The Federal Budget 2025-2026 has introduced key housing initiatives aimed at first home buyers and mortgage holders across Australia. With expanded government schemes, adjusted price caps, and new economic measures, these changes will shape the property market. For aspiring homeowners, especially those entering the market for the first time, understanding these updates is crucial to making informed financial decisions.
Big Boost for First Home Buyers: Expanded Help to Buy Scheme
One of the headline announcements is the $800 million expansion of the Help to Buy scheme, increasing the government’s total commitment to $6.3 billion. This initiative, designed to lower upfront costs for homeownership, now extends broader eligibility and financial relief to approximately 40,000 Australians over four years.
Key Updates to the Help to Buy Scheme:
- Higher income thresholds: Singles earning up to $100,000 (previously $90,000) and couples up to $160,000 (previously $120,000) are now eligible for the Help to Buy Scheme, expanding access to more buyers.
- Increased property price caps: The maximum property price for eligible homes in regional Queensland, including Toowoomba, has increased to $1 million, allowing buyers to consider a wider range of properties.
- Government equity contribution: The government will contribute up to 40% of the purchase price for new builds and 30% for existing homes, reducing the loan amount needed from buyers.
- Lower deposit requirement: Eligible buyers only need a 2% deposit, significantly lower than the standard 5% to 20%, making homeownership more accessible. This comes without a need to pay Lenders Mortgage Insurance.
- Reduced mortgage repayments: With a smaller loan to repay, buyers could save between $900 to $1,464 per month on mortgage repayments compared to a conventional home loan.
Although this scheme offers a promising route into the property market, it comes with trade-offs that borrowers should carefully evaluate with a mortgage broker before proceeding.
The Fine Print: Understanding the Trade-Offs of Shared Equity
While the Help to Buy scheme makes homeownership more accessible, buyers must consider its long-term financial implications:
- Capital Gains Sharing: When selling, the government claims its percentage of any increased property value.
- Full Maintenance Costs: Despite co-ownership, the buyer remains fully responsible for upkeep and repairs.
- Competitive Disadvantages: Delays in approval could mean missing out on a home in a fast-moving market.
- Limited Availability: With only 10,000 places allocated annually, demand may exceed supply.
For many first home buyers, comparing this program with alternatives like the First Home Guarantee may be beneficial.
Student Debt Relief: Boosting Borrowing Power for Graduates
A significant win for younger buyers is the 20% reduction in outstanding HELP/HECS debts, cutting approximately $16 billion from student loans across Australia. This change not only lowers financial burdens but also improves home loan eligibility by modifying how lenders assess debt obligations.
How This Affects Borrowers:
- Higher HELP repayment threshold: Minimum repayment income increases from $54,435 to $67,000.
- Better serviceability assessments: Lenders may discount or exclude HELP debt from borrowing calculations.
- Increased borrowing power: Lower repayments free up additional income for mortgage servicing.
This initiative could significantly benefit Australian professionals, such as teachers and nurses, who previously faced borrowing limitations due to student debt obligations.
Housing Supply Boost: Addressing Affordability Challenges
To tackle housing shortages and improve affordability, the government has earmarked billions for supply-side initiatives:
- Modern construction techniques: $54 million, including $49.3 million for prefabricated and modular housing.
- Housing Support Program: $1.5 billion in funding for infrastructure and social housing developments.
- Apprenticeship incentives: $10,000 payments for new construction apprentices and $5,000 employer incentives.
For Toowoomba, where urban expansion is driving growth, these measures could speed up housing construction and help stabilise prices over the coming years.
Foreign Buyer Ban: More Homes for Locals?
A key housing market intervention in the Federal Budget 2025-2026 is the two-year ban on foreign buyers purchasing existing properties, effective from 1 April 2025. This move aims to free up housing stock for local buyers and prevent land banking by offshore investors.
Potential Impacts for Australian Buyers:
- Less competition for existing homes: With foreign investors temporarily restricted from purchasing existing properties, more homes may be available for first-time buyers and local owner-occupiers. This could reduce bidding wars, making it easier for locals to secure a home.
- Slower price growth in certain areas: Historically, foreign investment has contributed to rising property prices in high-demand regions. With fewer offshore buyers, property value appreciation in some areas may slow, potentially leading to more stable or affordable prices for local buyers.
- Uncertainty for new developments: Foreign investors often fund large-scale residential projects, especially apartment developments. With investment restricted, developers may face challenges in securing financing, leading to delays or cancellations of new housing projects. This could impact housing supply in the long term.
While this policy benefits local buyers in the short term, some experts warn of possible unintended consequences, such as a decline in housing investment.
Tax Cuts, Energy Relief, and Economic Support Measures
Beyond housing-specific initiatives, several broader economic measures could impact mortgage affordability:
- Income tax cuts: The 16% tax rate will drop to 15% in July 2026 and 14% in July 2027, offering extra take-home pay. To illustrate, here’s how the tax cuts can impact the take-home pay for an annual income of $80,000:
| Year | Tax Rate | Annual Tax Savings | Total Tax Savings (from 2025) |
| 2025 | 16% | – | – |
| 2026 | 15% | $800 | $800 |
| 2027 | 14% | $800 | $1,600 |
- Energy rebates: Households will receive a $150 power bill credit until December 2025.
- PBS co-payment reductions: The maximum prescription cost will drop to $25 from January 2026.
Although these savings may seem small individually, they collectively enhance disposable income, potentially improving mortgage serviceability for borrowers.
Interest Rates and the Mortgage Market Outlook
The Federal Budget 2025-2026 is unlikely to cause major shifts in interest rates, but mortgage holders should remain vigilant. Most economists expect the Reserve Bank of Australia (RBA) to hold rates steady in April 2025, with potential adjustments depending on inflation trends.
Key Factors Affecting Interest Rates:
- Inflation trends: Cost-of-living relief measures may reduce inflationary pressure.
- Economic growth: Stability in employment and wages influences RBA decisions.
- Global financial conditions: Overseas economic shifts can affect Australian monetary policy.
For borrowers, this signals a period of relative stability, but long-term interest rate fluctuations remain possible.
Federal Budget 2025-2026: What This Means for Mortgage Brokers and Home Buyers
Navigating the Federal Budget 2025-2026 changes requires expert guidance. Mortgage brokers play a vital role in helping buyers assess their options, maximise government support, and structure their finances effectively.
Key Actions for Mortgage Brokers:
- Educating buyers on Help to Buy alternatives: Comparing traditional low-deposit options with shared equity schemes.
- Assessing the impact of student debt changes: Calculating improved borrowing power for affected clients.
- Monitoring construction sector developments: Understanding prefabricated housing opportunities for clients.
- Advising on foreign buyer restrictions: Helping investors adjust to new purchasing limitations.
We Help You Secure the Right Home Loan
The Federal Budget 2025-2026 introduces substantial changes for home buyers and mortgage brokers in Toowoomba and beyond. With expanded first home buyer programs, student debt relief, and housing supply investments, these measures create new opportunities—albeit with important considerations. Buyers must weigh the pros and cons of government-backed schemes while keeping a close eye on interest rates and market conditions.
At Unlocked Finance, our team of expert Toowoomba Mortgage Brokers can help you navigate these changes and find the best loan options tailored to your financial situation. Whether you’re a first home buyer exploring the Help to Buy scheme, a professional benefiting from student debt relief, or an investor adjusting to market shifts, we’re here to guide you. Speak to one of our Mortgage Brokers Toowoomba now for a personalised assessment and expert mortgage advice.
