The First Home Guarantee scheme is one of the most powerful tools available to Australian first home buyers. It allows eligible buyers to purchase a home with just a 5% deposit while avoiding the cost of Lenders Mortgage Insurance (LMI). This comprehensive guide explains how the scheme works, who's eligible, and how to apply in 2026.
What is the First Home Guarantee?
The First Home Guarantee (formerly the First Home Loan Deposit Scheme) is an Australian Government initiative that helps first home buyers enter the property market sooner. Under the scheme, the National Housing Finance and Investment Corporation (NHFIC) guarantees up to 15% of the property value, allowing you to buy with a smaller deposit.
Key benefits:
- Buy with just 5% deposit
- No Lenders Mortgage Insurance required
- Access competitive interest rates
- Available through participating lenders
- Government guarantee (not a cash payment)
What this means in practice: If you're buying a $600,000 property, instead of needing $120,000 (20%) to avoid LMI, you only need $30,000 (5%). The government guarantees the difference.
How the Scheme Works
The Government Guarantee Explained
The First Home Guarantee doesn't give you money—it provides a guarantee to your lender:
- You save a 5% deposit (minimum)
- You apply for a home loan through a participating lender
- NHFIC guarantees up to 15% of the property value to the lender
- Lender approves a loan up to 95% LVR without requiring LMI
- You make standard loan repayments
The guarantee covers the lender's risk, not your repayment obligations. You're still responsible for the full loan amount.
LMI Savings Example
Here's what you could save on LMI with the First Home Guarantee:
| Property Value | Deposit (5%) | Without Scheme (LMI) | With Scheme | Savings | |---------------|--------------|---------------------|-------------|---------| | $500,000 | $25,000 | $15,000-$20,000 | $0 | $15,000-$20,000 | | $600,000 | $30,000 | $20,000-$28,000 | $0 | $20,000-$28,000 | | $700,000 | $35,000 | $25,000-$35,000 | $0 | $25,000-$35,000 | | $800,000 | $40,000 | $30,000-$40,000 | $0 | $30,000-$40,000 |
LMI estimates vary by lender and circumstances.
Eligibility Requirements
To qualify for the First Home Guarantee, you must meet specific criteria:
Personal Requirements
Citizenship/Residency:
- Australian citizen, OR
- Permanent resident
Age:
- 18 years or older
First Home Buyer Status:
- Never owned property in Australia (including investment property), OR
- Haven't owned property in the past 10 years
Income Requirements
Individual applicants:
- Taxable income up to $125,000 per year
- Based on your most recent Notice of Assessment
Couples/Joint applicants:
- Combined taxable income up to $200,000 per year
- Both must be first home buyers
- Based on most recent Notices of Assessment
Occupancy Requirements
You must:
- Intend to live in the property as your principal place of residence
- Move in within 12 months of settlement
- Continue living there while the guarantee is in place
Property Requirements
Property type:
- House, townhouse, or apartment
- House and land package
- Off-the-plan apartment
- Land with separate building contract
Property price caps apply (see below)
Property Price Caps by Location
The scheme has maximum property prices that vary by location:
Capital Cities and Major Regional Centres
| Location | Price Cap | |----------|-----------| | Sydney | $900,000 | | Melbourne | $800,000 | | Brisbane | $700,000 | | Perth | $600,000 | | Adelaide | $600,000 | | Hobart | $600,000 | | Canberra | $750,000 | | Darwin | $600,000 |
Regional Areas
| State | Regional Price Cap | |-------|-------------------| | NSW | $700,000 | | VIC | $650,000 | | QLD | $550,000 | | WA | $450,000 | | SA | $450,000 | | TAS | $450,000 | | NT | $550,000 |
Price caps are reviewed periodically. Verify current caps before applying.
Major Regional Centres (Higher Caps)
Some regional centres have higher caps similar to capitals:
- Newcastle and Lake Macquarie (NSW)
- Illawarra (NSW)
- Geelong (VIC)
- Gold Coast (QLD)
- Sunshine Coast (QLD)
Check the NHFIC website for the complete list of elevated regional centres.
Available Places
The First Home Guarantee has limited places released each financial year:
Place Allocation (2025-26)
| Scheme Type | Places Available | |-------------|-----------------| | First Home Guarantee | 35,000 | | Regional First Home Buyer Guarantee | 10,000 | | Family Home Guarantee | 5,000 |
Important: Places are allocated throughout the year and can run out. Apply early in the financial year for best chances.
Regional First Home Buyer Guarantee
A separate scheme with additional places specifically for buyers in regional areas:
- Same eligibility criteria as First Home Guarantee
- Property must be in a regional area
- 10,000 places per financial year
- Can provide pathway if main scheme places run out
Family Home Guarantee
For single parents (including legal guardians):
- 2% deposit minimum (not 5%)
- Single parent with at least one dependent child
- $125,000 income cap
- 5,000 places per year
Participating Lenders
Not all lenders participate in the First Home Guarantee. The scheme is available through:
Major Banks:
- Commonwealth Bank
- NAB
- Westpac
- ANZ
Other Lenders (selection):
- Auswide Bank
- Bank Australia
- Bank of Melbourne
- Bank of Queensland
- Bendigo Bank
- Beyond Bank
- CUA
- Gateway Bank
- Great Southern Bank
- Indigenous Business Australia
- MyState Bank
- People's Choice
- Police Bank
- Regional Australia Bank
- Teachers Mutual Bank
- Ubank
Check the NHFIC website for the complete current list.
Working with a Mortgage Broker
A mortgage broker can help you:
- Determine eligibility
- Find participating lenders with best rates
- Secure a place in the scheme
- Navigate the application process
- Compare loan products from multiple lenders
How to Apply
Step 1: Check Your Eligibility
Before applying, verify you meet all requirements:
- [ ] Australian citizen or permanent resident
- [ ] Income under caps ($125k individual / $200k couple)
- [ ] First home buyer (or no ownership in past 10 years)
- [ ] Plan to live in property as main residence
- [ ] Property within price cap for your location
Step 2: Get Pre-Approved
- Contact a participating lender or mortgage broker
- Complete pre-approval application
- Reserve a place in the scheme (places are held for 90 days)
- Receive pre-approval confirming budget
Step 3: Find a Property
With pre-approval in hand:
- Search within the scheme's price cap for your area
- Consider both new and established properties
- Ensure property meets scheme requirements
- Make an offer once you find the right property
Step 4: Finalise Your Application
Once you've found a property:
- Submit formal loan application
- Provide all required documentation
- Property valuation arranged by lender
- NHFIC guarantee confirmed
- Loan approval issued
- Proceed to settlement
Required Documentation
Prepare these documents:
- Photo ID (passport, driver's licence)
- Proof of income (payslips, tax returns, Notice of Assessment)
- Bank statements (3-6 months)
- Evidence of deposit/savings
- Contract of sale (once you find a property)
- Proof of first home buyer status
Combining with Other Government Support
The First Home Guarantee can be combined with other assistance programs:
First Home Owner Grant (FHOG)
You can receive both:
- First Home Guarantee (5% deposit, no LMI)
- First Home Owner Grant ($10,000-$30,000 depending on state)
- Combined benefit can significantly boost your position
Stamp Duty Concessions
Most states' stamp duty concessions work alongside the First Home Guarantee:
- NSW: Up to $800,000 exemption
- VIC: Up to $600,000 exemption
- QLD: Concession on first $700,000
- Other states: Various concessions apply
First Home Super Saver Scheme (FHSSS)
Use your super savings for the deposit while also using the First Home Guarantee:
- Withdraw up to $50,000 from voluntary super contributions
- Use as your 5% deposit
- Access government guarantee
- No LMI payable
Example combined benefits (NSW, $700,000 property): | Benefit | Value | |---------|-------| | FHOG | $10,000 | | Stamp duty exemption | $29,490 | | LMI savings (via Guarantee) | $25,000+ | | Total Potential Savings | $64,000+ |
What Happens After You Buy
Living in the Property
You must live in the property while the guarantee is in place. The guarantee remains until you:
- Pay down the loan to 80% LVR
- Refinance without the guarantee
- Sell the property
Can You Refinance?
Yes, but with considerations:
- Refinancing removes you from the scheme
- New loan may require LMI if still above 80% LVR
- Consider staying with original lender until reaching 80% LVR
- Compare potential savings vs refinancing costs
Can You Sell?
Yes, you can sell the property at any time:
- Guarantee ends when property is sold
- No penalty for selling
- If you sell at a loss, you're responsible for any shortfall
- Government guarantee doesn't cover your losses
What if You Need to Move?
If circumstances change and you need to move:
- Discuss options with your lender
- May need to refinance (potentially with LMI)
- Can rent out property in some circumstances (check with lender)
- Guarantee requirements may affect options
Potential Drawbacks to Consider
While the scheme offers significant benefits, consider these factors:
Limited Lender Choice
Not all lenders participate:
- May miss out on best rates from non-participating lenders
- Less flexibility to shop around
- Some smaller lenders may have limited products
Property Price Caps
Price caps may limit your options:
- May exclude some desirable areas
- Caps may not keep pace with market growth
- Could be forced to compromise on property
Higher Total Loan Amount
Borrowing 95% means:
- Larger total loan
- Higher monthly repayments
- More interest paid over loan life
- Less equity buffer if prices fall
Limited Places
Places can run out:
- May need to wait for next financial year
- Timing pressure to find property while place held
- Regional scheme may be alternative if main places gone
First Home Guarantee vs Saving 20%
Should you use the scheme or wait to save more?
Arguments for Using the Scheme
- Enter market sooner
- Benefit from potential price growth
- Stop paying rent
- LMI savings of $20,000-$40,000
- Start building equity earlier
Arguments for Waiting
- Lower total loan amount
- More equity from day one
- Lower monthly repayments
- Greater choice of lenders
- Buffer if property values fall
The Key Question
Will property prices grow faster than you can save? In many Australian markets, waiting to save 20% means chasing a moving target as prices rise.
Example calculation:
- Current property value: $600,000
- Price growth: 5% per year
- Time to save 20% vs 5%: ~3 years difference
- Property value after 3 years: ~$694,000
- Extra needed for 20%: $18,800
Frequently Asked Questions
How do I know if places are available?
Check the NHFIC website or ask a participating lender. Places are released at the start of each financial year (July) and throughout the year.
Can I use the scheme for an investment property?
No. The First Home Guarantee is only for properties you'll live in as your principal place of residence.
What if my income increases after I'm approved?
Once approved and settled, income changes don't affect your guarantee. The income test is based on your Notice of Assessment at application time.
Can I buy with a friend using the scheme?
Generally no. The scheme is designed for individuals or couples in a genuine domestic relationship. Friends buying together typically won't qualify.
Does the scheme guarantee my loan repayments?
No. The guarantee is to the lender, not a guarantee of your repayments. You're fully responsible for your loan. If you default, the government guarantee helps the lender, not you.
What if property prices fall after I buy?
You're responsible for your full loan amount regardless of property value. If you sell at a loss or can't make repayments, you bear the financial consequences—the guarantee doesn't protect you from market falls.
Take the Next Step
The First Home Guarantee scheme can help you buy sooner with less deposit and no LMI. Understanding your eligibility and how to combine it with other government support can maximise your benefits.
At NJS Financial, we work with participating lenders to help first home buyers access the First Home Guarantee. Our team can assess your eligibility, reserve your place, and guide you through the entire process.
Ready to see if you qualify?
Use our borrowing capacity calculator to see how much you could borrow with a 5% deposit, or complete our free health check for personalised advice on accessing the First Home Guarantee and other first home buyer support.
