Melbourne’s first-home buyer landscape in 2025 is shifting fast. Expanded federal guarantees, higher property price caps, and enduring Victorian duty relief now shape deposits, eligibility, and buying power across the city. Consequently, a Melbourne first-home buyer who maps out grants and caps before shortlisting suburbs can reduce upfront costs and bid with confidence.
What It Is & Why It Matters
From 1 October 2025, the federal Home Guarantee Scheme (HGS) removes place limits and income caps while lifting purchase price thresholds. For Melbourne, the scheme’s cap rises to $950,000, enabling eligible purchasers to buy with as little as a 5% deposit and avoid Lenders Mortgage Insurance—subject to lender criteria.
Meanwhile, Victoria keeps its long-standing mix of grant and duty relief. The First Home Owner Grant (FHOG) remains a $10,000 payment for new homes up to $750,000, with occupancy requirements. This can meaningfully offset settlement cash for townhouse and apartment projects in growth corridors.
Just as importantly, first-home buyer stamp duty is fully exempt when the dutiable value is $600,000 or less, and concessional on a sliding scale from $600,001 to $750,000. Because duty can be one of the largest upfront costs, this relief often determines which price bracket remains feasible.
Grants & Caps: Melbourne Snapshot (2025)
Home Guarantee Scheme (federal). From 1 October 2025, no place limits and no income caps apply; Melbourne’s property price cap becomes $950,000. Participating lenders lodge applications, and eligible borrowers may avoid LMI with a 5% deposit.
First Home Owner Grant (state). A $10,000 FHOG applies to new homes only (house, townhouse, unit or apartment) capped at $750,000, with standard eligibility and occupancy rules. Although it does not apply to established dwellings, it pairs neatly with duty relief and the HGS.
First-home buyer duty relief (state). A full exemption applies at $600,000 and under; a concession applies from $600,001–$750,000. This relief can combine with the FHOG where the purchase is new and within the threshold.
Off-the-plan concession (state). For contracts between 21 Oct 2024 and 21 Oct 2025, a temporary concession broadens access to off-the-plan purchases. As a result, dutiable value can be reduced by post-contract construction costs—sometimes pushing buyers into the exemption or concession band. Always check contract dates.
Victorian Shared-Equity note. The Victorian Homebuyer Fund is closed to new participants. Existing participants continue under program rules, but new first-home buyers should focus on FHOG, duty relief, and the HGS.
Strategies That Actually Work
Match property type to incentives. Because the FHOG only applies to new homes, many entry buyers target townhouses or apartments under $750,000 to stack FHOG with duty relief. However, those purchasing established homes still benefit from duty concessions and, from October, the expanded HGS.
Use the HGS to reduce LMI drag. Even at a modest deposit, avoiding LMI can save thousands. Therefore, combining a 5%-deposit HGS purchase with a competitive variable rate and offset account can keep repayments flexible while preserving cash buffers.
Lean on off-the-plan arithmetic. Where timing fits the temporary concession, construction costs deducted from the contract price may drop the dutiable value below $600,000 or into the $600k–$750k band. That can swing feasibility, especially for inner- and middle-ring apartments.
Respect lender assessment. Even with stronger caps, borrowing power still rests on income, expenses, and buffers. Consequently, a clean file—consistent savings, stable employment, and realistic limits on other debts—remains the quiet advantage in every approval.
Quick Checklist (one afternoon, big clarity)
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Confirm today’s thresholds: Melbourne’s $950k HGS cap effective 1 Oct 2025; FHOG $10k for new builds to $750k; duty relief bands to $750k.
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Choose property type first: decide between new (FHOG eligible) and established (no FHOG, but duty relief may still apply).
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Map a target band: shortlist suburbs with listings in a duty-efficient bracket; avoid stretching to the next band without a compelling reason.
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Get a robust pre-approval: ensure income, liabilities, and statements align with lender policy; stress-test repayments above current rates.
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Check contract timing: if going off-the-plan, verify contract dates align with the temporary concession window before signing.
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Plan settlement funds: include adjustments, insurances, conveyancing, moving costs, and prudent buffers.
Mistakes to Avoid in 2025
Treating caps as targets. A $950k ceiling isn’t a goal; it’s a limit. Overshooting serviceability can erode lifestyle and savings.
Assuming everything stacks. FHOG applies only to new homes, while duty relief can apply to both new and established. Mixing rules incorrectly causes last-minute disappointment.
Ignoring dates. Off-the-plan duty concessions hinge on contract timing; even a short delay can change the outcome.
Banking on closed programs. The Victorian Homebuyer Fund is closed to new applicants; planning around it now wastes time.
Outlook & Next Steps
Although market conditions remain dynamic, the 2025 settings favour the Melbourne first-home buyer who pairs realistic pricing with the right incentive mix. With unlimited HGS places, higher price caps, and clear Victorian duty relief, the path from shortlisting to settlement is more predictable than it was a year ago. Therefore, careful sequencing—eligibility, lender policy, and contract timing—can unlock a first purchase sooner than expected.
