee Scheme removes the biggest single obstacle for most first-home buyers: the deposit. Instead of spending years building a 20 per cent deposit while the market moves around you, eligible buyers can enter with 5 per cent. Single parents can qualify through the Family Home Guarantee with as little as 2 per cent.
The trade-off is straightforward, and Zac puts it plainly. “Buyers get into the market earlier so they don’t wait two years to save up 20 per cent, but they do have to pay off a bigger loan.” That is the equation. Earlier entry, larger debt. For many buyers that is the right trade. For some, it is a trade they have not fully thought through.
The typical Victorian using the scheme is a couple in their early thirties, earning a combined $157,000, buying at around $681,000. The most active postcodes are Hoppers Crossing and Tarneit, Craigieburn and Roxburgh Park, Clyde and Cranbourne. These are affordable, outer-suburban markets where the scheme’s purchase price thresholds work in buyers’ favour. But price point and purchase price cap are not the same as good buying. Location and property type still matter enormously for what happens to that asset over time.
The property you choose matters more than the scheme you use
This is where most first-home buyer conversations get too narrow. The focus falls on finance: deposit size, interest rate, monthly repayments. The property itself receives less scrutiny than it deserves. Zac’s advice on this is clear. Rather than defaulting to the most affordable option available under the scheme, buyers should look for properties that carry genuine capital growth prospects.
He specifically points to character homes such as Art Deco apartments in inner suburbs as a stronger target than the outer-suburban stock that dominates scheme activity. These properties hold their appeal across market cycles, attract consistent tenant and buyer demand, and tend to outperform in growth over longer periods. It is not that outer-suburban purchases cannot work. Many do. But the cheaper the property and the further from established infrastructure, the more dependent the outcome is on population growth assumptions that may or may not play out. If you are using the scheme to access the market sooner, make sure the property you are buying is one worth accessing the market for.
Hold time is the variable most buyers get wrong
The scheme accelerates entry. What it does not change is the fundamental reality of how property returns are made: over time, not quickly. Zac’s advice here is unambiguous. First-home buyers using the scheme should be thinking in terms of 15 years, not 3 to 5. “The other advice I give to first-home buyers is by all means, buy the property you want to live in for now, but don’t try and upgrade and sell it in three years time. “He goes further. “Over the longer term you have more chance of the home growing in value. If you are going to sell in five years, that is not OK.”
The logic is not complicated. A property bought on a small deposit, with a large loan, sold within a few years, has to clear stamp duty, agent fees, the cost of the next purchase, and still generate a meaningful gain. That is a lot to ask of any market. Selling too early is one of the most common ways first-home buyers convert a sound long-term decision into a poor short-term one.
The better path is to buy with the intention of staying for 15 years, ideally paying down the loan significantly in that time, and then retaining the property as an investment when upgrading. That is how a scheme-assisted purchase becomes the foundation of a longer property journey rather than just a stepping stone that costs money on the way out.
What a buyer’s agent does differently
The Home Guarantee Scheme is a financing tool. It does not tell you which property to buy, whether the price is fair, or whether the suburb will perform. It does not negotiate on your behalf or identify what comparable properties have sold for in the past 90 days.
That is where independent representation changes the outcome. A buyer’s agent working with first-home buyers brings the same discipline to a $650,000 purchase that Cohen Handler brings to a $6 million one: research, due diligence, negotiation, and advice that is entirely free from the vendor’s interests. We are not selling you a home. We are helping you buy the right one. If you are considering using the Home Guarantee Scheme and want to make sure the property decision matches the financial one, speak with our team.
FAQ
The Home Guarantee Scheme allows eligible first-home buyers to purchase a property with a deposit as low as 5 per cent without paying lenders mortgage insurance (LMI). The federal government guarantees the remaining portion of the deposit, meaning buyers can enter the market years earlier than they otherwise would. In Victoria, purchase price caps are $950,000 for metropolitan areas and $650,000 for regional areas. Since October 2024, income caps have been removed, making more buyers eligible. A separate Family Home Guarantee allows single parents to purchase with a deposit as low as 2 per cent.
The primary risk is carrying a larger loan for longer. As Cohen Handler buyer’s agent Zac Jacobs notes, buyers enter the market earlier but take on more debt. If interest rates rise or the market softens shortly after purchase, buyers with small deposits have less equity buffer. Selling within a few years is also costly: stamp duty, agent fees, and the expense of the next purchase can easily outweigh any short-term gain. Buyers should plan to hold for a minimum of 10 to 15 years to give the asset time to grow in value and the loan time to reduce.
Cohen Handler’s Zac Jacobs advises buyers to look beyond the cheapest available option and seek properties with genuine capital growth prospects. He specifically recommends character homes such as Art Deco apartments in established inner suburbs, which tend to hold their appeal across market cycles and attract consistent buyer and tenant demand. The most popular postcodes under the scheme are outer-suburban growth corridors, but these carry more dependence on infrastructure investment and population growth than well-located inner-city stock.
At least 10 to 15 years, according to Cohen Handler buyer’s agent Zac Jacobs. He advises first-home buyers to purchase with a long-term mindset, ideally paying down the loan over that period and then retaining the property as an investment when they are ready to upgrade. Selling within three to five years, he says, is rarely a sound financial decision when you account for all transaction costs and the limited time for genuine capital growth to accumulate.
Yes. The scheme solves the deposit problem, but it does not help buyers choose the right property, assess whether the asking price is fair, or negotiate effectively. A buyer’s agent works exclusively for the purchaser, with no relationship to the vendor or agent selling the property. At any price point, independent representation helps buyers avoid overpaying, identify properties with stronger long-term potential, and navigate negotiations with the same discipline that experienced investors apply to every purchase.