Key takeaways
• The 2026 Federal Budget includes tax cuts, housing measures and proposed investor tax changes
• First home buyers may face less competition for some established homes over time
• Staged tax cuts may help some buyers save faster and improve borrowing capacity
• Government schemes and deposit support options may already help eligible buyers enter the market sooner
Buying your first home is one of the biggest financial decisions you will make.
The 2026 Federal Budget includes several measures that may affect first home buyers, from proposed changes that could reduce investor competition in some established housing markets, to new housing supply initiatives and staged tax cuts that may improve household cash flow over time.
Here is what was announced, what it may mean for first home buyers and what is worth understanding before taking your next step.
Less investor competition for established homes
One of the biggest proposed changes for first home buyers is the reform to negative gearing and capital gains tax arrangements for property investors.
Under the proposed changes:
investors purchasing established residential properties after 7:30pm AEST 12 May 2026 can no longer offset rental losses against wages or salary income from 1 July 2027
negative gearing remains available for eligible new builds
gains accrued after 1 July 2027 move to the new CGT indexation system
Sources: Australian Government Budget 2026–27 - Tax reform | CGT and Negative Gearing Factsheet
According to the government, the reforms may support an additional 75,000 Australians into home ownership over the next decade.
This does not mean buying property will suddenly become easy. But it does mean the policy settings are shifting toward supporting owner-occupiers in established housing markets.
“For some first home buyers, it may create more opportunities to actually view properties once they’re listed, rather than homes selling before they even get a chance to inspect them.” — Matthew Bulmer, Aussie Mobile Broker
The foreign buyer ban extension
The government is extending the ban on foreign buyers purchasing established homes until mid-2029.
Treasurer Jim Chalmers, in his Budget Speech, said: “We’re extending our ban on foreign investors buying existing homes to take pressure off the market.”
The impact is expected to vary depending on location and market conditions, but it may reduce one source of competition in some established housing areas.
You might also be interested in: How the Federal Budget is influencing property investment decisions
More homes being built
The budget also includes measures aimed at increasing housing supply over time.
The government confirmed a $2 billion Local Infrastructure Fund to help councils and utilities connect roads, water, power and sewerage infrastructure to new housing developments.
According to the government, the measure is intended to support around 65,000 new homes over the next decade.
The government also announced funding of up to $70 million for AI Accelerator grants designed to help streamline environmental and planning approvals.
More supply entering the market over time may provide first home buyers with more options, particularly in the new build segment.
Tax cuts that may help you save faster and borrow more
The staged tax cuts confirmed in the budget may increase take-home pay for many Australian workers over the next two years.
For first home buyers, this may matter in two ways:
helping some households save a deposit faster
potentially improving borrowing capacity because lenders assess income after tax
When | What | Potential benefit |
|---|---|---|
1 July 2026 | Tax rate drops from 16% to 15% on income between $18,201 and $45,000 | Up to around $268 per year |
2026–27 income year | $1,000 instant tax deduction | Average saving of around $205 at tax time |
1 July 2027 | Tax rate drops again from 15% to 14% | Up to around $536 per year total compared with 2024–25 settings |
2027–28 income year | Working Australians Tax Offset (WATO) begins | Up to $250 per year |
Sources: Australian Government Budget 2026–27 — Cost of Living; Australian Government Budget Calculator
For dual-income households, the combined impact may be more meaningful because the tax cuts apply individually to each taxpayer.
“On its own, a few hundred dollars a year won’t suddenly solve affordability challenges, but every bit helps. For many buyers, it’s the combination of small improvements that collectively help them reach their deposit goal sooner.” — Samantha Harvey, Senior Mobile Broker
What the $1,000 instant deduction may mean for deposit savers
The $1,000 instant tax deduction applies from the 2026–27 income year and allows workers to reduce taxable income by $1,000 without keeping receipts.
Because the deduction is generally claimed when lodging a tax return, the financial benefit arrives as a lump sum at tax time rather than through regular pay.
For some first home buyers, directing that lump sum into a high-interest savings account or First Home Super Saver Scheme contribution may help support deposit savings over time.
You might also be interested in: 2026 Federal Budget – What borrowers need to know
Understanding your deposit options
Your deposit size affects what pathways may be available to you as a first home buyer.
Here is a general guide:
Deposit level | What it may mean |
|---|---|
Less than 5% | Buyers may need more time to save or may need to explore specialist lending or government assistance options |
Around 5% | Eligible buyers may qualify for the First Home Guarantee and purchase without paying Lenders Mortgage Insurance (LMI), subject to eligibility |
Between 5% and 20% | LMI may apply depending on the lender and loan product |
20% or more | Buyers may avoid LMI and access a broader range of lending options |
General guide only. Eligibility, lending criteria and LMI conditions vary by lender, product, and individual circumstances.
LMI is a one-off insurance premium that protects the lender rather than the borrower if the loan goes into default. Depending on the loan size, it can add thousands to the upfront cost of buying.
An Aussie Broker can help you understand what options may apply at your current deposit level and whether any schemes could help reduce upfront costs.
Government schemes that may already help
Alongside the new budget measures, several existing government schemes remain available for eligible first home buyers.
Depending on your circumstances, you may be eligible for:
Sources: Housing Australia, Australian Taxation Office
Eligibility rules, property caps, and income thresholds vary depending on the scheme and location.
An Aussie Broker can help you understand which schemes may apply to your situation and how they interact with your borrowing capacity and deposit size.
You might also be interested in: 5% deposit vs Help to Buy vs Aussie Boost
What if you are not ready yet?
Not every first home buyer is ready to purchase immediately, and that is completely fine. But understanding your current position may help you plan your next steps more confidently.
“Being ready to buy is about understanding your borrowing power, knowing what you can realistically offer and being prepared for the process once you decide to make a move.” — Matthew Bulmer, Mobile Broker
An Aussie Broker can help you understand:
your current borrowing capacity
how the staged tax cuts may affect your position over time
what deposit gap still needs to be closed
which government schemes may apply
what timeline may realistically suit your circumstances
That conversation is free^ and may help give you a clearer picture of what is possible.
Already have your deposit ready to go?
If you are actively looking to buy, support may extend beyond the home loan itself.
An Aussie Buyer's Agent can help you assess properties, understand local market conditions and navigate the buying process, particularly if you are considering new builds or buying in a competitive market.
A deposit bond may also be an option in some situations where funds are temporarily tied up, such as term deposits or pending First Home Super Saver Scheme withdrawals.
An Aussie Broker can help you understand how these options work and whether they may suit your circumstances.
Speak with a local Aussie Broker about your options. Book a free^ appointment online or in store.
All budget measures referenced remain subject to legislation being passed.
