First Home Guarantee Scheme Explained

Buying your first home is exciting, but saving a 20% deposit can feel impossible, especially when property prices keep climbing. That’s where the First Home Guarantee (FHBG) comes in.

What Is The First Home Guarantee?

Backed by the Australian Government, the First Home Guarantee lets you purchase a home with as little as 5% deposit while avoiding Lenders Mortgage Insurance (LMI), a cost that can run into tens of thousands of dollars. Housing Australia manages the scheme as part of the broader Home Guarantee Scheme.

From 1 October 2025, the scheme is expanding with:

• Unlimited places (no more waiting lists)
• No income caps, so more buyers can qualify
• Higher property price caps to match today’s market
• Simpler access in regional areas (the regional guarantee is now part of the FHBG)

If you’ve been locked out of the market because of deposit hurdles or income limits, the First Home Guarantee could help you step onto the property ladder sooner and save big on upfront costs.

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

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.

One of the biggest savings is that you won’t have to pay Lenders Mortgage Insurance (LMI). Usually, lenders charge LMI when your deposit is under 20% of the property value. It protects the lender (not you) if you can’t make repayments, and it can add tens of thousands of dollars to your upfront costs. Under the First Home Guarantee, this cost is waived.

What Is The Eligibility Criteria For The First Home Guarantee Scheme?

From 1 October 2025, the eligibility criteria for the First Home Guarantee (FHBG) have been expanded to make homeownership more accessible:

• Deposit: You need a minimum deposit of at least 5%. (Most lenders still require this to be from genuine savings.)
• Residency: You must be an Australian citizen or permanent resident, aged 18 or over, and hold a valid Medicare card.
• Income: There are no income caps from 1 October 2025. Previously, eligibility was limited to singles earning up to $125,000 each year or couples earning up to $200,000 each year.

• Applicants: You can apply as an individual or jointly with another person. Couples, siblings, friends, and other family members can apply together.
• Ownership history: You must be a first-home buyer, or a previous homeowner who has not owned a property in Australia in the past 10 years.
• Occupancy: You must live in the purchased property as your primary residence (owner-occupier).
• Loan type: Loans under the scheme must have principal-and-interest repayments for the full term. Interest-only repayments are only acceptable if you are purchasing vacant land and constructing a home.
• Additional costs: In addition to your 5% deposit, you’ll need extra funds for purchase costs such as legal fees, government fees, and inspections.

While the First Home Guarantee suggests that you can qualify with as little as a 5% deposit, please be aware that additional funds are required to fully service the loan. These costs may include stamp duty, mortgage fees, and other expenses. A strong credit score and a positive credit history are also essential for eligibility. We encourage you to review all criteria carefully to confirm your eligibility before proceeding.

How Much Do I Save In LMI Under First Home Guarantee?

The figures in this table are estimates. You can use our LMI calculator to find out how much you save in different states and territories.

What Are The Price Caps For The First Home Guarantee?

These higher caps open the scheme to more first-home buyers, especially in Sydney, Melbourne and Brisbane, where property values are much higher than before.

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 Are The Benefits Of The First Home Guarantee?

The First Home Guarantee is designed to remove the biggest barrier for many Australians — saving a 20% deposit. Here’s how it helps you:

• Buy with just a 5% deposit. You don’t need to wait years to save for a 20% deposit.
• No LMI, which is applicable when buying with a small deposit. You save tens of thousands of dollars.
• Faster entry into the property market before rising prices make it harder
• There are unlimited scheme places available from 1 October 2025. The limit was 35,000 spots for the First Home Guarantee.
• There is no income cap from 1 October 2025, so high-earning singles and couples can now access the scheme.
• The scheme is not limited to couples. Siblings, friends or other family members can apply together.
• With Housing Australia guaranteeing up to 15% of the loan, lenders are more confident in approving your loan.

The First Home Guarantee makes it affordable, faster, and more achievable for many first-time home buyers to get on the property ladder.

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!