First Home Guarantee 2025 Explained

The First home Guarantee (FHBG) is a government-backed initiative designed to help eligible Australians buy a home.

This scheme allows Australians to purchase a property with as little as 5% deposit, without needing to pay Lenders Mortgage Insurance (LMI).

Administered by Housing Australia, the scheme guarantees up to 15% of the property’s value (as assessed by the lender).Buying your first home can feel out of reach but the First Home Guarantee (FHBG) initiative helps eligible buyers get into the property market sooner, without the usual hurdles.

With just a 5% deposit and no Lenders Mortgage Insurance (LMI), the FHBG (administered by Housing Australia), guarantees up to 15% of your home loan, making it easier to secure finance through a participating lender.

Sound promising? Let’s take a closer look at your eligibility and how it all works. But first, you need to understand the scheme itself in detail.

What Is The First Home Guarantee?

The First Home Guarantee (FHBG) is an Australian Government initiative for helping eligible buyers purchase a home sooner. The scheme is managed by Housing Australia as a part of the broader home guarantee scheme .

Buyers with a deposit that’s less than 20% need to pay lenders mortgage insurance (LMI). However, the First Home Guarantee scheme allows eligible buyers to purchase a modest home with a deposit of as low as 5%.

Housing Australia provides a guarantee of up to 15% of the property’s value to participating lenders, reducing or even eliminating the need for LMI.

How Does The First Home Guarantee Work?

Eligible home buyers can apply for a qualifying home loan through a participating lender to purchase an eligible property. The FHG supports up to 35,000 guaranteed loans each financial year.

Borrowers have the option to combine this guarantee with other government initiatives, such the First Home Super Saver Scheme, state or territory first home owner grants, and stamp duty concessions.

What Types Of Properties Can I Buy Under The First Home Guarantee?

Eligible first-home buyers can buy the following types of properties:

• An existing house, townhouse or apartment

• A house and land package

• Vacant land together with a separate contract to build a home

• An off-the-plan apartment or townhouse

Once you’ve been pre-approved for a home loan by one of the participating lenders, you’ll have 90 days to find and sign a contract of sale for an eligible property that you want to buy.

Finally, once you’ve signed a Contract of Sale, you’ll have an additional 30 days from the signing date to finalise the paperwork for your home loan.

What is Notice of Assessment?

You need to meet an income test if you want to be eligible for the Home Guarantee Scheme (HGS). Lenders use a Notice of Assessment from the Australian Taxation Office (ATO).When your tax returns are processed, your NOA will be available in your myGov Inbox.

But for applications made between 1 July, 2024 and 30 June, 2025, the required NOA must be from the 2023–2024 financial year. Housing Australia recommends speaking with your lender before signing a contract of sale if you haven’t yet received your latest NOA as it could potentially affect your eligibility.

If you’re unable to provide a NOA such as in cases where you’ve been working overseas your lender may accept alternative documentation. Be sure to check with them directly to understand your options.

How Does This 5% Deposit Scheme Work?

The government acts as your mortgage insurer for the gap between your deposit and the standard 20% deposit lenders require.

For instance, with a 5% deposit, the government guarantees the lender the remaining 15% of the property value, reducing their risk to the same level as a buyer with a 20% deposit.

Do I Only Need A 5% Deposit Under The Scheme?

Separate to the minimum required deposit of 5% under the Scheme, first home buyers must have funds to cover stamp duty, bank fees, legal fees and government transfer fees, where the loan-to-value ratio (LVR) is greater than 95%.

For example, a first home buyer in NSW will need a $25,000 (5%) deposit for a $500,000 purchase plus extra funds to complete the purchase.

Generally, for the example above, the extra funds required will be:

• Stamp duty – $0 (stamp duty is waived for first home buyers up to a certain threshold depending on the state)

• Titles Office – Mortgage: $165.40

• Titles Office – Transfer of Land: $165.40

• Loan fees (establishment fees, application fees or valuation fees) – $900 (These fees vary from $0 to $900)

• Legal/conveyancing costs – $1,500 – $2,000

• Lenders Mortgage Insurance (LMI) fees – $0 (waived under the first home buyer scheme).

So, your total funds to complete will be $25,000 plus $2,687 (approx.) as extra funds.

It would be best if you also accounted for sundry costs for inspections/reports, such as building inspection costs, pest inspection etc.

Helpful Tip

Most lenders usually require at least an 8% deposit for first-home buyers to be able to purchase. With the First Home Guarantee, a 5% deposit is sufficient, which helps you get into the property market sooner.

(Note: Additional savings might be required for stamp duty as it may be applicable depending on the price of the property and the state where you are buying.)

You will also get competitive interest rates equivalent to 80% LVR home loans, rather than interest rates for 90% or 95% LVR home loans. This means your borrowing capacity will be much better under the First Home Guarantee.

Rojina Shivabhakti, Mortgage Broker, Home Loan Experts

What Are The Eligibility Criteria For The FHBG?

There are several eligibility criteria first home buyers must meet to qualify for the First Home Guarantee:

• A minimum deposit of at least 5% is needed (most lenders require the deposit to have been accumulated through genuine savings).

• Having a strong credit history, without any defaults or arrears, is essential.

• Applicants must be Australian citizens or permenant residents, aged 18 years of age or above and hold a Medicare card are eligible.

• Single first-home buyers earning up to $125,000 a year or couples earning up to $200,000 a year are eligible. Income from the financial year preceding the year in which the loan is entered into will be assessed.

• Couples, siblings, other family members, and friends can jointly apply for the guarantee.

• Applicants must be first-home buyers or buyers who have not owned a property in Australia in the past 10 years.

• Applicants must intend to live in the purchased property as their primary residence (owner-occupiers).

• Loans under this scheme require scheduled repayments of the principal of the loan for the full period of the agreement. Interest-only repayments for a specific period are acceptable only for loans related to purchasing vacant land and constructing a house.

Apart from the 5% deposit required, first-home buyers must also provide evidence of funds to cover stamp duty, legal fees, bank fees etc.

How To Apply For The First Home Guarantee?

You can apply directly with a participating lender or take the help of a Home Loan Experts’ mortgage broker to help you.

Note: Housing Australia will not accept direct applications.

Here’s how you can move forward:

• Choose Your Path: Apply directly with a participating lender or get help from a mortgage broker.

• Get Assessed: The lender or broker will assess your eligibility for the scheme, along with considerations such as serviceability and credit checks.

• Reserve Your Spot: A lender or mortgage broker reserves a slot for you in the First Home Guarantee for 14 days, and this cannot be extended.

• Submit Application: Submit the application within 14 days and await conditional eligibility assessment to proceed to a certified guarantee.

• Conditional Approval: Upon pre-approval of the loan, you’ll have 90 days to return a signed and dated contract (extensions may be considered for property search).

As accredited mortgage brokers, Home Loan Experts can help you reserve your place, subject to availability. To apply and reserve a slot in the First Home Guarantee, please give us a call at 1300 889 743 or fill in our free online assessment form today.

What If The First-Home Buyers Scheme Places Are Exhausted?

If scheme places have been exhausted, but you’re eligible, you can still submit a reservation request, and you’ll be added to the waitlist.

When and if a Scheme place becomes available, you will be advised.

First Home Guarantee Eligibility Calculator 2022-2023

You can apply directly with a participating lender or take the help of a Home Loan Experts’ mortgage broker to help you.

Note: Housing Australia will not accept direct applications.

Here’s how you can move forward:

• Choose Your Path: Apply directly with a participating lender or get help from a mortgage broker.

• Get Assessed: The lender or broker will assess your eligibility for the scheme, along with considerations such as serviceability and credit checks.

• Reserve Your Spot: A lender or mortgage broker reserves a slot for you in the First Home Guarantee for 14 days, and this cannot be extended.

• Submit Application: Submit the application within 14 days and await conditional eligibility assessment to proceed to a certified guarantee.

• Conditional Approval: Upon pre-approval of the loan, you’ll have 90 days to return a signed and dated contract (extensions may be considered for property search).

As accredited mortgage brokers, Home Loan Experts can help you reserve your place, subject to availability. To apply and reserve a slot in the First Home Guarantee, please give us a call at 1300 889 743 or fill in our free online assessment form today.

What If The First-Home Buyers Scheme Places Are Exhausted?

If scheme places have been exhausted, but you’re eligible, you can still submit a reservation request, and you’ll be added to the waitlist.

When and if a Scheme place becomes available, you will be advised.

What Are The Price Caps For The First Home Guarantee?

The caps vary depending on the state or territory and whether you’re looking to buy in a city, large regional centre or other regional area.

Source: NHFIC

What Are Areas That Are Considered Regional Centres?

Recognising that dwellings in large regional centres tend to be more expensive than other regional areas, the capital city price caps will apply to large regional centres with a population over 250,000, namely:

• The Gold Coast

• Newcastle and Lake Macquarie

• The Sunshine Coast

• Illawarra (Wollongong)

• Geelong

What Are The Benefits Of The FHBG?

The First Home Guarantee offers a helping hand for first-time buyers by providing several advantages:

• The government guarantee saves first-home buyers with low deposits tens of thousands in LMI.

• First-home buyers can buy their first-home sooner and enter the property market due to the required deposit of only 5%.

• Your mortgage repayments will go towards paying off your home loan instead of on rent.

• long with other first-home benefits such as the first home owners grant (FHOG) and the stamp duty exemption/concessions, the deposit scheme may incentivise first home buyers at the fringes to finally buy their own home.

• This allows first-time buyers to search for a wide range of properties by allowing them to purchase existing homes, vacant land or house-and-land packages.

Who Are The First Home Guarantee Lenders?

There are 33 participating lenders who offer the First Home Guarantee. The lenders consist of major and non-major lenders. You can visit Housing Australia’s website to get the full list of lenders.

What Documents Are Required For The First Home Guarantee Application?

Initially, under the FHBG, you’ll need to submit the following information to your mortgage broker or to a participating lender.

• Your full name and date of birth

• Your Medicare number (including your position on the card)

• Your Notice of Assessment (NOA) for your taxable income. For reservations made from 1 July 2023 to 30 June 2024, the relevant NOA is for the 2022-2023 financial year.

• Other standard home loan documents.

Let Home Loan Experts Simplify Your First Home Guarantee Process

Don’t let saving for a 20% deposit delay your dream of home ownership. The First Home Guarantee offers a path forward. Call us at 1300 889 743 to speak to our mortgage experts and see if you can qualify to buy sooner with a smaller deposit. You can also complete our free online assessment form, and we’ll contact you shortly. We truly care about your success and want to use our expertise to help you achieve your dream of owning a home. Let’s start your home ownership journey today!