The Home Guarantee Scheme (HGS) lets eligible Australians buy a property with a 2–5% deposit without paying Lenders Mortgage Insurance (LMI), which is worth tens of thousands of dollars in savings.
From 1 October 2025, the scheme becomes dramatically easier to access: unlimited places, no income limits, higher price caps, and expanded eligibility.This guide explains how it works, who qualifies, how to apply, and how much you can save.
What Is The Home Guarantee Scheme And How Does It Help You Buy Sooner?
The Home Guarantee Scheme is an Australian Government initiative which allows first-home buyers, parents, and eligible returning buyers to buy with a small deposit while avoiding LMI.
From October 2025, the scheme offers unlimited places, no income limits, and higher property price caps.
The Home Guarantee Scheme (HGS), administered by Housing Australia, makes homeownership possible earlier by allowing lenders to treat your small deposit as if it were a 20% deposit.
Instead of you paying LMI, the government provides a guarantee for the shortfall.
Key updates from 1 October 2025
- Unlimited scheme places
- Higher property price caps that better match market conditions
- Merged regional guarantees, simplifying access for regional buyers
- No income caps for First Home Guarantee and Family Home Guarantee
- More flexible applicant types, including siblings and friends buying together
- Applicants: Individuals or two joint applicants (including siblings, partners, or friends)
- Deposit: 5–20% (lender may require more if your financials are weaker)
- Ownership History: No property interest in the last 10 years
- Residency: Australian citizens or permanent residents
- Costs: Must pay stamp duty, legals, inspection fees
- Occupancy: Must live in the home, not rent it out
- Income Limits: None from 1 October 2025
- Age: 18+
- Consider your location’s price cap.
- Determine whether you’re applying for FHBG or FHG.
- Guarantees are competitive at major lenders, even without place caps.
- Brokers know which lenders are approving 95–98% loans.
- HGS loans are only available through lenders approved by Housing Australia.
- Each lender has different credit policies on 2–5% deposits.
- ID, income verification, tax returns, bank statements, rental ledger, etc.
- Your broker will package these to meet lender requirements.
- Your broker handles the submission and tracks approval timelines.
- Must occupy the property within the timeframe required by the lender.
- Buy with 2% to 5% deposit
- Avoid $20K to $60K+ in LMI
- Unlimited scheme places from 2025
- Higher property price caps
- No income limits
- More flexible joint applications
- Faster pathway to homeownership
This expansion significantly increases access for middle-income earners and buyers in high-cost regions, a major policy shift driven by declining homeownership rates among under-40s.
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GET A FREE ASSESSMENTHow Does The Home Guarantee Scheme Work?
The Home Guarantee Scheme guarantees up to 18% of your loan (or 98% for single parents), letting you buy with 2–5% deposit while avoiding LMI.
You must meet scheme rules, use a participating lender, and live in the property.
Here’s the simple breakdown:
| Deposit Saved | Usual Outcome | Under HGS | What It Means |
|---|---|---|---|
| 2% | LMI required | LMI waived (Family Home Guarantee) | Single parents buy much sooner |
| 5% | LMI required | LMI waived (First Home Guarantee) | First-home buyers enter market faster |
| 20% | No LMI | No need for HGS | Traditional path |
Who Is Eligible for the First Home Guarantee (FHBG)?
The first home guarantee scheme helps first-home buyers and returning buyers who haven’t owned a property in 10 years buy a house with a 5% deposit. From October 2025, there are no income limits, unlimited places, and expanded property price caps.
To be eligible for the FHBG, you must be an Australian citizen or permanent resident, over 18, buying as an owner-occupier with at least 5% deposit, and not having owned property for 10 years.
Eligibility Requirements
What Are The Maximum Property Prices in 2025?
New price caps apply from 1 October 2025, increasing limits across most states to better match rising home prices. These caps apply to both FHBG and FHG applicants.
| Region | Maximum Property Price (1 Oct 2025) |
|---|---|
| NSW – Sydney & regional centres (Newcastle, Lake Macquarie & Illawarra) | $1,500,000 |
| NSW – rest of state | $800,000 |
| VIC – Melbourne & regional centre (Geelong) | $950,000 |
| VIC – rest of state | $650,000 |
| QLD – Brisbane & regional centres (Gold Coast & Sunshine Coast) | $1,000,000 |
| QLD – rest of state | $700,000 |
| WA – Perth | $850,000 |
| WA – rest of state | $600,000 |
| SA – Adelaide | $900,000 |
| SA – rest of state | $500,000 |
| TAS – Hobart | $700,000 |
| TAS – rest of state | $550,000 |
| ACT | $1,000,000 |
| Northern Territory | $600,000 |
| Jervis Bay Territory & NorfolkIsland | $550,000 |
| Christmas Island and Cocos (Keeling) Islands | $400,000 |
How Much LMI Can You Save Under the Scheme?
Your savings can range from $20,000 to $60,000+ in LMI. It largely depends on your property price and deposit. The higher the price and LVR, the more you save.
| Property Value | Loan Amount | LVR | LMI Saved |
|---|---|---|---|
| $1,500,000 | $1,425,000 | 95% | $63,523 |
| $1,000,000 | $950,000 | 95% | $34,290 |
| $850,000 | $807,500 | 95% | $27,821 |
| $750,000 | $712,500 | 95% | $24,166 |
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.
Buy Sooner With A Lower Deposit
How Do You Apply for the Home Guarantee Scheme?
You must apply through a participating lender or mortgage broker.
The steps include confirming eligibility, preparing documents, choosing a lender, and lodging an application before purchasing a property.
Step-By-Step Application Process
Check Your Eligibility
Speak To A Broker
Choose A Participating Lender
Prepare Documentation
Submit Your Application
Buy Your Home And Move In
What Are The Benefits of the Home Guarantee Scheme?
You buy sooner, save money, and access homes in more locations thanks to higher price caps and the removal of income tests.
Key Benefits
Home Guarantee Scheme vs Traditional 20% Deposit
| Feature | Home Guarantee Scheme | Standard Loan |
|---|---|---|
| Minimum Deposit | 2%-5% | 20% |
| LMI Fee | $0 | $10K to $60K |
| Time to save deposit | Months | Years |
| Ideal For | First-home buyers and Single Parents | Buyers with established savings |
Ready To Apply For A Home Guarantee Scheme?
At Home Loan Experts, we specialise in helping Australians navigate complex home loan options, including securing a spot in the Home Guarantee Scheme.
We’ll assess your situation, confirm your eligibility, and recommend the best lenders based on your goals.
Call us on 1300 889 743 or enquire online today.
Frequently Asked Questions
Do you need genuine savings for a 5% deposit?
Usually yes, but some lenders accept rental history as an alternative.
Can Investors Use The Home Guarantee Scheme?
Can Friends Buy Together ?
Can You Use The Scheme To Build Home?
What Happens If You Move Out Later?
Does The Scheme Affect Interest Rates?
Can You Combine HGS With Stamp Duty Concessions?
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